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ISSN : 0974-908X

Volume: 2 Issue: 1March 2010

A bi-annual journal from GRG School of Management Studies

Coimbatore, India

Journal of Management Thought and Practice

Work - Family Challenges:A Case Study of Women Employed inIrregular Hours of WorkB. Usha and K.T. Geetha

Building strong Financial Brands:An empirical evaluation ofPublic Sector BanksSurekha Invalli and A. Raghurama

Measuring Risk - Adjusted Mutual Fund Performance:A Study of Select Sector Funds in IndiaZabiulla

Capacity Utilization in Small ScaleIndustrial UnitsG.V. Jagapathi Rao

Operational Efficiency of Merged Banksin India after Globalization Period - Factor Analysis ApproachN. Bharathi and G. Ravindran

Stress in relation to Self perceptionM. Meenakshisundaram, P.T. Saleendran andN. Panchanatham

Indian outlook: Understanding ofIntellectual Property RightsN. Kavitha and A. Ramachandran

PRERANA in Sanskrit means hope and inspiration. The primary objective of PRERANA journal is to enhance the standard of management education by drawing from conceptual and empirical research based articles reflecting current industry practices. PRERANA shall include contributions from eminent members of the academia and sharing of practices by experts from industry. The Journal will also contain book reviews, editorial abstracts and executive summaries of recent publications in management.

Prof. S. Balasubramanian, DirectorGRGSMS, Coimbatore

Dr. D. Dhanapal, Group Director KPR Institutions, Coimbatore

Mr. P. M. Jagatheesan, Vice President-HR Sara ELGI Group, Coimbatore

Dr. Rajesh Haldipur, Dean and Professor SDM Institute for Management Development, Mysore

Mr. Rajeev Kamineni, DirectorKamineni Retail Enterprises, Coimbatore

Dr. R. Mahadevan, DirectorIndia Pistons, Chennai

Dr. R. Nandagopal, DirectorPSG Institute of Management, Coimbatore

Dr. Gail K Naughton, Dean College of Business, San Diego State University, USA

Executive Editor: Dr. B. Sripirabaa, Faculty, GRG School of Management Studies

Dr. Alford H Ottley, ProvostNorthwestern College, USA

Mr. Benedict Paramanand, DirectorManagement Next, Bangalore

Dr. T. S. RagunathanChair, Informations Operations Technology ManagementCOBA, University of Toledo, USA

Dr. Ms. Sheela Ramachandran, PrincipalPSG College of Arts and Science, Coimbatore

Dr. A. Senthil Kumar Associate Professor of Mechanical EngineeringNational University of Singapore, Singapore

Dr. Monideepa Tarafdar, Associate Professor, Informations Operations Technology ManagementCOBA, University of Toledo, USA

Dr. Ms. N. Yeshodha Devi, PrincipalPSGR Krishnammal College for Women, Coimbatore

The Editorial Board

ISSN : 0974-908X

Volume: 2 Issue: 1 March 2010PRERANA

Journal of Management Thought and Practice

A bi-annual journal from GRG School of Management Studies

Coimbatore, India

PRERANA March 2010

i

CONTENTS

Title

Work - Family Challenges: A Case Study of Women Employed in Irregular Hours of Work

Building strong Financial Brands: An empirical evaluation of Public Sector Banks

Measuring Risk - Adjusted Mutual Fund Performance: A Study of Select Sector Funds in India

Capacity Utilization in Small Scale Industrial units

Operational Efficiency of Merged Banks in India after Globalization Period - Factor Analysis Approach

Stress in relation to Self perception

Indian outlook: Understanding of Intellectual Property Rights

CXO Interview

Book Review

Author(s)

B. Usha and Dr. K. T. Geetha

Mrs. Surekha Invalli and Dr. A. Raghurama

Mr. Zabiulla

Prof. G. V. Jagapathi Rao

Dr. N. Bharathi and Dr. G. Ravindran

Mr. M. Meenakshisundaram, Dr. P. T. Saleendran andDr. N. Panchanatham

Dr. N. Kavitha and Dr. A. Ramachandran

Page No.

1

13

21

35

45

57

65

73

77

PRERANA March 2010

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PRERANA March 2010

From the Executive Editor

Market dynamics, through the emergence of the global economy, advances in technology, increased societal demands and the need to provide more social services with fewer resources have created challenges for organizations. The current commercially competitive environment creates more pressure on senior management into addressing both positive and negative aspects of their organizations in attempts to excel in all areas. Consequently, organizations are constantly engaging in activities aimed at increasing access to resources including manpower, material, money and methods that will allow them to compete successfully in the changing environment and to plan and design activities to accomplish their perceived goals. Growing organizations constantly seek to improve program implementation to develop new resources and/or address needs in the community through their clever talent pool. Synonymously Rob Goffee and Gareth Jones in their book Clever have defined clever individuals as “highly-talented individuals with the potential to create disproportionate amounts of value from the resources that the organization makes available to them”.

These requirements create an avenue for the academicians and practitioners to explore new practices to enhance effective and efficient utilization of the resources and thereby achieve competitive advantage. The objective of PRERANA is to propagate current developments in the field of management through empirical research articles that tests, extends or builds management theory and contributes to management practice. PRERANA encourages manuscripts that present strong theoretical contributions to the management field supported by empirical results thus enabling industries in applying them.

PRERANA's international and multi-disciplinary review team ensures achieving high standards of excellence with regards to the quality of contents. The current issue has seven articles in the areas of Finance, General Management and Human Resources.

Usha and Geetha in their article have attempted in identifying the factors that cause work-family challenges among women working in irregular hours. Their study included nurses, business transcriptionists and police personnel. The results of the study revealed that women were dissatisfied with the quality of work life and faced family related issues and personal problems irrespective of their occupation. Surekha Invalli and Raghurama in their article have discussed the empirical investigation conducted in determining the difference in the financial performance among banks with Global Financial Brands status and their group banks. Their study indicated aggressive Brand building was a significant determinant of profitability and earnings quality of the banks.

Zabiulla in his article has analyzed the investment performance of select sector funds through Sharpe ratio, Treynor ratio, Jensen Alpha, Sortino ratio, Adjusted Shape Ratio and Information ratio using high frequency data. The study revealed that Reliance Pharma Fund and Franklin FMCG Fund posted superior performance, while DSP Blackrock Technology.com Fund has shown mixed results. Performance measured in terms of downside and relative risk criteria revealed that almost all the

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PRERANA March 2010

schemes posted poor performance. Jagapathi Rao in his study attempted in estimating the capacity utilization level in small scale industries in West Godavari District. The results revealed that that there was no relationship between the location of units and the extent of capacity utilization.

Bharathi and Ravindran in their article have discussed about the operational efficiency of merged banks after the globalization period in India. The study included a sample of nine merged banks and used factor analysis for grouping the ratios in to relevant factors. The study revealed the areas of improvement for better productivity and performance for the merged banks. Meenakshisundaram, Saleendran and Panchanatham in their study have examined the relation between stress and self perception among college students using Perceived Stress Scale and Neemann-Harter Self Perception Profile. The results revealed that stress was negatively related with student's self perception and gender differences were found to be significant for three self perception measures. Kavitha and Ramachandran through their article bring to limelight the implications and significance of Intellectual Property Rights. This issue also carries the excerpts of a CXO talk by Mr Srihari M. Udupa on 'Social Entrepreneurship: The future Career Choice' and a book review.

As the Executive Editor of PRERANA, I thank all the authors for their contributions to the first issue of the second volume and the readers for their support and suggestions. I invite articles from academicians, practitioners and researchers highlighting business issues and future challenges with implications for management education and the business community.

- Dr. B. Sripirabaa

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PRERANA March 2010

1B. Usha and Dr. K. T. Geetha

WORK - FAMILY CHALLENGES: A CASE STUDY OF WOMEN EMPLOYED IN IRREGULAR HOURS OF WORK

B. Usha Dr. K. T. Geetha1 2 and

1

Handset: 9360029855, E-mail: [email protected] Dr. K. T. Geetha, Professor, Department of Economics, Avinashilingam University for Women,

Coimbatore. Handset: 9486805002, E-mail: [email protected]

B. Usha, Assistant Professor, Department of Management Science, Park's College, Tirupur.

ABSTRACTThough women have made their entry into the labor market they still face

obstacles at their workplace which are related to (a) the hazards or risks which are common to all the workers; and (b) the risks which working women face in their families and in the society. The multiple roles in work and family can be the source of multiple satisfactions for employed women but the combination of career and family roles is often associated with conflict, overload and stress. Therefore, the study attempted in identifying the factors that cause work-family challenges among women working in irregular hours. Incidental sampling technique was adopted to select a sample of 500 respondents comprising of 150 nurses, 210 business transcriptionists and 140 police personnel. Through personal interview method data pertaining to the study was collected from Coimbatore Corporation area between November 2007 and March 2008. Factor analysis was used to identify the factors which cause dissatisfaction among working women. The findings of the study revealed that women were dissatisfied with the quality of work life and faced family related issues and personal problems irrespective of their occupation.

INTRODUCTION The status of women in the society has an important bearing on their

participation in economic activity, which is common in developed and developing countries. In developing countries the family incomes are, by and large, low and that can best be supplemented by women's work. Various studies (Desai, 1957; Hate, 1969; Kapur, 1970) also point out that today the educated women of India are no more contented in carrying out only the traditional female roles of a wife and mother. The main reason why most women work was the low income of their men folk. D'Souza (1975) in his study identified that when the husband's income was not adequate for the support of the family, the wife also was compelled to work.

The married working woman when forced to combine her two major occupations and roles; marriage and work, faces additional socio-psychological problems and difficulties, the first of them being role-conflict. This was the most important obstacle to the woman achieving a high position in occupations and professions, since both these roles are equally demanding and important. Studies on educated working women and role-conflict (Mahajan, 1966; Kapur, 1970;1973; Srivastava, 1972; Joshi, 1973; Kaul, 1973) found that educated working women, even while holding very responsible posts, continue to be over-conscious of their duties and obligations at home; duties towards their husband, children and home.

PRERANA March 2010

B. Usha and Dr. K. T. Geetha2

Inner conflict and tension was experienced particularly if they are very keen to play both their roles very efficiently and are desirous of paying equal attention to their home and work. Problems are then faced particularly in those cases where the wife has to devote more time and energy to her too absorbing job or profession because of its immediate compulsions and she feels guilty that she has not been able to do justice to her husband, home and children.

Role-conflict was felt mainly because, the perception of the married woman to herself and of the society as a whole, as a mother and home-maker, has not undergone much change as a consequence of her contributing economically to her family. She still feels that her home and children are her prime responsibilities (Ramanamma, 1969; Srivastava, 1972), and she continues to be predominantly governed by this role since that was also the social norm. Wife's work participation can create a potential status problem for husband. Husbands can feel threatened by the fact that they no longer were solely responsible for the support of their families and that their wives were no longer dependent on them. Such views were reported in the works of Dahlstrom (1967); Dhingra (1972); Nischol (1975) and Kala Rani (1976). Time apportionment of a working woman was related to the type of responsibilities at home and at work place. Studies conducted by Nye and Hoffman (1963) and Kapur (1974) indicated that women who choose to combine marriage with career had to face problems in allocating time and resources between the two major responsibilities.

Gupta and Sruti (1982) found that dual responsibilities of the home and work call for multiple roles, which put great strain on working women. Elssy Bonilla de Ramos (1984) attempted to understand the problems of working mothers with pre-school children. A sample of mothers who use the day care system run by the Colombian state was studied. Though the sample was not statistically representative of the female population with pre-school children, it presented similar characteristics to those of the women in the large urban centres. It was found that: (a) the living conditions of the families in the low and middle-low socio-economic positions are more limited than those observed in the families in the middle-high socio-economic position; (b) the intensity and the composition of domestic tasks also vary, not only by virtue of the different economic resources available to the family, but also by virtue of differential access to public services such as electricity, running water, public transportation and so on; and (c) the very organization of the family appears to be affected by their socio-economic conditions. This is particularly evident for the single parent (mother) families which are more frequent in the middle-low and lower social positions. Although the mothers take the children to these centres looking for a service for the children and not for themselves, the centres become a very important promotion space also for the mothers. In fact, for the majority of them, this experience meant a link allowing them to partly overcome the isolation that characterizes their daily life. It was concluded that the conditions of social reproduction can be substantially improved for the families from the lowest social strata, if there was an adequate state participation in the process. There was no doubt that it would be a fundamental factor advancing the circumstances of the working mothers of young children and especially those from the lower income sectors.

PRERANA March 2010

B. Usha and Dr. K. T. Geetha 3

Nelson and Quick (1985) highlighted the greater stress caused by marriage, social, familial and professional roles. Radha Devi and Rabeendran (1985) reported that working women could not spare much time for household activities. Verbrugge (1986) attributed negative health consequences to heavy job demands and multiple role strain. Ghadially and Kumar (1989) found that salient stressors were inadequate pay, under utilization of skills and variability of workload.

NEED FOR THE STUDYWomen thus, are facing conflicting situation due to (i) inner conflict of dual

commitment and (ii) the practical difficulty of combining work with their household activities. The conflicting situation of working women could be solved only if the traditional notion of society towards women changes. While simultaneously recognising the contribution of women to economic development, it is essential to examine the environment where women work and the conditions under which they become significant members contributing to economic growth. Hence there is a need to monitor the issues and challenges the women face at work.

The Amendment of Factories Act, 1948 (August 10, 2005) which allowed women to work in night shift have further opened new opportunities for women. Consequently she explores new areas, horizons, and time frames which are still considered odd. The dual responsibilities of the home and work, call for multiple roles which put great strain on working women (Gupta and Sruti, 1982). In spite of the difficulties they face in balancing the work and family, women are ready to work irregular hours (7 pm to 6 am) not only out of gross economic necessity but also for the fulfillment and satisfaction of their social and psychological needs.

In this context, we attempted to examine the work-family challenges faced by women working in irregular hours of work. The study included nurses, women business transcriptionist and women police personnel as the sample respondents. Women nurses have day shift and night shift duty in their profession, business transcriptionists do only night shift work and the women police personnel should be ready for work at any time of the day.

The irregular hours of work performed by them cause's additional strain and work-family imbalance, which in turn affects their career. In this context, the researcher attempts to study the different types of challenges faced by nurses, women business transcriptionists and women police personnel. Since not many researches are done in India on women employed in irregular hours of work, a study on the women working in irregular hours of work in a given socio-economic context is significant.

OBJECTIVES The objectives of the study were 1. To examine the socio-economic profile of women employed in irregular

hours of work2. To examine the problems women face in their work environment and at

home.

PRERANA March 2010


METHODOLOGY The sample respondents for the study comprised of women employed in jobs

that were of irregular hours of work. The study was conducted in Coimbatore corporation area. Incidental purposive sampling technique was adopted to select a sample of 500 respondents from the universe which comprised of 150 nurses, 210 business transcriptionists and 140 police personnel. Data pertaining to the study were collected by personal interview method between November 2007 and March 2008. The study used factor analysis to identify the underlying pattern of relationship between the various dimensions of problems women face at workplace and in the home front.

ANALYSIS AND DISCUSSIONThis section presents the analysis of the data that was collected from the

respondents. Socio – economic profile of working women: Of the 500 working women surveyed, 30 percent were nurses, 42 percent were business transcriptionists and 28 percent were police personnel. More than 55 percent of the working women belonged to Hindu community, small proportion (1.9 percent) working as business transcriptionists was Muslims and the remaining sample respondents belonged to Christian community. Majority (60 percent) of the sample respondents working as nurse and police belonged to backward caste but the sample respondents employed in BPO's more or less evenly belonged to backward, most backward, schedule caste/tribe and others. More than 90 percent of the working women were from nuclear family and the average size of the family did not exceed 5 members.

More than 40 percent of the working women in the sample were married. About 30 percent of the working women were diploma holders, 28.2 percent of the working women had completed graduation, 22.4 percent had completed post graduation, 11.8 percent were professionals and the remaining 7.6 percent had only higher secondary level of education.Occupational pattern of the working women: In a sample of 150 nurses, fifty percent of the women interviewed were working as nursing assistant and 46 percent were staff nurse for less than 16 years and another 4 percent were working as head nurse for less than 31 years. Sixty one percent of the women working as nursing assistant and staff nurse were in temporary jobs and the remaining were in permanent job.

In a sample of 210 business transcriptionists, 57 percent of the women were working as writers for less than 6 years and the remaining 43 percent of the women were editors for less than 11 years. Among the 140 police personnel, 95 percent of the women were working as constable for less than 11 years and 7 percent of the women were head constable for less than 16 years.Earnings: About 26 percent of the nurses had monthly income less than Rs.5,000 while 70 percent had income in the range Rs.5,000-10,000 and 4 percent in the range Rs.10,000-15,000.

Among the business transcriptionists, 28.1 percent of women had income in the range Rs.5,000-10,000, 51.4 percent in the range of Rs.10,000-15,000 and 20.5

PRERANA March 2010


percent than Rs.5,000, 74.3 percent in the range Rs.5,000-10,000 and 14.3 percent in the range Rs.10,000-15,000.

The contribution of these women to their total family income was also found to be substantial. About 45 percent of the nurses contributed 10-30 percent of their income for families' upkeep, 52 percent contributed 30-60 percent and 3 percent contributed more than 60 percent. Among the business transcriptionists, 56 percent contributed 10-30 percent of their income for families' upkeep, 41 percent contributed 30-60 percent and 3 percent women contributed more than 60 percent. Among the police personnel, 41 percent of the police women contributed 10-30 percent of their income for families' upkeep, 54 percent contributed about 30-60 percent and 4 percent contributed more than 60 percent.Problems at workplace: Though women have made their entry into the labor market they still face obstacles at their workplace which are related to: (a) the hazards or risks which are common to all the workers; and (b) the risks which working women face in their families and in the society. Zani et al., (2001), Kausal (2006), Morash et al., (2006) and Boivin et al., (2007) highlighted the problems of working women in shift work. Though multiple roles in work and family can be the source of multiple satisfaction for employed women (Crosby, 1987), a combination of career and family roles is often associated with conflict, overload and stress (Lewis and Cooper, 1987;1988; Frone et al., 1991; 1992). An analysis was carried out to assess the nature of problems faced by the working women at their work place and at home. Factor analysis was used in the present study to identify the underlying pattern of relationship between the various dimensions of problems at workplace and whether these problems can be grouped in terms of a composite variable. To determine the appropriateness of applying factor analysis the KMO and Bartlett's test measures were computed. The KMO statistics varied between 0 and 1. A value close to one indicates the patterns of correlations as relatively compact and hence factor analysis should yield distinct and reliable factors. KMO statistics for nurses, business transcriptionists and police personnel were 0.929, 0.935 and 0.929, signifying higher than acceptable adequacy of sampling. The Bartlett's tests of sphericity was also found to be significant at 1 percent level providing evidence of the presence of relationship between variables to apply factor analysis.

The communalities for each variable were assessed to determine the amount of variance accounted for by the variable to be included in the factor rotations. All the variables excepting unsafe travelling in the company conveyance for nurses and police personnel had a value greater than 0.50 signifying substantial portions of the variance in the variables accounted by the factors.

Table 1 enlists the Eigen values and their relative explanatory powers for 18 linear components identified within the data set. The Eigen value greater than one alone was considered for inclusion in the analysis. The above results indicated for the sample data, the Eigen value of the first two factors alone was greater than 1 indicating that these factors alone were appropriate for inclusion in the analysis. The two factors together accounted for nearly 85 percent of the variations in the problems at workplace for nurses, 90 percent for business transcriptionists and 82 percent for police personnel.

above Rs.15,000. About 11.4 percent of the police personnel had income less

PRERANA March 2010


Table 1: Factor loadings of the problems at workplace

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 3 iterations.

Nurse Business

transcriptionist

Police

Component Component Component

Variable

1 2 1 2 1 2

Unsatisfactory working condition .736 .561 .805 .216 -.200 .613

Hard work .752 .807 .226 .068 .034 .537

Bad atmosphere .644 .122 .089 .234 -.078 .539

Health hazard .741 -.364 .234 .197 .164 .596

Inadequate income .884 .436 .966 .269 .174 .479

Overwork .789 .915 .548 .921 .559 .242

Hours of work .699 -.034 .367 -.222 .673 .245

Too much of travel .891 .354 .830 .570 .014 .647

Sexual harassment .673 ..043 .486 .618 .356 .548

Increased harassment at

workplace

.592 .795 .383 .204 .963 .496

Boredom and monotony of work .438 .174 .555 .441 .576 -.801

Insecurity to work at night .612 .259 .416 .610 .966 .538

Increased exploitation at

workplace

.513 -.437 .094 .477 .506 .496

Unsafe travelling in the company

conveyance

- - .234 .548 - -

Reporting and going out during

night

.892 .253 .894 .237 .955 .379

Increased gender bias .631 .462 .635 .384 .337 .286

Increased stress and burn out .596 .372 .459 .901 .541 -.034

Increased crimes .479 .198 .103 .265 .631 .354

Eigen value 12.966 1.444 14.826 1.351 12.852 1.116

Percentage of variance 76.269 8.496 82.368 7.508 75.599 6.565

Cumulative percentage 76.269 84.765 82.368 89.875 75.599 82.163

PRERANA March 2010


The Kaiser rotated component matrix are presented in table 1. For nurses, factor 1 had significant loadings for three dimensions, namely reporting and going out during night, too much of travel and inadequate income which represents the quality of work life. Factor 1 is very powerful because it explains nearly 76 percent of the variance. Factor 2 has significant loading for three dimensions viz., overwork, hard work and increased harassment at workplace and explains only 9 percent of the variance. Hence by enhancing the quality of work life and working environment the dissatisfaction among the nurses can be lowered.

For business transcriptionists, factor 1 has significant loadings for four dimensions viz., inadequate income, reporting and going out during night, too much of travel (quality of work life) and unsatisfactory working condition (which represents working environment). Factor 1 thus combines both quality of work life and working environment and represents the need to have a balance between the two for preventing dissatisfaction. For business transcriptionists, factor 1 is very powerful as it explains 82 percent of the variance. Factor 2 has significant loadings for 2 dimensions viz over work and increased stress and burn out, which can be named as health issues. This factor explains only 8 percent of the variance. Hence for business transcriptionists enhancing the quality of work life, working environment and health issues are essential for prevention of dissatisfaction.

For police personnel, factor 1 has significant loadings for three dimensions viz insecurity to work at night, increased harassment at workplace and reporting and going out during night, all of which represents quality of work life. This factor accounted 76 percent of the variance. Factor 2 had significant loadings for only one dimension namely boredom and monotony of work which represent the quality of work life. This factor explained 7 percent of the variance. Hence by improving the quality of work life, the dissatisfaction can be reduced among the police personnel.Problems at home: Working women tend to give high priority to their role as wife and mother, which distorts their commitment to work. Similar view was expressed in the works of Nye and Hoffman (1963) and Kala Rani (1976). A study by Warren et al., (2009) reveals that combining paid-work and motherhood remains a major source of difficulty for women. It is the mothers, rather than the fathers, who bend their jobs to meet family needs. While these appear to be signs of growing gender convergence, but not equality, in parent's contribution to childcare times (O'Brien, 2005), women are still responsible for domestic labor and childcare (Tang and Cousins, 2005).

Factor analysis was used to identify the underlying pattern of relationship between the various dimensions of problems at home and whether these factors could be grouped in terms of a composite variable. To determine the appropriateness of applying factor analysis the KMO and Bartlett's test measures were computed. KMO statistics for nurses, business transcriptionists and police personnel were 0.737, 0.913 and 0.914 signifying higher than acceptable adequacy of sampling. The Bartlett's tests of sphericity was also found to be significant at 1 percent level providing evidence of the presence of relationship between variables to apply factor analysis.

The communalities for each variable were assessed to determine the amount of variance accounted for by the variables to be included in the factor rotations. All the

PRERANA March 2010


variables excepting low income for nurses and to be away from home for nurses and police personnel had a value greater than 0.50 signifying substantial portions of the variance in the variables being accounted by the factors.

Table 2 enlists the Eigen values and their relative explanatory powers for 14 linear components identified within the data set. The Eigen value greater than one alone was considered for inclusion in the analysis. The above result indicates for the sample data, the Eigen value of the first three factors alone was greater than 1 for nurses. For business transcriptionists, the Eigen value of the first two factors alone was greater than one and for the police personnel, the Eigen value of the first two factors alone was greater than 1 indicating that these factors alone were appropriate for inclusion in the analysis. For nurses, the three factors together accounted for nearly 83 percent of the variations in the motivational factors, while for business transcriptionists, the first two factors accounted for nearly 90 percent of the variations in the motivational factors and for police personnel, the two factors together accounted for nearly 90 percent of the variations in the motivational factors.

The Kaiser rotated component matrix are presented in table 2. For nurses, factor 1 had significant loadings for five dimensions, namely inadequate time to look after family (family related issue), no time to participate in social and religious functions (personal problem), hamper family relationship (family related issue), lack of comfort with continuous night shifts (personal problem) and odd hours of work affect family members at home (family related issue). Factor 1 was very powerful because it explained nearly 59 percent of the variance. Factor 2 had significant loading for three dimensions viz., suspicion from family members (family related issue), inadequate time for personal work and no time for personal grooming (personal problem) and explains only 17 percent of the variance. Factor 3 had significant loading for one dimension viz., no support from family members (family related issue) and explains only 8 percent of the variance. Family related issues and personal problems cause problems at home for nurses.

For business transcriptionists, factor 1 had significant loadings for four dimensions viz., no time to participate in social and religious issues (personal problem), no support from family members (family related issue), inadequate time for personal work and no time for entertainment (personal problem). Factor 1 was very powerful because it explains nearly 82 percent of the variance. Factor 2 had significant loading for four dimensions viz., suspicion by society (societal problem), no time for personal grooming (personal problem), hindrances to carry out the responsibility of a wife/daughter and suspicion from family members (family related issue) and explains only 7 percent of the variance. Societal problem, family related issues and personal problems cause problems at home for business transcriptionists. Since the business transcriptionists works only in night shifts the society doubts the culture and behavior of women employed in BPO. So there needs a change in the mind set of the society and this could be done by creating awareness about the safety and security measures provided by the management according to the Factories Act, 1948 (amendment bill – 2005).

For police personnel, factor 1 had significant loadings for four dimensions viz., no time to participate in social and religious functions, inadequate time for personal work, no time for personal grooming (personal problem) and no support from family

PRERANA March 2010


Table 2: Factor loadings of problems at home

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 3 iterations for nurses and business transcriptionists and rotation converged in 6 iterations for police personnel.

Nurse Business transcriptionist

Police

Component Component Component

Variable

1 2 3 1 2 1 2 Societal problem Suspicion by society .375 .145 .599 .657 .925 .463 .934 Family related issues Hamper the family relationship

.938

.670

.389

.603

.416

.579

.491

Family members would not allow to work at night

.559 .673 .603 .384 .263 .483 .529

Odd hour work affect family members at home

.932 .675 .429 .327 .581 .589 .606

Hindrances to carry out the responsibility of a wife/daughter

.369 .462 .364 .473 .845 .387 .460

Inadequate time to look after family affairs

.943 .547 .369 .209 .328 .236 .851

No support from family members

.497 .478 .938 .854 .372 .864 .492

Suspicion from family members

.567 .951 .436 .595 .814 .348 .803

Personal problem Too much of responsibility .549 .431 .483 .437 .362 .637 .358 Inadequate time for personal work

.207 -.817 .572 .849 -.042 .875 .274

No time to participate in social and religious functions

.943 .361 .416 .906 .043 .893 .287

Lack of comfort with continuous night shifts

.936 .657 .494 .518 .438 .557 .458

No time for entertainment .607 .384 .234 .841 .263 .326 .855 No time for personal grooming

.269 .793 .193 .463 .880 .868 -.285

Eigen values 8.248 2.375 1.057 11.483 1.084 11.504 1.128 Percentage of variance 58.912 16.968 7.548 82.021 7.741 82.173 8.059

Cumulative percentage 58.912 75.880 83.427 82.021 89.762 82.173 90.232

PRERANA March 2010


members ( family related issue). These factors accounted for about 82 percent of the variance. Factor 2 had significant loadings for four dimensions namely suspicion by society (societal problem), no time for entertainment (personal problem), inadequate time to look after family affairs (family related issue) and suspicion by family members (family related issue). These factors explained 8 percent of the variance. Societal problem, family related issues and personal problems cause problems at home for police personnel. The society always has some fear to mingle with police personnel and do not trust them because they have a opinion that they will be troubled unnecessarily without any cause. The suspicion from the society could be reduced by development of good interpersonal relation with the people in the society.

To sum up, by providing counseling on work related and personnel problems and extending support from a team of welfare health and counseling staff, the stress experienced by the women workers could be reduced and counselling practices can be extended at employee family level including dependents and relatives for better results.

CONCLUSION Though women have made their entry into the labor market they still face some

obstacles at their workplace and at home. The findings of the study reveals that nurses were dissatisfied with the quality of work life and work environment, while business transcriptionists were dissatisfied with quality of work life, work environment and faced health issues and police personnel were dissatisfied with quality of work life. Family related issues and personal problem caused problems at home for nurses, while suspicion by society, family related issues and personal problem caused problems for business transcriptionist and police personnel. Quality of work life has emerged as a common problem to all the three categories of respondents.

There is a substantial increase in the number of professional, self employed and educated women. This is due to the reasons that women in general do things systematically and in particular manage the resources effectively. Women have an inherent talent for multi-tasking - organizing household activities, managing available resources, maintaining relationships and making firm decisions. These qualities of women can be capitalized by identifying their potential and extending a favourable support to manage new ventures.

Challenges persist in work places and it is how employees take up these problems are likely to vary. Few are unique to women while few are common to both the genders. Women need to prepare themselves to cope up with these challenges. Hence organizations can implement family–friendly approaches to encourage women employees to balance their work-family challenges. Dissatisfaction among the women employees can be reduced by improving the quality of work life by providing an attractive system of reward and recognition of good work and by improving the working environment. In addition counseling could be provided to women employees on work related and personnel problems with the support from a team of welfare health and counseling staff. Such measures are likely to help in harnessing the potential existing among the women employees thereby enabling them enhance their performance at the work.

PRERANA March 2010


References

Bruna Zani and Luca Pietrantoni, (2001), Gender differences in burnout, empowerment and somatic symptoms among health professionals: moderators and mediators. Equal Opportunities International, 20 (1/2), 39-48.

Crossby, F. (1987), Spouse, Parent, Worker: On Gender and Multiple Roles. New Haven: Yale University Press.

Dahlstrom, E. (1967), The Changing Roles of Men and Women, Gerald Dick Worth, London.

Desai, Neera, A. (1957), Women in Modern India, Bombay: Vora and Co., Publishers.

Dhingra, O. P. (1972), Women in Employment, Report of the Field Investigation into the Problems of Professionally Trained Employed Women in India, New Delhi: Shri Ram Centre For Industrial Relations and Human Resources.

Diane B. Boivin, Geneviève M. Tremblay and Francine O. James, (2007), Working on a typical schedules, Sleep Medicine.

Elssy Bonilla de Ramos, (1984), Working mothers of pre-school children in an underdeveloped society. Women's Studies International Forum, 7 (6), 415-422.

Frone, M. R., Russell, M. and Cooper, M. L. (1991), Relationship of work and family Stressors to Psychological Distress. Journal of Social Behavior and Personality, 6(7), 227-250.

Frone, M. R., Russell, M. and Cooper, M. L. (1992), Antecedents and Outcomes of work-family Conflict: Testing a Model of the work-family interface. Journal of Applied Psychology, 77(1), 65-78.

Ghadially, R. and Kumar. P. (1989), Stress, Strain and Coping Styles of Female Professionals. Indian Journal of Applied Psychology, 26(1), 1-8.

Gupta and Sruti (1982), Role Stress: A Study of Female. Indian Journal of Psychometry and Education, 32(1).

Hate, C. A. (1969), Changing Status of Women In Post-Independent India, Bombay: Allied Publishers Pvt. Ltd.

Joshi, Rama, J. (1973), Contemporary Change in the Socio-economic Role of Women in India, in Kaurla Bhasin and Leslie Sawhney (eds.), The Position of Women in India, Programme of Training for Democracy, Bombay.

Kala Rani, (1976), Role Conflict in Working Women. Cheran Publications, New Delhi.

Kapur Promilla, (1974), The Changing Status of Working Women in India. Vikas Publishing House Pvt Ltd, Bombay.

Kapur Promilla, (1970), Marriage and the Working Women in India. Vikas Publishing House Pvt Ltd, New Delhi.

Kapur Promilla, (1973), Love Marriage and Sex. Vikas Publishing House Pvt Ltd, New Delhi.

Kaul Beena, (1973), Study of Adjustment of Women in Employment, M.Phil Dissertation, Allahabad: University of Allahabad.

Kaushal, S. L. (2006), Working of Women in Night Shifts – Opportunities and Threats. Pratibimba, 6 (2), 56.

Lewis, S. and Cooper, C. L. (1987), Stress in Two Earner Couples and Stage in Life Cycle. Journal of Occupational Psychology, 60(3), 289-303.

Lewis, S. and Cooper, C. L. (1988), Stress in Dual Earner Families, In Gutek, B; Stromberg A and Larwood L (Eds.), Women and Work: An Annual Review, 3, Beverly Hills: Sage Publications, 139-168.

Mahajan Amarjit, (1966), Women's Two Roles: A Study of Role Conflict. The Indian Journal of Social Work, 24(4).

Merry Morash, Dae-Hoon Kwak and Robin Haarr (2006), Gender differences in the predictors of police stress, Policing. An International Journal of Police Strategies and Management, 29 (3), 541 – 563.

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Nelson, D. L. and Quick, J.C. (1985), Professional Women: Are Distress and Disease Inevitable. Academy Management Review, 10, 206-213.

Nischol Kamlesh, (1975), Economically independent Emotionally Crushed. Social Welfare, 22, 37-40.

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Radha Devi, D. and Ravindran, M. (1985), Working Women and Household Work. Social Change, 15 (2), 21-24.

Ramanamma Angara, (1969), Position of Women in India-With Special Reference to Pune, Ph.D. Thesis in Sociology, Pune: University of Pune.

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Srivastava Vinita, (1972), Employment of Educated Married Women, its Causes and Consequences with Reference to Chandigarh, Ph.D. Thesis, Punjab University, Chandigarh.

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PRERANA March 2010

13Mrs. Surekha Invalli and Dr. A. Raghurama

BUILDING STRONG FINANCIAL BRANDS: AN EMPIRICAL EVALUATION OF PUBLIC SECTOR BANKS

Mrs. Surekha Invalli Dr. A. Raghurama1 2 and

1

Engineering, Sullia, Karnataka. E-mail: [email protected] Dr. A. Raghurama, Chairman and Professor, Department of PG Studies and Research in Commerce,

Mangalore University.

Mrs. Surekha Invalli, Assistant Professor, Department of Management Studies, K. V. G. College of

ABSTRACTLike any other businesses in service sector, banks and other financial

institutions are adopting branding for strategic purposes. Branding has never been considered a serious issue in the Indian banking sector with very few banks focusing on branding their products. A survey of global banks by The Banker in July 2007 ranked only 6 Indian Banks in the Global Financial Brands League. Surprisingly after 2 years, the Indian tally in the Global Financial Brands 2009 has more than tripled to 19 and the existing ones have also achieved a commendable rank improvement. All the 13 new entrants in the league are Public Sector Banks. Using the annual data on financial performance of Public Sector Banks for the Period 2007 to 2009, an empirical investigation is made to determine whether banks with Global Financial Brands status are significantly different from their group banks in delivering better financial performance. Results indicate aggressive Brand building as a significant determinant of profitability and earnings quality of the banks but has least to do with capital adequacy, managerial efficiency and operating efficiency.

INTRODUCTIONThe financial services sector has come a long way from arguing that banks are

beyond branding to a phase where banks and other financial institutions are using branding strategically – like any other business. The prime reason that could be attributed to branding as a second thought could be the emphasis on operating efficiency and financial efficiency as preferred measures of performance. With product, price, technology parity catching up across categories and no longer differentiators, the demand for Brands as a source of competitive advantage was inevitable. Realizing the timely need, some of the major Banks in India are undergoing a high-profile, and undoubtedly expensive, re-branding programme. Not content with putting out ATMs, initiating Web banking and mobile banking platforms, banks have realized that long-term success lies in shedding their old boring methods and coming up with a bright logo, dynamic new caption and a PR campaign.

The July 2007 survey of Global Banks conducted by The Banker – A Financial Times publication ranked only 6 Indian Banks into the Global Brands League. Five Chinese banks were above State Bank of India (SBI). The survey took into consideration parameters such as strength of capital, assets, soundness of capital assets ratio and profits. Surprisingly after 2 years, the Indian tally in the Global Financial Brands 2009 has more than tripled to 19 and the existing banks have also

PRERANA March 2010

Mrs. Surekha Invalli and Dr. A. Raghurama14

achieved a commendable rank improvement. All the 13 new entrants in the league are Public Sector Banks. Sticking to prudential banking norms has helped Indian banks turn in impressive numbers in the Global-500 2009 table.

Drawing on the brand building and financial performance, we investigate whether there is a gap between the two groups of banks i.e. those in the Global Brands -500 league and those who are not. The criteria used for comparison are managerial efficiency, profitability, earnings quality. Using the annual data on financial performance of Public Sector Banks for the Period 2007 to 2009, an empirical investigation was made to determine whether banks with Global Financial Brands status differed significantly from their group banks in delivering better financial performance.

RATIONALE FOR BRAND BUILDING BY BANKSBrands are not new to this consumerist world, but have become indispensable in

our lives. Considered as beacons of trust, they deliver a sense of familiarity to the consumer through a perceived added value. While there are many business benefits associated with brands, it is interesting that few financial services firms commit to actively and consistently managing their brands. Banks serve a variety of clients with differing needs, which in turn makes it difficult to build a brand that is relevant to all groups. Due to financial liberalization and competition, there is little or no differentiation among products and product pricing parity offered by different categories of banks. Thus the opportunity exists for banks to gain competitive advantage by investing in brand management and enjoy the performance benefits.

BRANDING INITIATIVES BY INDIAN BANKS Re-branding is not a new phenomenon in financial service industry across the

world. The Prudential Insurance Company has also revised its logo many times. The company kept the “Solid as Rock” symbolism but progressively modernized it to represent its innovative financial services until it became too modern and in the late eighties reverted back to a more traditional logo. Canara Bank – the century old Public Sector Bank in India whose motto is 'Serving to grow and growing to serve' has changed its Logo four times to remain contemporary and reorient itself to the changing times. It is interesting that few financial services firms such as City Bank, HSBC Bank, ICICI Bank, State Bank of India are committed actively and consistently in managing their brands. However branding as a strategic move is a relatively new concept for the Indian Banking industry.

Major Banks such as Bank of Baroda, Canara Bank, Union Bank of India, IDBI Bank etc. have already gone through re-branding. In February 2009, an Economic Times publication listing of the Top 500 Global Financial Brands of 2009 highlights the worthy performance of Indian Banks despite the financial crisis. Table 1 gives the list of banks in the top 500 global financial brands of 2009. The publication reports, for the three months ending December 2008 reveal that 19 Indian banks/financial institution in the Global 500, 2009 reported an average 35% growth in interest income and a higher 42% jump in net profit. SBI, ICICI Bank, HDFC Bank, Axis, Kotak Mahindra Bank and IDBI Bank were in the list which were also figured in the 2007 Global Brands.

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Mrs. Surekha Invalli and Dr. A. Raghurama 15

RESEARCH GAP Typically, it is assumed that a strong brand will have a positive impact on the

bottom line of the firm, and numerous authors give advice on how firms can achieve such a strong brand (Aaker and Joachimsthaler, 200l, Munoz and Kumar, 2004). The general impact that the overall choice of branding strategy has on the financial performance of the firm has not been adequately explored.

OBJECTIVE The objective of the study was to investigate whether banks with Global

Financial Brands status differed significantly from their group banks in delivering better financial performance for the period 2007-2009.

Table 1: List of Indian Banks in Top Global Financial Brands 2009

Public Sector banks category Private Sector banks category

Bank of Baroda HDFC Bank

Bank of India ICICI Bank

Canara Bank Kotak Mahindra Bank

IDBI Bank Ltd. Axis Bank

Indian Bank

Indian Overseas Bank Non-bank, diversified financial services brand

Oriental Bank of Commerce Power Finance Corporation

Punjab National Bank

State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State Bank of India (SBI)

State Bank of Patiala

Syndicate Bank

Union Bank of India

Source: India Brand Equity Foundation ww.ibef.org

METHODOLOGY To analyze the impact of branding on Performance, only Public Sector Banks

including State Bank group were chosen, thus the universe of study was 28 Banks. Table 2 provides the names of the Banks in the two groups. To compare the two groups on select parameters of profitability, managerial efficiency, earnings quality, related to Operating efficiency and Capital adequacy data has been drawn from Annual Publication of RBI Trend and Progress of Banking 2008-09. SPSS version 17 was used to analyze the data.

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Table 2: List of Banks considered for study

Not in the league of Global 500 In the league of Global 500

Allahabad Bank Bank of Baroda

Andhra Bank Bank of India

Bank of Maharashtra Canara Bank

Central Bank of India IDBI Bank Ltd.

Corporation Bank Indian Bank

Dena Bank Indian Overseas Bank

Punjab and Sind Bank Oriental Bank of Commerce

State Bank of Indore Punjab National Bank

State Bank of Mysore State Bank of Bikaner and Jaipur

State Bank of Saurashtra State Bank of Hyderabad

State Bank of Travancore State Bank of India (SBI)

UCO Bank State Bank of Patiala

United Bank of India Syndicate Bank

Vijaya Bank Union Bank of India

All the 28 Public sector Banks including IDBI bank Ltd were selected for the study. The data was collected for a period of 3 years from 2007 to 2009. The variables considered for study were Management efficiency, Operating efficiency, Profitability, Earnings quality and Capital adequacy. These variables were widely used in numerous studies to assess and compare the performance of banks. The variables along with the respective factors and their importance of measurement are presented in Table 3.

RESULTS AND DISCUSSIONMann-Whitney U Test was performed. It is a non-parametric method which

does not require the assumptions of normality and equal variances, but is similar to independent samples t test. For all analyses, SPSS 17v was used and the confidence interval was set at 95%. The test statistic is based on the sum of the rank for the respective populations. Table 4 gives the test results for all the variables considered for the study.

Results indicate there was no significant difference between Public sector bank recognized as Global Brands from their peers in the category for the variables managerial efficiency, capital adequacy and operating efficiency. On the other hand there was significant difference between the 2 groups of banks on the parameters profitability and earnings quality. In case of profitability, profit per employee

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(z= -2.229at p<0.05) and return on asset (z=-1.976 at p<0.05) for the year 2007 were found to be statistically significant. The profit per employee was also found to be highly significant for the year 2008 and 2009. Among the factors related to earnings quality, increase in net profits (z=-3.262 at p=0.001) was significant for the year 2008. Spread as percentage of total assets with z=-2.187 and -2.643 respectively were found to be significant at p<0.05 for the years 2007 and 2008.

Table 3: List of Variables chosen for analysis

Variables Factors Importance

Advances to

Deposits

Measures the efficiency of the management in

converting the deposits available within the bank to

advances

Managerial

Efficiency

Business per

employee

Efficiency of all the employees in generating business

to the bank

Operating

Expenses as

percentage to Total

Expenses

Efficiency of management of operations Operating

efficiency

Non-Interest

Income to total

income

It is the interest income earned by the banks excluding

income on advances and deposits with RBI

Profit per employee Measure of profitability of a bank, also a measure of

employee productivity

Profitability

Return on Asset Measure of profitability of a bank

Percentage growth

in Net profit

Percentage change in Net profit over the previous year Earnings

quality

Spread to total

assets

Spread is measured as the difference between interest

receipts and interest payments and is expressed as a

percentage of total assets.

Capital adequacy Capital adequacy reflects the overall financial

condition of a bank and also the ability of management

to meet the need for additional capital

Capital

adequacy

Advances to assets Reflects the aggressiveness of a bank in lending funds

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Table 4: Results of Mann-Whitney U Test Y ear 2007 2008 2009 2007 2008 2009

M anagerial efficiency

Business

per

em ployee

Business

per

em ployee

Business

per

em ployee

Total

advances

to Total

deposits

Total

advances

to Total

deposits

Total

advances

to Total

deposits

M ann-

W hitney U

87.000 66.000 66.000 97.000 76.000 53.000

Z -.505 -1.471 -1.213 -.046 -1.011 -1.844

A sym p. Sig.

(2-tailed)

.613 .141 .225 .963 .312 .065

Profitability

Profit per

em ployee

Profit per

em ployee

Profit per

em ployee

R eturn on

A ssets

R eturn on

A ssets

R eturn on

A ssets

M ann-

W hitney U

80.500 49.500 33.000 55.000 78.000 59.500

Z -.804 -2.229 -2.815 -1.976 -.919 -1.530

A sym p. Sig.

(2-tailed)

.421 .026 .005 .048 .358 .126

E arnings quality

Spread as

% of

A ssets

Spread as

% of

A ssets

Spread as

% of

A ssets

Increase in

net profit

Increase in

net profit

Increase in

net profit

M ann-

W hitney U

50.500 40.500 55.000 N A 27.000 52.000

Z -2.187 -2.643 -1.747 N A -3.262 -1.893

A sym p. Sig.

(2-tailed)

.029 .008 .081 N A .001 .058

C apital adequacy

C apital

A dequacy

ratio

C apital

A dequacy

ratio

C apital

A dequacy

ratio

A dvances

to Total

A ssets

A dvances

to Total

A ssets

A dvances

to Total

A ssets

M ann-

W hitney U

86.500 96.000 65.000 55.000 84.000 90.000

Z -.528 -.092 -1.262 -1.976 -.643 -.049

A sym p. Sig.

(2-tailed)

.597 .927 .207 .048 .520 .961

O perating efficiency

O pr. Exp.

as % to

Total

Expenses

O pr. Exp.

as % to

Total

Expenses

in

O pr. Exp.

as % to

Total

Expenses

N on-

Interest

incom e to

Total

Incom e

N on-

Interest

incom e to

Total

Incom e

N on-

Interest

incom e to

Total

Incom e

M ann-

W hitney U

64.000 85.000 90.000 86.500 82.000 62.500

Z -1.562 -.597 -.049 -.528 -.735 -1.383

A sym p. Sig.

(2-tailed)

.118 .550 .961 .597 .462 .167

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CONCLUSION The findings of the study present the view that branding has implications for

financial performance and earnings quality but not for managerial, operating efficiency and capital adequacy for the chosen category of Public Sector Banks for the period 2007-09. Banks should find low cost marketing strategies such as co-branding, NGO Partnerships, sponsorships, creating opinion leaders, social marketing to allow for significant cost savings. It is widely believed that financial services firms are not likely to have strong brand management capabilities in-house. Employees need to be educated about brand at all levels of the organization. In addition to the challenge of the novelty of brand management, a firm faces the challenge of staying relevant to its many different types of clients in the financial services world.

References

Aaker, David A. and Erich, Joachimsthaler, (2000), Brand Leadership, London, Free Press.

Canara Bank: Performance highlights March2009 accessed through www.canarabank.com

Ceridwyn King, (2005), Exploring the role of employees in the delivery of the brand: a case study approach. Qualitative Market Research: An International Journal , 8(3), 277-295.

Choudhari, S. and Tripathy, A. (2003-04), Measuring Bank Performance: An Application of DEA. Prajnan, 32 (4), 287-304.

Kapferer, Jean-Noël, (1997), Strategic Brand Management, Great Britain, Kogan Page.

Lane Keller, K. and Aaker, D.A. (1992), The effects of corporate images and branding strategies on new product evaluations, Stanford University Research Paper Series, September.

Meeta Malhotra, Ray and Keshavan, (2007), Brand change needs consistent communication. Published in Business Line dated October 04, 2007.

Nirmal John (2008), List of re-branding bank. Retrieved on January 2, 2008, www. growssify.com finance dated 02-01-2008

Roger Malone , (2009), Remaking a government-owned giant: An interview with the chairman of the State Bank of India, Retrieved on April 4, 2009, www.mckinseyquarterly.com

Sidin Vadukut, (2008), A bank by any other name. Published in Business Line dated January 13, 2008

Smith, Scott M. and David S. Alcorn, (1991), Cause Marketing: A New Direction in the Marketing of Corporate Responsibility. Journal of Services Marketing, 5 (4), 21-37.

State Bank of India Corporate Governance reports. Annual report 2008-09. www.statebankofindia.com

Press release statement by Mr. Yogendra Gouti, Managing Director, Interpublicity Advertising Agency (Interpub). Retrieved on July, 22, 2008. www.indiaprwire.com.

19 Indian banks in top 500 global financial brands 2009. Retrieved February 12, 2009, www.ibef.org

Worcester, B. (1986), Corporate Image Research in Consumer Market Research Handbook, 3 Ed., McGraw Hill, New York, NY.

Zyglidopoulos, (2006), Exploring the Moderators on the Branding Strategy-Financial Performance thRelationship, paper presented at the 10 Annual International Conference on Reputation, Image, Identity

and Competitiveness, New York City, May 25 - 28, 2006.

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21Mr. Zabiulla

Mr. Zabiulla1

1

Management Studies, Bangalore - 560 097. Email: [email protected]. Zabiulla, Senior Lecturer, Department of Management Studies, Sambhram Academy of

ABSTRACTOver the years, mutual funds have redefined the financial landscape of

investors in India. There is a significant growth in the mutual fund industry in terms of asset base as well as the schemes during the recent period. Given, the financial markets characterised by volatility, it is important to examine the performance of mutual funds using emerging market data. The present paper aims at analyzing the investment performance of select sector funds during April 2006 to July 2009 using high frequency data. Besides the conventional performance measures of Sharpe, Treynor and Jensen that are commonly used in for evaluating fund performance, additional measures that captures fund manager's competence skills have also been used. It is found that Reliance Pharma Fund and Franklin FMCG Fund have posted better performance relative to the market. While DSP Blackrock Technology.com Fund has shown mixed results in terms of Sharpe and Treynor rankings. These three funds have posted positive alpha thereby indicating superior performance. While performance measured in terms of downside and relative risk criteria reveal that almost all the schemes posted poor performance. Time tested models alone cannot give a fair view of the fund manager's competence skills in delivering abnormal returns; downside risk measures could definitely augment the performance evaluation framework of managed portfolios. The findings reported in the study have wider ramifications in articulating investment strategies and the capital market hypothesis.

INTRODUCTIONOver the years, mutual funds have redefined the financial landscape of

investors in India. The asset under management (AUM) of the 20 – year old Indian mutual fund industry stood at Rs. 6,70,993 crore as at June 30, 2009. The industry had witnessed a steep growth of 15% in May 2009 on the back of substantial rise in equities as well as strong liquidity in the system. In their analysis, KPMG reported that the AUM has recorded a compounded annual growth rate of 35% during 2005-09. Further, the report shows that the assets of Indian mutual fund industry could triple to nearly 18 trillion rupees by 2015 if Indian economy revived quickly.

Mutual funds have become an invaluable tool for a wide range of investors, from individuals seeking to save for retirement to sophisticated socialites focused on preserving their assets and businessmen determined to create wealth. Today, mutual funds have the potential to be a part of any portfolio and also have the ability to deliver in a defined time horizon. The key, however, is to make a proper selection of funds and follow an investment process that keeps an investor on track to achieve the desired results. “Past performance is no guarantee of future performance”. In view of this how can an investor evaluate the vast pool of fund offerings? How can they

MEASURING RISK - ADJUSTED MUTUAL FUND PERFORMANCE: A STUDY OF SELECT SECTOR FUNDS IN INDIA

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Mr. Zabiulla22

choose the mutual funds that are most likely to meet an investors investment return targets? Investors are motivated by both greed and fear. In other words, they want to make the best possible returns while staying in their individual “comfort zone” when it comes to risk (Mobius, 2007). In choosing the right fund, an investor needs to address two issues, namely measures that focuses on evaluating a fund manager's past performance and fund characteristics that determine the magnitude of risk.

There is a rich literature on investment performance of mutual funds both in India and abroad. However, in most of these studies, focus has been on the time tested models of Sharpe, Treynor, Jensen measures. At the same time, other studies have also used Fama decomposition measure. The present paper is different from earlier works, in the sense, a comprehensive risk adjusted performance measures (absolute, downside and relative measures) are employed to assess the fund performance. In this paper, an attempt was made to empirically examine the risk adjusted performance of twelve sector funds (Pharma, FMCG and Technology Funds) using emerging market data over 40 months spanning from April 2006 to July 2009. Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors.

The rest of the paper is structured as follows. Section 2 presents the brief review of existing literature relevant with this study across the world. Section 3 provides the data and its descriptive statistics. The methodology employed for the present study is explained in section 4. Section 5 describes the empirical findings and discussions based on which the final section gives the summary of the paper along with the conclusions.

REVIEW OF LITERATUREDuring the past four decades researchers and practitioners across the world

have devoted a considerable attention to study the performance of managed portfolios. Some of the widely acknowledged measures employed in evaluating the performance of managed portfolios include the methodologies advocated by Treynor, Sharpe, Jensen, Fama and others. Treynor (1965) developed a methodology for evaluating the fund performance called reward to volatility measure. In his path breaking study, Sharpe (1966) developed reward to variability measure and found that 11 funds reported superior performance out of 34 funds to that of DJIA. Treynor and Mazuy (1966) developed a measure for testing whether fund managers outguess the market or not and found no evidence thereof. Jensen's (1968) devised a measure based on CAPM and reported that mutual funds did not appear to achieve abnormal performance when transactions cost were considered. Fama (1972) developed a methodology for evaluating investment performance of managed portfolios. He suggested that overall performance could be broken down into several components.

Gupta (1974) evaluated the performance of select mutual funds categorized in terms of their broad investment objectives for the period 1962-71.He reported that all fund types outperformed the market irrespective of choice of market index and performance measure. Modest (1987) ascertained whether conventional measures of fund performance are sensitive to the benchmark chosen to measure normal

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Mr. Zabiulla 23

performance. To test this hypothesis they employed the standard CAPM benchmarks and a variety of APT benchmarks. They found little similarity between the absolute and relative mutual fund rankings obtained from these alternative benchmarks, which suggested the importance of knowing the appropriate model for risk and return in this context. In addition, they reported that rankings were not insensitive to the method used to construct the APT benchmark. The study concluded that the results were statistically significant using all the benchmarks.

Cumby and Glen (1990) evaluated the performance of 15 U.S. based internationally diversified mutual funds between 1982 and 1988 by employing Jensen measure and the positive period weighting measure developed by Grinblatt and Titman. They found that the fund managers failed to provide investors with performance that beats the broad international equity index over the sample period.

Jayadev (1996) evaluated the performance of two growth oriented mutual funds on the basis of monthly returns compared to benchmark returns over a study period of 21 months (June 1992 to March 1994). He employed risk-adjusted performance measures suggested by Jensen, Treynor and Sharpe for evaluation. He found that both the funds were poor in earning better returns either adopting market timing strategy or in selecting under – priced securities. Further, the study concluded that the two growth oriented funds have not performed better in terms of total risk and were not offering advantages of diversification and professionalism to the investors.

Elton et al., (1996) examined predictability of stock mutual funds' performance based on risk-adjusted returns measures. They reported that past performance could be used to predict risk-adjusted future performance. The study also demonstrated that application of modern portfolio techniques on historical data could improve construction of fund portfolios that significantly outperformed a rule based on the past rank alone. The portfolio so selected was reported to have small, but statistically significant, positive risk adjusted returns during a period when mutual funds in general had negative risk-adjusted returns.

Daniel et al., (1997) empirically examined the mutual fund performance with characteristic–based benchmarks. He developed and applied new measures of portfolio performance which used benchmarks based on the characteristics of stocks held by the portfolios that were evaluated. The sample included 2500 equity funds from 1975 to 1994. Based on these benchmarks, 'characteristic timing' and 'characteristic selectivity' measures were developed to detect, respectively, whether portfolio managers successfully time their portfolio weightings on these characteristics and whether managers select stocks that outperform the average stock having the same characteristics. The study showed that aggressive–growth funds exhibited some selectivity ability, but they lack characteristic timing ability.

Allen and Tan (1999) tested the persistence of mutual fund mangers' rate of return and risk–adjusted returns in UK on 131 open – ended mutual funds from 1989 – 1995. They analyzed the relative performance of the funds and examined whether mutual fund mangers could maintain their inter–fund performance rankings over time. They assessed persistence in performance in the short run and long run by using several statistical measures. They asserted that if past performance was a predictor of future performance, first half 'superior' managers in the first period would remain as 'superior' managers in the next period, second half 'inferior' managers in the second

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24 Mr. Zabiulla

half and so on. They found that both raw returns and risk–adjusted returns exhibited strong evidence of persistence in the long run but this evidence appear to reverse in the short run.

Singla and Singh (2000) evaluated performance of 12 growth oriented mutual funds scheme using risk-return relationship models given by Sharpe, Treynor, Jenson and found that the selected funds reported lower average returns than the market return.

Noulas et al., (2005) evaluated the performance of 23 Greek equity funds using risk-return analysis. The study was based on weekly data for equity mutual funds for the period 1997-2000. The ranking of the mutual funds was based on the techniques used by Treynor, Sharpe and Jensen. The study showed that the equity funds have neither the same risk nor the same return. They reported that there were big differences among the equity mutual funds with respect to risk and return. The results indicated that there was a positive relation between risk and return for the whole period, while the betas for all funds were smaller than one. They suggested that the investor needs to know the long-term behavior of mutual funds in order to make the right investment decision.

Muthappan and Damodharan (2006) evaluated the performance of Indian Mutual Fund schemes in the risk and return framework during the period April 1995 to March 2000 employing Sharpe, Treynor, Jensen, Sharpe differential measure and Fama's components of performance measures. The results indicated that the risk and return of mutual fund schemes were not in conformity with their investment objectives. The sample schemes were found to be inadequately diversified. However, the funds were able to earn higher returns due to selectivity.

Tripathy (2006) empirically investigated the market timing abilities of Indian fund managers of thirty one tax planning schemes in India over the period December 1995 to January 2004 using Jensen and Mazuy Model and Henriksson and Merton Model. The study reported that the fund managers were not successful in reaping returns in excess of the market returns; rather they were timing the market in wrong direction.

Deb et al., (2007) employed conditional and unconditional approaches to find the stock selection and market timing abilities of 96 Indian mutual fund managers. The study reported lack of market timing abilities and presence of stock selection abilities among the fund managers in both conditional as well as unconditional approaches. Further, from pooled regressions, they confirmed the strong evidence of positive stock selection and negative market timing.

Kader and Kuang (2007) examined risk–adjusted performance, selectivity, timing ability and performance persistence of thirty Hong Kong mutual funds during August 1995 to July 2005. They employed single factor model, three factor models, Jensen's alpha and Treynor index for evaluating weekly returns of the funds as against the benchmark, Hong Kong Hang Seng Index. In addition selectivity and timing ability of fund managers was addressed using Treynor and Mazuy quadratic model. The study evidenced that the funds underperformed relative to the market. Further, the study revealed insignificant selectivity and market timing ability.

Sehgal and Jhanwar (2008) evaluated the performance of 60 growth and growth-income mutual fund schemes in India from January 2000 to December

PRERANA March 2010

Mr. Zabiulla 25

2004.They examined both the stock selection skills and the timing abilities of the sample fund managers and argued that multi-factor benchmarks provide better selectivity and timing measures compared to one-factor CAPM as they control for style characteristics such as size, value and momentum. The study found that the evidence on selectivity improved marginally when higher frequency data such as daily returns were used instead of monthly returns.

Thanou (2008) employed the CAPM framework in examining the risk adjusted performance of 17 Greek Equity Mutual Funds during up and down market conditions. He evaluated the performance of each fund based CAPM performance methodology for the nine year period as well as for three sub – periods displaying different market characteristics. The ranks so obtained were compared with two indices and found significant differences in ranking between the two market conditions. The study revealed that majority of the fund under study followed closely to the market index while other funds consistently outperformed the market. The market timing abilities showed a mixed result.

DATA AND ITS DESCRIPTIVE STATISTICS In this study, dataset includes daily NAVs of select sectoral funds (growth

oriented) as exhibited in Table-1 and the benchmark index, S&P CNX 500 over the period from April 2006 to July 2009. The S&P CNX 500 is India's first broad based benchmark of the Indian capital market representing 95.11% of total market capitalization and about 94.84% of the total turnover on the NSE as on March 31, 2009. For this study, S&P CNX 500 have been used as market proxy.

The data for the funds was taken from the web site of Association of Mutual Funds of India (www.amfiindia.com). Further, we used the popular website of National Stock Exchange (www.nse.com) for obtaining information about the benchmark index. The bank rate, given in the RBI website (www.rbi.org) was used as a surrogate for the risk free rate of return. The bank rate of 6% has been used as a surrogate for risk free rate of return.

Any missing values for the NAV of the sample schemes and for the index have been excluded to equalize the financial time series data. These values formed the basis for the study to examine the risk-adjusted performance of the sample funds. The corresponding codes for the funds mentioned in the table 1 have been used henceforth in the subsequent tables to represent the fund name.

The daily returns were calculated for the sample funds and the market proxy using their day – end values. The daily returns of the fund and the benchmark were found out using the formulas

Rm =It

It-1

- 1 *100Rp =NAVt

NAVt-1

- 1 *100 and

respectively. Where, NAV is the net asset is value of the fund at time t and NAV is t t-1

the net asset value of the fund at time t-1. Similarly, I and I are the value of the t t-1

market proxy at time t and t-1 respectively.

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Mr. Zabiulla26

Table 1: List of Sample Sector Funds

S.No Name of the sector fund Date of

inception

Fund size (Rs. Cr) as on

July 2009

Code

1 Franklin Pharma Fund Mar 31, 1999 50.95 P1

2 Reliance Pharma Fund Jun 05, 2004 126.67 P2

3 SBI MSU Pharma Fund May 26, 2004 30.2 P3

4 UTI Pharma and Healthcare

Fund

Jul 03, 1999 53.76 P4

5 Birla Sun Life Buy India Fund Jan 15, 2000 44.76 F1

6 Franklin FMCG Fund Mar 31, 1999 29.97 F2

7 ICICI Prudential FMCG Fund Mar 31, 1999 58.26 F3

8 SBI MSU FMCG Fund Jul 05, 1999 7.89 F4

9 Tata Life Sciences and Tech

Fund

Jun 18, 1999 41.23 T1

10 Franklin Infotech Fund Aug 22, 1998 112.47 T2

11 DSPBlackrock Technology.com

Fund

May 16, 2000 86.53 T3

12 SBI MSU Infotech Fund Jul 05, 1999 44.09 T4

Similarly, the risk of the fund and benchmark as measured by the standard

deviation was calculated. The bank rate given in annualized form was converted into daily figure. If r is the daily risk free rate and the annualized rate is R, then the daily risk free rate is given by (1+r)j = (1+ R) where j=250, being the average number of trading days in a year.

The characteristic of return distribution for normality is also tested using Jarque-Bera Test. Table 2 provide the descriptive statistics of daily returns of the sample funds and the benchmark index over the study period under consideration.

The average daily returns were positive for both the sample funds and the benchmark index except SBI MSU Pharma Fund and SBI MSU Infotech Fund. Reliance Pharma Fund has earned higher returns in comparison with S&P CNX 500. The statistics shows that returns series exhibited standard deviation greater than unity while the market proxy had recorded highest standard deviation of 2.187. The skewness statistics are not large; however a negative skewness implies that the returns distributions have a lower probability of earning positive returns. The value of kurtosis was greater than 3 in almost all the funds (75%) and benchmark, meaning that they have a heavier tail than the standard normal distribution. The daily returns are, thus not normally distributed as evidenced by the 'p - value' of Jarque-Bera Test.

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Table 2: Descriptive Statistics of Daily ReturnsSector Funds Mean

()µ

Standard Deviation ()σ Skewness

()S

Kurtosis

()K

JB TEST 'p-value'

P1 0.022 1.332 -0.670 3.913 0.0000

P2 0.056 1.759 -0.418 2.936 0.0000

P3 -0.018 1.836 -0.378 4.334 0.0000

P4 0.003 1.427 -0.707 4.37 0.0000

F1 0.034 1.764 0.097 8.91 0.0000

F2 0.030 1.261 -0.524 3.703 0.0000

F3 0.027 1.444 -0.801 4.648 0.0000

F4 0.023 1.494 -0.426 3.504 0.0000

T1 0.042 1.693 -0.470 3.538 0.0000

T2 0.018 2.184 0.216 1.033 0.0000

T3 0.052 1.907 -0.587 2.851 0.0000

T4 -0.014 1.994 -0.643 4.61 0.0000

Benchmark index

S&P CXN 500 0.053 2.187 0.067 5.302 0.0000

METHODOLOGYThis section describes the methodology employed to examine the risk

adjusted performance of sector funds. Risk adjusted returns are composite risk - return measures used to determine whether or not the fund's return earned were sufficient compared to those earned by similar portfolios and benchmarks exhibiting a similar level of risk. For better exposition, the task is divided into two sections: measures based on Modern Portfolio Theory and the measures based on down side and relative risk.

Before proceeding to operational formulae, the notations that are used are summarized here: R = Risk-free interest rate; R = Return from the portfolio; R = f p m

Return from the market portfolio; σ = Standard deviation of the returns of fund; = p m

Standard deviation of the returns of the market index; β = Market risk of the fund p

(beta); β = Market risk (β = 1, by convention); P = Number of observations; VaR = m m

Value at Risk.Absolute risk measures: The following are the absolute risk measures used in this study. Coefficient of Variation: The standard deviation of two investments viz., fund and the benchmark has to be normalized for their relative variability for the purpose of comparison. A measure of risk adjusted return the coefficient of variation is the standard deviation scaled by the mean of return series. It is used to compare the variability of the fund returns vis-à-vis the benchmark return. The variation coefficient of returns for the fund and the benchmark index is computed using the following equations.

σ

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Mr. Zabiulla28

COVP =σP

RP

...................(1)

COVm =σm

Rm

...................(2)

Sharpe ratio: The Sharpe Index (1966) developed by William Shape is probably still the most widely employed performance measure in practice. It is a reward to variability ratio and uses the standard deviation as the measure of total risk. All other things being equal, higher Sharpe Index translate into a higher performance and vice - versa. Using the equations (3) and (4), the Sharpe ratio for the fund and the benchmark was calculated.

SIP = σP

RP ...................(3)- Rf

SIm = σm

Rm ...................(4)- Rf

Treynor ratio: Treynor Index proposed by Jack Treynor (1965) measures the excess return per unit of systematic risk. It is a reward-to-volatility ratio based on the fact that preferred portfolio lies on the most counter clockwise ray in the expected return-beta space. Higher the index, better is the fund performance and vice - versa. The Treynor index for the fund and the benchmark index are defined as:

TIP = βP

RP ...................(5)- Rf

TIm = Rm...................(6)- Rf

The beta of the sample funds, are estimated using the OLS regression equation.

RP βP Rmα εi= + +

M-Squared return: M² is the Sharpe ratio scaled by the standard deviation of the benchmark return. The M squared measure can be used to lever the return of the fund up or down depending on the risk undertaken. It focuses on total volatility as a measure of risk, but its risk adjusted measure of performance has the easy interpretation of a differential return relative to the benchmark index. The M² return is determined as:

M²RP - Rf

σP

σmx P= x x P + Rf

...................(7)

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Jensen's Alpha: According to Jensen (1986), equilibrium return on a portfolio would be a benchmark equilibrium return of the portfolio which is correctly priced by the market with respect to systematic risk of the portfolio. It is a regression of excess fund return with excess market return and is expressed as:

RP - Rf = ...................(8)Rmβα+ εi+- Rf

( (

Where R - R is the excess return (the raw return less the risk-free rate) on fund, is a p f

measure of the abnormal performance of fund, β is a measure of the market beta risk

for fund; R - R is the excess return on a benchmark market index; and ε is a mean m f

zero error term. In this model, the intercept α is the Jensen's measure of the fund

manager's ability. A statistically significant positive α indicates superior investment performance of the fund.Downside and relative risk measures: The following ratios were used to measure the downside and relative risk of mutual funds. Sortino ratio: The Sortino ratio, associated with Dr. Frank Sortino is a modification of the Sharpe ratio but penalizes only those returns falling below a required rate of return. The required rate of return is often taken to be the risk free rate of return and was originally known as the minimum acceptable return. Unlike Sortino ratio, Sharpe ratio penalizes both upside and downside volatility equally. The Sortino ratio (SR) is measured according to the equation below:

α

...................(9)SR =RP - Rf( (XP

Pn

i=1RP - Rf( (

2

X

Adjusted Shape Ratio: Dowd (1999) introduced the value at risk (VaR) approach to Sharpe ratio. The VaR is a single risk measure summarizing all sources of downside risk. If the return series is not normally distributed, the conventional Sharpe ratio will have bias and therefore, the standard deviation is substituted with VaR. The adjusted Sharpe ratio is determined by the following equation.

...................(10)ASRP =RP - Rf( (

VaRGiven the confidence level, historical value at risk is determined by

multiplying the face value of the fund times the return at the point in the distribution of 1.65 standard deviations below the mean return.Information ratio: Also known as appraisal ratio, information ratio is a measure of benchmark relative return gained for taking on benchmark relative risk. To put it differently, it is the signal - to - noise ratio of a fund manager's forecast reflecting the divergence between the performance of the fund and benchmark. The information ratio (IR) is estimated by the following equation.

...................(11)IR =

n

i=1RP - Rm

n

RP - Rm( (σ

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Mr. Zabiulla30

EMPIRICAL RESULTS AND ANALYSISThe results of empirical study are dealt in two parts: (1) Absolute risk

adjusted performance, and (2) Downside and relative risk adjusted performance.Absolute risk adjusted performance: Table 3 depicts the results of absolute risk adjusted performance measures. The variability of fund returns (Coefficient of Variation) was found to be negatively large for SBI MSU Pharma Fund and SBI MSU Infotech Fund. Further, the variability of the benchmark returns was lower (higher) than the variability in the fund returns for three funds (eight funds). UTI Pharma and Healthcare Fund showed significant variation in its returns.

Table 3: Results of Absolute risk adjusted performance measures

The Sharper ratio for the sample funds shows three funds have outperformed the market in terms of total risk as measured by standard deviation. Franklin FMCG Fund has a Sharpe ratio marginally lower by 0.0012 as compared to market Sharpe index. On the other hand, other funds Treynor ratio indicates that the portfolio offering the highest reward/risk (systematic risk) ratio will be the only risky portfolio in which investors will choose to invest. In the sense, fund manager have diversified away the diversifiable risk and the matter of concern for investors should be the systematic risk only. Results show that all the funds have beta less than one (beta results not reported here) and hence can be concluded that all the selected sector funds are defensive in their movement of returns relative to the market proxy. A higher Treynor ratio relative to market index suggests that investors did not receive

Sector Funds CV Sharpe ratio Treynor ratio M²

return

Jensen’s alpha

P1 61.521 0.0145 0.0402 0.0341 -0.005

P2 31.482 0.0304 0.0829 0.0689 0.021

P3 -103.350 -0.0109 -0.0320 -0.0216 -0.052

P4 483.435 0.0004 0.0012 0.0033 -0.025

F1 52.452 0.0177 0.0418 0.0411 -0.007

F2 41.975 0.0220 0.0604 0.0504 0.004

F3 52.554 0.0174 0.0491 0.0404 -0.052

F4 65.838 0.0136 0.0396 0.0321 -0.006

T1 40.126 0.0235 0.0594 0.0538 0.006

T2 118.874 0.0073 0.0227 0.0184 -0.020

T3 36.572 0.0261 0.0639 0.0595 0.010

T4 -142.988 -0.0082 -0.0228 -0.0155 -0.052

S&P CXN 500 41.254 0.0232 0.0507

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Mr. Zabiulla 31

adequate return per unit of systematic risk undertaken. Interestingly, Treynor ratios for Reliance Pharma Fund and DSP Blackrock Technology.com Fund resulted in same ranking of the funds and have outperformed the market by containing loss per unit of systematic risk undertaken by investors. Again, SBI MSU Infotech Fund and SBI MSU Pharma Fund has recorded negative Treynor ratio.

The M² return is also used to compare the risk and return efficiency of funds as done using Sharpe ratio. The M² return of funds relative to S&P CNX 500 ranges between 0.0689 to -0.0155. Reliance Pharma Fund has earned a higher positive risk – adjusted return in pharma category as well as in the entire sample funds.

The analysis reveals that alpha values of Reliance Pharma Fund, Franklin FMCG Fund, Tata Life Sciences and Tech Fund and DSP Blackrock Technology.com Fund were positive indicating thereby superior performance of these funds relative to S&P CXN 500. Other funds have posted a negative alpha values in comparison with the benchmark. Negative alphas suggest that the fund manager lack micro forecasting abilities i.e., ability to forecast the future prices in time so as to make appropriate investment strategy. A close look at the alpha estimates also reflects a wide deviation among them. These deviations exhibit, inter alia, the varied equity selectivity abilities of fund managers for different schemes. The alpha values were tested for their statistical significance at 5% and 1% level of significance and the results reported that none of the schemes have statistically significant alpha estimates. Downside and relative risk adjusted performance: The results of Downside and relative risk adjusted performance measures are exhibited in Table 4. Sortino ratio uses a downside risk as a proxy for risk and the target return as the hurdle rate as a proxy for return. Reliance Pharma Fund, Tata Life Sciences and Tech Fund and DSP Blackrock Technology.com Fund have earned excess return to downside risk, of which Reliance Pharma Fund has posted highest Sortino ratio. Other schemes have recorded Sortino measure ranging between 0.0163 and 0.8493. Again, SBI MSU Infotech Fund and SBI MSU Pharma Fund have recorded negative Sortino ratio.

The adjusted Sharpe ratio incorporates VaR instead of standard deviation as a proxy for risk. Value at risk measures the potential loss in value of a portfolio over a defined period for a given confidence level. As seen in the table, SBI MSU Infotech Fund and SBI MSU Pharma Fund has recorded positive adjusted Sharpe ratio. It is on account of their negative excess return (active return). Most of the schemes failed to capture the potential loss in value of the traded portfolio of the fund from adverse market movements.

Information ratio measures the benchmark relative return gained for taking on benchmark relative risk. It measures the active investment manager's skill. Surprisingly, all the funds have recorded negative information ratio except Reliance Pharma Fund (0.0022). The negative information ratio indicates that a fund underperformed its benchmark in generating incremental return given the amount of benchmark relative risk taken to earn it. It also signals that fund managers failed to depart from benchmark on account of lack of special information, which otherwise would have resulted in value addition to the benchmark return.

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32

Table 4: Results of Downside and relative risk adjusted performance measures

CONCLUSIONIn this paper, the risk adjusted measures have been employed to assess the

performance of twelve select sector funds in India. It is interesting to note that using time tested models, Reliance Pharma Fund and Franklin FMCG Fund has posted superior performance, while DSP Blackrock Technology.com Fund has shown mixed results in terms Sharpe and Treynor rankings. While performance measured in terms of downside and relative risk criteria reveal that almost all the schemes posted poor performance. Using time tested models alone cannot give a fair view of the fund manager's competence skills in delivering abnormal returns; downside risk measures could definitely augment the performance evaluation framework of managed portfolios. The findings reported in the study have wider ramifications in articulating investment strategies and the capital market hypothesis.

References

Allen, D.E., and Tan, M.L. (1999), A Test of the Persistence in the Performance of UK Mutual Funds. Journal of Business Finance and Accounting, 26(5 – 6), 559–593.

Bodie, Zvi, Alex Kane, Alan J. Marcus, and Pitabas Mohanty (2006), Investments, 4 Ed., Tata McGraw-Hill, New Delhi.

Mr. Zabiulla

Fund Name Sortino Ratio Adjusted Sharpe Ratio Information Ratio

P1 0.5522 -0.0888 -0.0224

P2 1.198 -0.0188 0.0022

P3 -0.4201 0.0065 -0.0483

P4 0.0163 -0.0003 -0.035

F1 0.7009 -0.0106 -0.0225

F2 0.8493 -0.013 -0.0163

F3 0.6616 -0.0102 -0.0182

F4 0.5273 -0.0079 -0.0209

T1 0.9148 -0.0135 -0.0098

T2 0.3051 -0.0041 -0.0208

T3 1.0064 -0.0148 -0.0009

T4 -0.3101 0.0045 -0.0483

S&P CXN 500 0.925 -0.1425

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Mr. Zabiulla 33

Bruce J. Feibel (2003), Investment Performance Measurement, John Wiley and Sons, USA.

Cumby, Robert E. and Glen, Jack D. (1990), Evaluating the Performance of International Mutual Funds. Journal of Finance, 45(2), 497-521.

Daniel, Kent., Grinblatt., Mark., Titman, Sheridan and Wermers, Russ (1997), Measuring Mutual Fund Performance with Characteristic-Based Benchmarks. The Journal of Finance, 52(3), 1035-1058.

Deb, Soumya Guha, Banerjee, Ashok and Chakrabarti, B.B. (2007), Market Timing and Stock Selection Ability of Mutual Funds in India: An Empirical Investigation. Vikapa, 32(2), 39 – 51.

Elton, Edwin J., Gruber, Martin J. and Blake, Christopher R. (1996), The Persistence of Risk Adjusted Mutual Fund Performance. Journal of Business, 2, 133 – 157.

Fama, Eugene F. (1972), Components of Investment Performance. Journal of Finance, 27(3), 551-567.

Gupta, Manak C. (1974), The Mutual Fund Industry and its Comparative Performance. Journal of Finance and Quantitative Analysis, 6, 894.

Jayadev, M. (1996), Mutual Fund Performance: An Analysis of Monthly Returns. Finance India, 10(1), 73 – 84.

Jensen, Michael C. (1968), The Performance of Mutual Funds in the Period 1945-1964. Journal of Finance, 23, 389- 416.

Kader, Abdel M. and Kuang, Y. (2007), Risk adjusted performance, selectivity, timing ability and performance persistence of Hong Kong mutual funds. Journal of Asia Pacific Business, 8(2), 25 – 58.

Lehmann, Bruce N. and Modest, David M. (1987), Mutual Fund Performance Evaluation: A Comparison of Benchmarks and Benchmark Comparisons. The Journal of Finance, 42(2), 233-265.

Mark Mobius (2007), Mutual Funds: An introduction to the core concepts, John Wiley and Sons.

Muthappan, P.K., and Damodharan, E. (2006), Risk – Adjusted Performance Evaluation of Indian Mutual Fund Schemes. Finance India, 10(3), 965-983.

Noulas, Athanasios G., Papanastasiou, John A., and Lazaridis, John (2005), Performance of Mutual Funds. Managerial Finance, 31(2), 101-112.

Sehgal, Sanjay and Jhanwar, Manoy (2008), On Stock Selection Skills and Market Timing Abilities of Mutual Fund Managers in India. International Research Journal of Finance and Economics, 15, 307 – 317.

Sharpe, William F. (1966), Mutual Fund Performance. Journal of Business, 39, 119-138.

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Singla, S.K., and Singh, Pritpal (2000), Evaluation of Performance of Mutual Funds Using Risk – Return Relationship Model. Indian Journal of Commerce, October.

Thanou, Eleni (2008), Mutual Fund Evaluation during up and down market conditions: The case of Greek Equity Mutual Funds. International Research Journal of Finance and Economics, 3, 84- 93.

Treynor, Jack L. (1965), How to Rate Management of Investment Funds. Harvard Business Review, 43, 63-75.

Treynor, Jack L., and Mazuy, Kay K. (1966), Can Mutual Funds Outguess the Markets. Harvard Business Review, 44, 131-136.

Tripathy, N.P. (2006), Market Timing Abilities and Mutual Fund Performance – An Empirical Investigation into Equity Linked Saving Schemes. Vilakshan – XIMB Journal of Management, 27 – 38.

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Prof. G. V. Jagapathi Rao 35

CAPACITY UTILIZATION IN SMALL SCALE INDUSTRIAL UNITSProf. G. V. Jagapathi Rao1

1

Sir C. R. Reddy College, Eluru - 534 007. Handset: 99890 72712. E-mail: [email protected]. G. V. Jagapathi Rao, Director, Department of PG Management Studies, MBA Programme,

ABSTRACTIn the era of fast changing developments, with the global economy linkages,

small scale industrial units' faces several challenges as well as opportunities. The active role played by the small scale industries in the process of development of modern economies is widely accepted. All indicators reveal that small scale units are yet to develop. The study selected West Godavari District of Andhra Pradesh, to study the capacity utilization level in small scale industries. A sample of 135 Small Scale Industrial Units was selected from among the 3375 registered industrial units with the District Industries Center. The study used both primary and secondary data. Primary data was collected through a questionnaire. Secondary data was collected from books and journals. The study considered the location of the units, capacity utilization, reasons and measures for capacity under utilization of the units. The study identified that there was no relationship between the location of units and the extent of capacity utilization.

INTRODUCTION Small Scale Industrial (SSI) units have been considered as a powerful

instrument for achieving “Accelerated Industrial Growth” and creating 'Productive Employment Opportunities' in an economy. SSI units accounts for 40% of gross value of output in the manufacturing sector, and provide employment to over 31.25 million people. The production growth rate was 13 percent in 2007-08. The employment growth rate was 4.6 percent. The export figure touched $ 168.7 billion during 2008-09. In India SSI units produces more than 750 products of all types. As per the revised estimates for the SSI sector based on Third All India Census, the number of SSI units at the end of 2006-07 in the country was 12.84 million (2.03 million registered and 10.81 million unregistered).

EARLIER STUDIESVijaya (1981) studied twenty three SSI units of an industrial estate in Warangal

town of Andhra Pradesh, and the study revealed that there was general under utilization of production capacity in different units studied and only two units utilized their maximum capacities. The study found deficiency of demand, scarcity of raw material, lack of finance during the initial stages of development, competition from large units and, technical reasons as causes for underutilization of capacity. Mohanthy (1982) surveyed 171 small-scale units in Cuttack district of Orissa State for a period of 5 years from 1976-77 to 1980-81 and found that the capacity utilization in different sizes of industrial units did not depend on the size of the unit. Ramayya and Papayya (1985) studied 47 units of Warangal district of Andhra Pradesh and found that none of the mills in Warangal district were utilizing their installed capacity even for eight hours a day. The average utilization was only 62.5% of installed capacity.

PRERANA March 2010

Prof. G. V. Jagapathi Rao36

KrishnaKumar and Ramamurthi (1990) covered 85 units situated in and around the twin cities of Hyderabad and Secunderabad. The study revealed that out of 85 units, 58.82% were not in a position to utilize their capacity beyond 50 percent and identified inadequate market demand, lack of working capital, inadequate and irregular supply of raw material and power failure, inadequate work force, etc., as the reasons. A case study was undertaken by Jaychandran, NarendraKumar and Himachalam, in 1994, covering 39 viable sample units of Tirupati Industrial Estate. The study showed that 50% of the SSI units were utilizing 25% to 50% of capacity and the remaining 50% were utilizing 50% to 75%. Conspicuously, not even a single unit was utilizing more than 75% of plant capacity. Subba Rao (1998) made an attempt on the organization and problems of SSI units in Srikakulam, Vizayanagaram and Visakhapatnam Districts of Andhra Pradesh. He found that 45%-50%installed capacity was idle in many industrial units.

NEED FOR THE STUDY SSI units were particularly suited for better utilization of local resources and for

the achievement of local low capital investment. In view of the vital role being played by the small scale sector, in generating employment, developing rural economy, reducing regional imbalances and in earring more foreign exchange, these units were selected for the study. With respect to West Godavari District of Andhra Pradesh, no studies were conducted on capacity utilization in SSI units. Hence we selected an agriculturally well developed West Godavari District to study the capacity utilization in SSI units.

SCOPE OF THE STUDYThe study was restricted to West Godavari District of Andhra Pradesh. It was

also restricted to the units which were registered with District Industries Centre, Eluru only. The following two conditions namely: i) The units must be having existence of Five years and above. ii) The units must be having above Rs.25 lakh but not exceeding five crore in plant and machinery, were considered as the basis for selecting the SSI units.

OBJECTIVES The study aimed to achieve the following objectives

•To study the extent of capacity utilization among the sample units.

•To identify the causes for under utilization of capacity

•To analyze the relationship between the nature of the unit, location and capacity utilization.

METHODOLOGY The present study used both primary and secondary data. The primary data were

collected through a questionnaire. The researcher personally visited all the sample units and collected data from the entrepreneurs' of West Godavari District of Andhra Pradesh. While collecting data, the researcher visited District Industries Centre (DIC) of West Godavari District. Secondary data was collected from books, journals,

PRERANA March 2010


annual reports of SIDO, NISET Hyderabad and District Industries Centre of West Godavari District.Sampling Plan: A sample of 135 Small Industrial Units was selected among the three thousand three hundred and seventy five (3375) registered Industrial Units with DIC of West Godavari District (as on 31-03-2009). In the selection of the sample units a two stage stratified simple random sampling technique was adopted. In the first step the industries were grouped under nine segments on the basis of the nature of the product. In the second step 4 per cent of the units were selected from the universe with five years existence for intensive study.

T ype o f Industry R egistered U nits S am ple U nits

C hem ical 752 30

B uild ing M aterials 373 15

R ubber and P lastic 220 09

Food and Food P rocessing 255 10

E ngineering 901 36

M etallic 303 12

A gro based 150 06

T ex tile based 147 06

P aper and W ood 274 11

T otal 3375 135

Period of the Study: A field survey was conducted from April 2009 to July 2009 to collect the first hand data.

ANALYSIS AND DISCUSSIONConsidering the growing population and the rising unemployment, India is

in need of SSI sector for speedy growth of the economy. We devoted this study to identify the various factors that differentiated installed capacity and the extent of capacity utilization in SSI units. Location of the Units: Location decision has to be taken in case of a new business as well as for setting up a branch of an existing business. A well-located unit will have higher capacity utilization than a badly located unit. The SSI units may be located either in approved place or industrial estate or in industrial area. The estate or area based units have locational advantages.

Table 1: Location of the unitsLocation of the Units No. of enterprises Percentage to total

Industrial estate 31 22.96

Industrial Area 32 23.70

Approved place 72 53.34

Total 135 100.00

Table 1 analyses the location of the unit. Nearly 46 per cent of units were

established in industrial estates and industrial areas and the remaining 54 per cent were established in some other approved areas. 72 out of the 135 entrepreneurs

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worked hard for establishment of their plants as they started in other than industrial estates and areas allotted by Government.Capacity Utilization: The Productivity of an enterprise is based on the utilization of their production capacity. Non-utilization of the production capacity results in an increase in the cost of production per unit. If the necessary raw materials are available, there is a maximum utilization of machinery and labor resulting in higher production. Every increase in production reduces the average cost per unit and the marginal cost is also considerably lower. An entrepreneur has to plan in detail so that the bottlenecks are cleared to reduce overhead cost. Thus the aim of the entrepreneur should always be to utilize production capacity fully. Hence we made an attempt to collect the data regarding the utilization of units considered for the study and the results are presented in table 2.

Table 2: Capacity utilization in sample SSI units

Capacity of the Units Number of enterprises Percentage to total

Below 25% 5 3.70

25-50% 24 17.78

50-75% 44 32.59

75-100% 62 45.93

Total 135 100.00

Table 2 reveals that 62 units constituting 45.93 percent (62 out of 135) were

utilizing in the range of 75-100 percent of their installed capacity. 44 units constituting 32.59 percent were utilizing in the range of 50-75 percent, while 24 units constituting 17.78 percent were utilizing in the range of 25-50 percent. Only 5 units constituting 3.70 per cent (5 out of 135) were utilizing below 25 per cent installed capacity.Line of Activity: Line of activity in this study is classified into five categories as manufacturing, processing, assembling, trading and services. Manufacturing units include all types of industries in the study. Other than paper and paper products remaining all other types of industries are included in processing sector. Trading includes only food and food processing industries. Some of the engineering units include services and assembling units. Service sector includes not only engineering units but also agro based industries. We made an attempt to explain the relation between line of activity and type of industry and the results are presented in the following tables.

Table 3 explains that 65.93 per cent of total 135 enterprises were established in manufacturing sector whereas only 22.22 per cent (30 units out of 135 firms) were established in processing sector. Nearly 35 per cent of the total 135 units i.e. 46 units were non manufacturing units.

Table 3 present that, 90 per cent of SSI units manufacturing chemical and chemical products (i.e. 8 units out of 9 units) were manufacturing units. Of the 15 building material units covered in the study 73.33 per cent of them (11 units) were handling manufacturing activities and rest of them were in processing sector. 17 entrepreneurs (47.22 per cent) of the total 36 in the food and food processing units

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were in the processing sector whereas 83.33 per cent (10 out of 12units) of metallic production units were in manufacturing sector. The same trend was also observed in textile products as 10 out of 11 units were in manufacturing sector.

Table 3: Industry wise line of activity

Type of

Industry

Manufacturing Processing Trading Services Assembling Total

Chemical

and

Chemical

Products

8 1 0 0 0 9

Building

material 11 4 0 0 0 15

Rubber and

Plastic

Products

4 2 0 0 0 6

Food and

Food

Processing 10 17 9 0 0 36

Engineering

4 2 0 2 2 10

Metallic

Products 10 2 0 0 0 12

Agro based

Products 26 1 0 3 0 30

Textile

Products 10 1 0 0 0 11

Paper and

Wood

Products 6 0 0 0 0 6

Total 89/(65.93) 30/(22.22) 9/(6.67) 5/(3.7) 2/(1.48) 135/(100)

Installed capacity by line of activity: It is important to study in which line of business activity the utilization of production capacity is remarkable and that information is presented in table 4.

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Table 4: Capacity utilization by line of activity

Capacity

of the

units

Manufacturing Processing Trading Services Assembling Total

2 3 0 0 0 5 Below

25% (1.48) (2.22) (0) (0) (0) (3.7)

13 11 0 0 0 24 25-50%

(9.63) (8.15) (0) (0) (0) (17.78)

30 7 4 2 1 44 50-75%

(22.22) (5.19) (2.96) (1.48) (0.74) (32.59)

44 9 5 3 1 62 75-100%

(32.59) (6.67) (3.7) (2.22) (0.74) (45.93)

89 30 9 5 2 135 Total

(65.93) (22.22) (6.67) (3.7) (1.48) (100.00)

Table 4 reveals that 49 per cent (44 out of 89) manufacturing units were utilizing more than 75 per cent of the installed capacity but it was 45.9 per cent i.e. 62 units out of 135 which have been utilizing more than 75 per cent of their production capacity. Nearly 83 per cent of manufacturing units under study i.e. 74 out of 89 enterprises were utilizing more than 50 per cent of their production capacity but it was only 78 per cent ( 106 out of 135) in total units considered for the study. All trading and service units were utilizing more than 50 per cent of their production capacity and 50 per cent of processing units were utilizing only 50 per cent of their production capacity.Reasons for Under Utilization: Under utilization of installed capacity is a major bottleneck in management of any organization. The installed capacity of any concern is decided by forecasting the future demand of the product in the market. There are so many reasons which influence the under utilization of installed capacity. The reasons differ from enterprise to enterprise and from entrepreneur to entrepreneur. They include scarcity of raw material, shortage of skilled labor, limited marketing facilities, irregular supply of power and competition prevailing in the market etc. Table 5 brings to lime light the reasons for under utilization of the capacity as perceived by the entrepreneurs.

As per table 5 heavy competition was the first reason for under utilization of the installed capacity with 333 weightage score and it was accepted by 63

stentrepreneurs as their first problem (1 rank), 53 entrepreneurs as their secondary nd rdproblem (2 rank) and 38 entrepreneurs as third rated (3 rank) problem for them.

Due to lack of marketing facilities the entrepreneurs were not interested to utilize the total installed capacity of their production plant. Lack of marketing facilities was

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stsecond major reason for under utilization of installed capacity and it was opted 1 nd rdrank by 33 entrepreneurs, 2 rank by 31 entrepreneurs and 3 rank by 24

entrepreneurs. In this analysis also the shortage of skilled labor got the least place with 48 weightage points.

Table 5: Reasons for under utilization of the installed capacity

Reasons for under

utilization

1st

Rank points

2nd

Rank points

3rd

Rank points

Total

points Rank

Shortage of raw

material 12 36 5 10 21 21 67 5

Shortage of skilled

labor 2 6 11 22 20 20 48 6

Shortage of finance 13 39 16 32 19 19 90 4

Lack of marketing

facilities 33 99 31 62 13 13 174 2

Lack of power 12 36 19 38 24 24 98 3

Competition 63 189 53 106 38 38 333 1

Total 135 405 135 270 135 135 810

REMEDIAL MEASURES 1. Due to severe competition from the large-scale units, the survival of the SSI

units is a big problem. Inadequate power supply is the major reason for under utilization of capacity. When compared with large-scale units, SSI units cannot afford to invest on power generation. The Government hence should give higher preference to the SSI units and ensure that power is supplied 24 hours throughout the year.

2. Marketing is a big problem to the SSI units (rank 2 in factors for under utilization of capacity) and marketing has now become highly complex and scientific operation. Export promotion and marketing development council may be set up by the government exclusively for strengthening the SSI units on export front.

3. Because of the shortage of finance, the SSI units have been utilizing less than 50% installed capacity. The banks and financial institutions should follow uniform norms of lending and liberal procedures with regard to security, so as to avoid delay in sanction and disbursement of loan amounts to small scale units.

4. SSI units should realize the necessity of the productivity and they should employ latest techniques of production and promotional activities, so as to improve the quality and increase the market share of the products.

5. The District Industries Centres should be restructured to meet the requirements of present SSI sector. They should conduct Training

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Programmes for both entrepreneurs and workers in the recent technological advances and in promoting their products.

6. The Government should establish a special task force specially to diagnose the symptoms of sickness at district level consisting of 3 or 4 technically and professionally qualified people for continuous monitoring of the poor performance of small industrial units.

CONCLUSION Under utilization of capacity created in a business organization is most

undesirable. It brings disadvantages to all. Therefore, the control of it becomes very much necessary. It can be controlled both at the firm level as well as the industry level. The firm level measures includes actions taken by the entrepreneur himself while at the industry level the external force, namely, the government has to set right the imbalances.

Because of WTO agreement many countries like China, South Korea and Malaysia are entering into India with their products. SSI units are unable to face competition from the product of these countries. Restrictions may be relaxed on SSI units to enable them withstand in the market.

Due to several reasons namely shortage of raw materials, finance and skilled labor, lack of marketing facilities and power and intense competition from the domestic giants and international brands, SSI units have been utilizing less than 50% capacity. The survival of the small enterprises largely depends on improvement in the quantity of output. In the era of fast changing developments, with the global economy linkages, the small enterprises need to adapt change if they have to find a place in the competitive environment.

A change should be brought about in our education system, as the system is more oriented towards making students as employees than making them entrepreneurs. Hence courses related to the development of entrepreneurial skills should be incorporated into the system to enable the aspiring students gain potential insight in to the process of becoming successful entrepreneurs.

References

Bedbati Mohanthy (1990), An Analysis of Working of SSI's in Cuttak District of Orissa, Journal of Indian Economy, 6(3), 63-69.

Bhavani, J.A. (2002), Small Scale Units in the Era of Globalization Problems and Prospects. Economic and Political Weekly, 37(52), 5213-5218.

Gangadhara Rao, N. (1986), Entrepreneurship and the Growth of Enterprises in Industrial Estates, Deep & Deep Publishers, New Delhi, 51-55.

Gupta, C.B. and Khanna, S.S. (2001), Entrepreneurship and Small Business Management, Sultanchand Publications, 1-23.

Jayachandran, Narendra Kumar and Himachalam (1999), Capacity Utilization in Small Industry. SEDME, 21(1), 45-49.

Krishna Kumar and Ramamurthi (1990), Entrepreneurial Success: An Empirical Study in Hyderabad and Secunderabad Cities. Journal of Small Business Management, 28(3), 36-39.

Nagayya, D. (2004), Export Performance and Exim Policy. Geetam Journal of Management, 2, 1-34.

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Ramayya and Papayya (1985), Installed Capacity in SSI Units - A study of Warangal District. Small Business Management, 7, 307-310.

Srinivas Subba Rao, P. (2001), Organization and Problems of Small Scale Units in Vizayanagaram, Srikakulam and Visakhapatnam Districts of Andhra Pradesh. Finance India, 15(1), 207-211.

Union Ministry of Finance, Economic Division (2008), Economic survey 2007-08, New Delhi.

Upaulthus Selvaraj, M. (1994), Financial Incentives and Small Industrial Units in Madurai District. Finance India, 8(4), 989-996.

Vijaya, N. (1995), Utilization of Production Capacity in an Industrial Estate - A Study. SEDME, 12(3), 25-28.

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44

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Dr. N. Bharathi and Dr. G. Ravindran 45

OPERATIONAL EFFICIENCY OF MERGED BANKS IN INDIA AFTER GLOBALIZATION PERIOD - FACTOR ANALYSIS APPROACH

Dr. N. Bharathi Dr. G. Ravindran1 2 and

1

New Delhi. Handset: 09971419099. E-mail: [email protected] Dr. G. Ravindran, Associate Professor, Karunya School of Management, Karunya University,

Coimbatore-641 114. Handset: 98422 96728. E-Mail: [email protected]

Dr. N. Bharathi, Assistant Professor, Delhi College of Arts and Commerce (Delhi University),

ABSTRACTThe Indian business environment has altered radically since 1991 with the

changes in the economic policies and introduction of new institutional mechanisms. It has been observed that such changes in the business environment are emerging out of the effects and impact of liberalization. Globalization, Information Technology and financial awareness have contributed a fuel to dynamism in the Indian economy (It is expected that in the new atmosphere M&As will play a more significant role in business). This paper discusses the operational efficiency of merged banks in India after the globalization period. It is based on a sample of nine merged banks and banks drawn from PROWESS database developed by CMIE. The study used factor analysis for grouping the ratios in to relevant factors. The results revealed the areas of improvement for better productivity and performance for the merged banks.

INTRODUCTIONEconomic environment in India has been made more favorable for the growth

of the various business enterprises along with competitive strength. Such growth, opportunities and challenges come in various shapes and size in the dynamic global market environment and require innovative approaches. In order to meet the needs and requirements of financial stake holders and other players in the market, it is necessary to reorient the strategies adopted by the firms. These strategies considered opportunities for growth both internally and externally.

The sweeping wave of economic reforms and liberalization has transformed the business scenario all over the world. The most significant development has been the integration of national economies with market oriented globalized economy, resulting in shrinking of the size of the market. And it becomes externally difficult for all the companies to survive, unless they cut cost and maintain price. In such a situation Merger and Acquisitions (M&A) which facilitates elimination of duplication of the administrative and marketing expenses is inevitable. To fund this M&A activities and also to continue the business activities on a large scale, the traditional customers of a banker turn away increasingly from traditional loan to new alternative services. As a result of changes in the expectations of the corporate customers, banks are constrained to rethink their business and devise new strategies to face the challenges before them. Moreover, foreign banks have been permitted to bring their share up to 74% in the Indian banks. This adds more oil to the spreading fire. The foreign banks would consider M&As as a quick method of inorganic growth. Therefore, Indian Banks are also forced to think on the same line to face the competitions effectively.

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Dr. N. Bharathi and Dr. G. Ravindran46

M&As in the service sector have brought a new style of doing business. The process of M&As is considered essential to penetrate both the domestic and foreign markets to create new opportunities, build a strong marketing base to be at the front end service provider for increased customer comfort. These collectively show the efficiency of productivity, holds the lay for competitive advantage and survival for the banking firms. This also ensures better utilization of available resources. This analysis is also much useful to the stake holders of the bank.

WAVE OF MERGER AND ACQUISITIONDuring post independence period, it was considered necessary to reduce

inequalities between different regions and groups. At that time there were only a few banks and bankers who enjoyed good reputation and some other banks struggled a lot to survive as it were operated under various types of tensions and pressures. As it was extremely difficult to mobilize adequate resources for development to remove inequality, a sound financial system, especially the well functioned banking system, was inevitable along with better service to customers and through them, to the nation. Hence, the then government of India under the stewardship of late Smt. Indira Gandhi decided to nationalize some of the important banks in the country. Accordingly during July 1969, 14 major banks which held deposits exceeding Rs.50 crores and in 1980, 6 more banks which held deposits exceeding Rs.200 crores were nationalized. This laid the foundation for merger activities.

The nationalized banks are under the control of Reserve Bank of India, with the assurance of guarantee to safety and security. Through nationalization, the government aimed to remove control by, provision of adequate credit for agriculture, small scale industries and exports, encouragement of new classes of entrepreneur and giving a professional bent to the bank management. These nationalized banks, by opening branches in the villages, offer not only financial assistance but also provide advice and guidance on several vital problems concerning the rural folk and the economically backward sections in the villages derive unique benefits.

RECENT TRENDSIn the present day environment, banking and banking products are getting more

and more commodities. All banks, irrespective of the fact, whether they are nationalized, private or foreign have developed a customer centric approach. Each bank is optimizing the cross selling opportunities by targeting existing relationship and ensuring customer loyalty. The target is the entire customer base, therefore, it becomes imperative for banks to be able to offer all products needed by the customers at competitive prices. This is where the technology and systems used by the banks become so important. Even the marketing strategy adopted by the banks is changing from traditional banking to a one stop of varied financial services based on technological innovations.

FINANCIAL SECTOR REFORMSIn mid 1991, the country faced acute financial crisis leading to the unveiling of

new economic policy by the then Finance Minister Dr. ManMohan Singh. It was a welcoming change in the world scenario as the country was passing through an

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unprecedented economic crisis which resulted in strain on balance of payment, galloping inflation, frustrating position of foreign exchange reserves and other macroeconomic imbalance. The New Economic Policy was based on a combination of measures aimed at economic stabilization and structural reforms to overcome the shortcomings of socialistic patterns of economy adopted by India for the last 40 years. This policy changed totally the regulated environment into a market driven competitive system.

During this regime a committee set up under the chairmanship of Mr. Narasimhan, to examine all aspects of the structure, organization, function and the procedure of the financial sector, recommended vast changes in the financial system based on international norms to cater to the needs of the sector and to strengthen the system. One of the recommendations of the committee was revamping the structure of the banking system. Accordingly the banking structure shall be as under:

1. 3 or 4 large banks which could become international in character;2. 8 to 10 banks with a network of branches throughout the country engaged in

universal banking;3. Local banks whose operations would be generally confined to a specific

region; and4. Rural banks (including Regional Rural Banks) whose operations would be

confined to the rural areas and whose business predominantly covers financing of agriculture and allied activities.

The financial sector reforms that were brought into force in 1991 have greatly changed the face of Indian banking. Though the banking system in India has done fairly well in adjusting to the new market dynamics; it could not be denied that no greater challenges lie ahead. In the past, mergers were initiated by the Reserve bank of India and the government to protect the interest of depositors of weak banks by nationalization process. But now, market led mergers have gained momentum as a result of competitive pressure.

thApart from this scenario, India Vision 2020 envisages bringing India to the 4 rank among 207 countries in terms of the Gross Domestic Product and also moving the country from low income nations to an upper middle income country. In order to achieve this, it is necessary to have an annual growth in the GDP of 8.5% to 9% over the next 10 years with strong, well functioning financial sector and banking for emerging economy. It is required that the financial sector and banking industry must grow with its economy so that it must be able to meet the increasingly sophisticated demands that are placed on it. This would call for considerable investments in the infrastructure and meeting the funding requirements of high magnitudes which would be a challenge to the banking and financial system.

OBJECTIVES Factor analysis has been performed to simplify and group the variables on

priority basis called 'Factor' and cluster the variables in the factor extracted.1. To analyze and compare the operational performance of merged banks

before and after merger.2. To study the factors that influence the operational performance of pre and

post merger period.

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48

REVIEW OF LITERATURESanjay Kumar (1998) in his study attempted to explore the relationship between

bank profitability and its determinants. The study used a model with the most critical variables / ratios and used multi-discriminant analysis for the precise analysis and measurement of profitability. The study revealed that only four most discriminating variables out of 14 variables are the key discriminators which can be used in profitability analysis of banks, measuring their financial health and prudent selection of banks for investment, lending or deposits.

Devivedi (1999) examined Merger and Acquisition as a Tool for Business to Improve the Potentialities. His study revealed that M&A can be used to improve the financial position and increase the profitability if it is carried out systematically and professionally by giving due attention to the HR issues.

Laxman (2004) in his study has made an attempt to asses the impact of merger on financial performance in terms of CAR, NPAs, Interest income, Interest Expenditure, Operating expenditure, Provisions and Contingencies, Spread, Gross Profit, Net profit as a percentage to total assets before and after merger. The study concluded that there was a decreasing trend in spreads and increasing tendency in NPAs of the target bank. But these indicators more or less remained the same when compared to average indicators of the Private Sector Banks during the period under study.

Selvam, Vanitha and Babu (2005) in their study analyzed and compared the financial performance of merged banks before and after merger in terms of growth of total asset, profits, revenue, investment and deposits. The sample units of the study were State Bank of India, Oriented Bank of Commerce, Centurion Bank, Bank of Baroda, Union Bank of India, HDFC Bank and ICICI bank. The study revealed that ICICI Bank achieved the higher growth rate in all respects except deposit. The study concluded that the banks may develop opportunity measure to gauge the success and also to improve their post merger performance.

Debasish (2005) in her study analyzed the conceptual overview on the series of recent merger and acquisitions. She suggested that the removal of entry barriers saw emergence of private sector banks (both old and new) in India and how market forces were compelling these to conglomerate and consolidate their competitive abilities.

Sivaram (2006) in his article discussed the scenario of M&A activities in India. He concluded that the banking sector has gained momentum in merger and acquisition activities and the factors such as globalization, technological changes regulatory, flexibility have triggered the M&As in the Indian banking sector.

Bhatnagar (2006) in her study discussed the India Banking Association document “Banking Industry Vision 2010”. It is visualized that the merger in India either between the public sector banks, or public sector and private sector banks is the logical thing to happen in the competitive race. The study concluded that M&A route is providing a quick step to acquire competitive size, an opportunity to share markets and reduce the cost of product development and delivery.

Mugarjee (2007) in his study analyzed the need for the attention of professionals in finance, law, strategy etc. The study revealed the danger areas and pit falls of the integration process and due diligence.

Dr. N. Bharathi and Dr. G. Ravindran

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METHODOLOGYSources of Data: The study was based on secondary data. The data were collected from the official directory and data base of Centre for Monitoring Indian Economy (CMIE) namely PROWESS. The published annual reports of the selected banks related websites, magazines and journals on finance have also been used as data source.Period of Study: The study covers a period of 10 years as five years before the date of merger and five years after the date of merger including the year of merger. So it covers a period from 1995-2006.Sampling Design: The study is related to the banking industry. The merger process in banking industry started in 1950s-merger of private banks to avoid loss making by them. During late 1960's the government of India intended nationalization of banks by RBI.

In continuation of this, M&A took place in the form of public sector banks acquiring private banks/private sector bank with another private sector bank etc. After the financial sector reforms in the year 1991 the banking sector especially the public sector banks were forced to improve their competitiveness. So the banks merged after the period 1991 were taken into consideration as it needs special attention to see to what extend these banks attained success in their merged process. So such banks were selected from 1995 onwards on the basis of the availability of data for a period of 5 years before the merger and five years from the merged period. The list of such banks is presented in Table 1.

Table 1: Sample Banks

S.No Merging bank Merged bank Year

1 Kasinath Seth Bank State Bank of India (SBI) 1995

2 Punjab Co-operative Bank Oriental Bank of Commerce (OBC) 1997

3 Bareilly Co-operation Bank Bank Of Baroda (BOB) 1999

4 Sikkim Bank Union Bank of India (UBI) 1999

5 Times Bank Housing Development Financial

Corporation Bank (HDFC) 2000

6 Bank of Madura Industrial Credit Investment

Corporation of India (ICICI Bank) 2001

7 Nedungadi Bank Punjab National Bank (PNB) 2003

8 Global Trust Bank Oriental Bank of Commerce 2004

9 IDBI Bank Industrial Development Bank of India

(IDBI) 2005

Source: IBA Bulletin

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FRAMEWORK OF ANALYSISThe secondary data were collected from different sources. Statistical tools were

applied to analyze 11different operational ratios. Calculations were made to test the operational performance of the merged bank for a period of 5 years before and five years after the merged period. The operational ratios were calculated to test the operational efficiency of the merged banks for the study period. The study used factor analysis for grouping the ratios in to relevant factors.

OPERATIONAL EFFICIENCYThis research explains operational performance of the merged banks with the

help of 11 ratios namely 1. Price earning ratio (X )1

2. Ratio of price to book value per share (X )2

3. Price to cash EPS (X )3

4. Market capital to share capital (X )4

5. EV / EBIDT (X )5

6. Non performing asset to net advance (X )6

7. Business per employee (X )7

8. Profit per employee (X )8

9. Return on asset (X )9

10. Return on equity (X )10

11. Capital adequacy ratio (X )11

ANALYSIS AND DISCUSSION Factor analysis is a multivariate statistical technique used to condense and

simplify the set of large number of variables to smaller number of variables called factors. This technique is helpful to identify the underlying factors that determine the relationship between the observed variables and provides an empirical classification scheme of clustering of statements into groups called factors.Pre merger period: Using all the eleven operational ratios namely X , 1

X ,…………., X , factor analysis was performed and the results are presented in the 2 11

following tables.Table 2 gives the rotated factor loadings, communalities, eigen values and the

percentage of variance explained by the factors. Out of the 11 operational ratios, 3 factors have been extracted and these three factors put together explain the total variance of these ratios to the extent of 81.714 %.Cluster of operational ratios: In order to reduce the number of factors and enhance the interpretability, the factors were rotated. The rotation increases the quality of interpretation of the factors. There are several methods of the initial factor matrix to attain simple structure of the data. The varimax rotation is one such method used here to obtain better result for interpretation and the results are given in table 3.

Three factors were identified as it accounted the maximum percentage variance. The 6 operational ratios X , X , X , X , X and X were grouped together as factor I 1 3 4 5 6 10

and accounts for 38.12 % of the total variance. The 4 operational ratios X , X , X and 2 7 8

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X constituted the factor II and accounted for 27.305 % of the total variance. 11

Operational ratio X constituted the factor III and accounted for 16.274 % of the total 9

variance. Thus, the factor analysis condensed and simplified the 11 operational ratios and grouped them into 3 factors explaining 81.714 % of the variability of all the 11 ratios. Thus, it was concluded that the factor analysis based on the strength of inter-correlation between the operational ratios during pre merger period has extracted three factors explaining 81.714% of the variability.Post merger period: Using all the eleven operational ratios namely X , X ,…., X , 1 2 11

factor analysis was performed and the results are presented in table 4.

Table 2: Rotated factor loadings - pre merger period

Factors Ratios

1 2 3 Communality

X1 0.966 0.158 -0.098 0.968

X2 -0.026 0.711 -0.533 0.790

X3 0.893 0.243 -0.097 0.866

X4 0.779 0.545 0.022 0.904

X5 0.832 0.454 -0.033 0.899

X6 0.568 -0.432 -0.494 0.753

X7 0.226 0.835 -0.010 0.748

X8 0.426 0.712 0.182 0.722

X9 -0.123 -0.113 0.947 0.925

X10 0.652 0.249 0.557 0.797

X11 0.408 0.670 -0.015 0.616

Eigen value 7.193 3.005 1.790 11.988

% of variance 38.122 27.318 16.274 81.714

Cum % variance 38.122 65.440 81.714

Source: Compiled from Annual Reports of the Banks

Table 4 gives the rotated factor loadings, communalities, eigen values and the percentage of variance explained by the factors. Out of the 11 operational ratios, 3 factors have been extracted and these three factors put together explain the total variance of these variables to the extent of 89.483 %. Cluster of operational ratios: In order to reduce the number of factors and enhance the interpretability, the factors were rotated. The study used varimax rotation and the results are presented in table 5.

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Table 3: Clustering of operational ratios into factors - pre merger period

Factor Ratios Rotated factor loadings

1-X 1 0.966

2-X 3 0.893

3-X 4 0.779

4-X 5 0.832

5-X 6 0.568

I. (38.122 % )

6-X 10 0.652

7-X 2 0.711

8-X 7 0.835

9-X 8 0.712 II. (27.318 % )

10-X 11 0.670

III. (16.274 % ) 11-X 9 0.947


Table 4: Rotated factor loadings - post merger period

FA CTO RS O perational Ratios

1 2 3 Com m unality

X 1 0.524 0.826 0.184 0.968

X 2 0.438 0.828 0.342 0.79

X 3 0.535 0.836 0.050 0.866

X 4 0.569 0.743 0.290 0.904

X 5 0.855 0.171 -0.167 0.899

X 6 -0.873 -0.325 -0.157 0.753

X 7 0.862 0.273 -0.152 0.748

X 8 -0.359 0.684 -0.575 0.722

X 9 0.779 0.315 0.508 0.925

X 10 -0.088 0.314 0.834 0.797

X 11 0.022 -0.013 -0.832 0.616

Eigen value 4.192 3.007 1.789 8.989

% of variance 36.889 31.764 20.830 89.483

Cum % variance 36.889 68.653 89.483


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Table 5: Clustering of operating ratios into factors - post merger period

Factor Ratios Rotated factor loadings

1-X5 0.855

2-X6 -0.873

3-X7 0.862 I. (36.889 %)

4-X9 0.779

5-X1 0.826

6-X2 0.828

7-X3 0.836

8-X4 0.743

II. (31.764 %)

9-X8 0.684

10-X10 0.834 III. (20.830 %)

11-X11 -0.832


Three factors were identified which accounted for the maximum percentage variance. The 4 operational ratios X , X , X and X were grouped together as factor I 5 6 7 9

and accounted for 36.889 % of the total variance. The 5 operational ratios X , X , X , 1 2 3

X and X constituted the factor II and accounted for 31.764 % of the total variance. 4 8

The 2 operational ratios X and X constituted the factor III and accounted for 20.830 10 11

% of the total variance. Thus the factor analysis condensed and simplified the11 operational ratios and grouped into 3 factors explaining 89.483 % of the variability of all the 11 operational ratios. Hence it was concluded that the operational variables were reduced and classified into 3 factors with the variability of 89.483%.

CONCLUSIONThe new economic environment of the 1990s has facilitated M&As between

banks. The present study indicated average performance of acquiring banks based on the indicators. But it could not be concluded as evidence of improvement in terms of various parameters. With supported relative information a correct position can be identified. The policy makers can use the findings of the study as a base for framing policies relating to M&As in service sector. Also it identifies the areas of improvement for better profitability and performance for the banks.

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References

Anderson, T.W. (1958), An Introduction to Multivariate Analysis, John Wiley Sons, New York.

Buck, E. C. (1972), Commercial Account Profitability Analysis: some Consideration in Developing a System. The Journal of Commercial Bank Lending, December.

Chalam, G.V, and Prasad, A. (2006), Evaluation of Financial Performance through Scaling Technique. Southern Economist, 44 (20), 7-10.

Corns, Marshall. C. (1970), Practical Cost Accounting for Banks, Bankers Publishing Company, Boston.

Devraj, (2002), Merger and Amalgamations in Banking Industry, Rajat Publications, New Delhi.

Erich A. Helfert (1992), Techniques of Financial Analysis, Jaico Publishing House, Mumbai.

Erich. A. Hilbert (2006), Techniques of Financial Analysis - A Practical Guide to Applied Managerial Finance, Jaico Publishing House, Mumbai.

Fischer, Gerald C. (1968), American Banking Structure, Columbia University Press, New York.

Ganesan, P. (2001), Determinants of Profits and Profitability of Public Sector Banks in India: A Profit Approach. Journal of Financial Management and Analysis, 14 (1), 27-37.

Greenbaum, S. I. (1967), Competition and Efficiency in the Banking System: Empirical Research and its Implications. Journal of Political Economy, 75, 461-481.

Hamasalakshmi, R. and Manickam, (2005), Financial Performance Analysis of Selected Software Companies. Finance India, Vol. 19(3), 915-935.

Heishorn, John, W. (1983), Profit Analysis for loans. Harvard Business Review, November-December.

Heron, Randall and Erik, Lie, (2002), Operating Performance and Method of Payment in Takeovers. Journal of Financial and Quantitative Analysis, 37 (1), 137-155.

James. C Van Horne, (1983), Financial Management and Policy, Prentice Hall of India, 6 Ed., New Delhi.

Kaveri, V.S. (1986), Financial Analysis of Company Merger in India, NIBM, Himalaya Publishing House, Delhi.

Kumar Darshan, (1976), Amalgamation of Companies: Concept and Implications. Chartered Accountant, 24 (2), 670.

Kumar, Nagesh, (1990), Mobility Barriers and Profitability of Multinational and Local Enterprises in Indian Manufacturing. Journal of Industrial Economics, 38(4), 449-463.

Mueleer, D. (1980), The Determinats and Effects of Mergers: An International Comparison. The Science Center Berlin, 24, 299-314.

Patrick, Gaugahm, (1994), Reading in Mergers and Acquisitions, Black Well Finance.

Pawaskar, Vardhana, (2001), Effect of Mergers and Corporate Performance in India. Vikalpa, 26(11), 19-29.

Rahman, A., and Limmack, R. J. (2004), Corporate Acquisition and the Operating Performance of Malaysian Companies. Journal of Business Finance and Accounting, 31 (3-4), 359-400.

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Reid, Samuel Richardson, (1968), Mergers, Managers, and the Economy, McGraw-Hill Book Company.

Rhoades, S.A. (1998), The Efficiency Effects of Bank Mergers: An Overview of Case Studies of Nine Mergers. Journal of Banking Finance, 22.

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Sharma, Divesh, S. and Jonathan, Ho. (2002), The Impact of Acquisitions on Operating Performance: Some Australian Evidence. Journal of Business Finance and Accounting, 29(1 and 2), 155-200.

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Shayamji Agrawal, (2000), Merger and Acquisitions of Commercial Bank in Indian Context, IBA Bulletin, 22-75.

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Subramanian, S. (1996), Evaluation of Strategies for Mergers, Amalgamation and Acquisition. The Management Accountant, November, 829-883.

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3M. Meenakshisundaram Dr. P. T. Saleendran and Dr. N. Panchanatham1 2 ,

ABSTRACTThis study examined the relation between stress and self perception among

college students. Stress experienced by college students was measured using Perceived Stress Scale and Self Perception was measured using eight sub-scales from the Neemann-Harter Self Perception Profile. The eight sub-scales included: intellectual ability, scholastic competence, appearance, social acceptance, close friendships, finding humor in one's life, and measure of global self esteem. One hundred and sixty seven participants were included for the study. It was assumed that stress would be significantly associated with self perception and gender. The results partially supported the hypotheses. Stress was negatively related with student's self perception in all domains, but the gender difference was significant for only three of the self perception measures.

INTRODUCTIONStress is seen as modern society's illness by everyone. Stress has effects on

people's behaviors, communications and efficiency. Stress is not only a factor in working places it is also a common factor in educational environments and is experienced by students. A great deal of research has examined the effects of stress on variables such as adaptational outcomes (Lazarus et al., 1985; Gadzella, 2006). The authors questioned a new theory that stress should be measured independent of psychological response variables such as appraisals or perceptions. In particular, they suggested that an individual's perception of a situation is a critical mediating variable. Further, the authors stated that self perceptions may have a role in the relation between stress and psychological well being. Thus, Lazarus et al., (1985) concluded that appraisal process (i.e. personal perceptions of the events) should not be removed in the measurement of psychological stress. This idea has been supported by Varni et al., (1994). They state that the meaning derived from the stressful event, not necessarily the event itself, may result in the perception of the event as being stressful.

Study by Sax (1997) indicated a nationwide increase in college students' stress. Academic stressors include the student's perception of the extensive knowledge base required and the perception of inadequate time to develop it (Carveth et al., 1996). Students report experiencing academic stress predictably, with the greatest sources of academic stress being found in studying for exams, taking exams and with respect to grade competition and the large amount of content to master in a small amount of time (Kohn and Frazer, 1986; Abouserie, 1994). Reactions to stressors refer to the state of physical or psychological arousal that usually results from the perception of stress (Thoits, 1995). Students experience physical and psychological reactions to

M. Meenakshisundaram, Dr. P. T. Saleendran and Dr. N. Panchanatham

1

College for Women, Coimbatore-641004. E-mail: [email protected] Dr. P. T. Saleendran, Assistant Professor in Management Sciences, D. J. Academy for Managerial

Excellence, Coimbatore.3 Dr. N. Panchanatham, Professor and Head, Department of Business Administration, Annamalai

University, Annamalainagar.

Mr. M. Meenakshisundaram, Lecturer, GRG School of Management Studies, PSGR Krishnammal

STRESS IN RELATION TO SELF PERCEPTION

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stressors when they perceive excessive or negative stress. Excessive stress induces physical impairments, and it is not uncommon to find students afflicted with persistent lack of energy, loss of appetite, headaches, or gastrointestinal problems (Winkelman, 1994).

In related work, Maio-Esteves (1990) found that self perceptions mediated the effects of stress on perceived health status. The author found a significant negative relationship between stress as it related to perceived health status through the variables of introspection and problem-focused behavior. Specifically, when stress increased, problem-focused coping ability decreased while emotion-focused coping ability increased. The author also found a significant direct effect of introspectiveness on perceived health status. In other words, the more one focuses on a problem, the more it affects one's health. The analysis also indicated that more the participants felt they were able to handle the everyday problems they faced, the better they felt physically. Although Maio-Esteves' (1990) work does not directly examine the relation between; stress, self esteem and self concept, it does support the importance of self perceptions in mediating the effects of stress.

SELF-PERCEPTION AND STRESSStress and its effects on an individual's self perceptions have received

substantial empirical attention. Perceived control of time as it relates to student stress has been the focus of some of the empirical research. Macan et al., (1990) found that students who felt in control of their tune reported significantly better evaluations of their performance, greater work less role ambiguity, less role overload, and lower job-induced and somatic sessions. The authors also found a correlation between aspects of time management and self-reported performance and stress. Students reported less satisfaction with their life and work when experiencing greater role demands in conjunction with increased psychological and physical stress. These findings are consistent with the idea that more the stress a student experiences the less satisfied they will be with other areas of their life (i.e., they tend to have more negative self perceptions).

Within the academic setting, the relation between stress and self perceptions has also been examined. Garg (1992) found past academic performance to be a predictor of subsequent self perceptions. That is, perceptions of scholastic competence may affect the individuals self perceptions. Additionally, nonacademic perceptions (e.g., physical ability, physical appearance, relations with same or opposite gender, and general self concept) were found to be influenced by the family, social satisfaction, mental stress associated with recent life-change experiences, and health factors. Those participants with low emotional self concept were also likely to have experienced recent life-change experiences and mental health problems. Specifically, students with high levels of what the author called "life-change units,"

Tung and Chahal (2005) examined relationship between stress and adjustment and found no significant causal relationship between the variables. However direction of the results implied that level of adjustment influences the number of stressful events and amount of stress experienced by them. However, Hussain (2008) found inverse but significant relationships between academic stress and adjustment among high school students.

M. Meenakshisundaram, Dr. P. T. Saleendran and Dr. N. Panchanatham

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59M. Meenakshisundaram, Dr. P. T. Saleendran and Dr. N. Panchanatham

(also defined as stress) tended to have a less positive sense of mental well being if they possessed a low emotional self concept change and the self concept becomes more stable. Additionally, the author found that those who came from an intact family possessed a higher academic self concept than those from a divorced or separated family, implying that those who have experienced a separation or divorce have experienced more stress.

Finally, gender differences in self perceptions have been empirically examined. Researches on the difference of stress levels between genders were usually conducted directly or indirectly. Gadzella and Baloglu (2006) in their study concluded that female students experienced more stress compared to the male students and found that female students experience stress during changes in their life. While Muhammad Shah (1993) found that there was a significant difference between the stress experienced by male and female students and the research by Balda (2006) shows that female students experience more stresses when faced with problems compared to the male students.

Zuckerman (1985) found that the men and women in the college sample reported similar life goals, self esteem, Interpersonal self confidence, and self concepts. However, the author reported a significant difference in domain-specific perceptions in that the men tend to perceive themselves higher in the areas of math/science ability, leadership/public speaking skill and coping/self sufficiency than woman. Garg (1992) has also reported a gender difference in academic self concepts. This study found that men reported a higher self concept for the areas of mathematics and problem solving. Thus, there seems to be a gender difference in self concept and self esteem. These studies taken together suggest that stress can affect an individual's self perceptions. While the results, of these studies are often generalized to the college population, the individuals that comprise these sample populations may not adequately represent the diversity of college campuses. Thus, further work needs to focus on similar variables before general conclusions are made.

THE PRESENT STUDYAlthough college students experience a great amount of stress, the relationship

between stress and students self perceptions has been of limited interest in the literature. The primary objective of this article is to extend the literature in this area by specifically examining the relation between stress and students self perception.

It is assumed that students experience a high level of stress due to their greater role diversity and that this increased stress affects them differently than the general population. In particular, this work hypothesized that stress will negatively affect self perceptions. Additionally, gender differences in self concept will be considered.

METHODThe 167 participants who receive post graduation studies were drawn from five

colleges in Coimbatore. There were 90 female and 77 male participants. Their ages ranged from 20 – 25 years.

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60 M. Meenakshisundaram, Dr. P. T. Saleendran and Dr. N. Panchanatham

MATERIALSSelf-Perception Profile for College students (Neemann and Harter, 1986) was

used to measure students' self-perception. Eight sub-scales were drawn from this profile, including: intellectual ability, scholastic competence, job competence, appearance, social acceptance, close friendships, finding humor in one's life, and global self-worth. Each sub-scale contained four questions with the exception of the global self worth scale which contained six questions. Participants respond to each item on a 1 to 4 point scale where four is the most competent or adequate self-judgment. This scale employed a structured alternative format which asked the respondent to first decide which of two statements best described her/him, then to mark whether the statement is really true or sort of true for her/him. Coefficient alpha was used to assess the internal consistency reliability of sub-scales. The sub-scales yielded values ranging from 0.55 to 0.81, with the majority being above 0.70 (Neemann and Harter, 1986),

A Global Measure of Perceived Stress (Cohen et al., 1983) scale provides a measure of stress experienced in the past month. The respondent has to rate individual events on a 5-point scale. Scores are obtained by reversing scores on the seven positive items, and then summing across all 14 items (Cohen et al., 1983). A high score indicates a high level of stress, while a low score indicates a low level of stress.

PROCEDUREAll subjects were individually contacted and the questionnaire was

administered. The questionnaire contained demographic information of the students followed by the College Student Self-Perception Profile and then the Perceived Stress Scale. Participants received all materials in one questionnaire.

RESULTS Mean scores for each self perception sub-scale are presented in Table 1.

Students felt most competent in the domains of global self worth, finding humor in one's life and job competence.

Table 1: Descriptive Statistics

S.No Variable N Mean Standard Deviation

1

2

3

4

5

6

7

8

Appearance

Scholastic Competence

Social Acceptance

Close Friendships

Job Competence

Finding Humor

Intellectual Ability

Global Self worth

167

167

167

167

167

167

167

167

8.98000

10.4000

12.5714

12.1429

12.7143

12.5714

13.1429

16.7143

2.20000

2.54484

3.51186

3.06904

2.79947

2.71825

2.46385

3.25357

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In order to examine the relation between stress and students' self perceptions, a series of 2-way ANOVA'S was performed using the Statistical Package for Social Sciences (SPSS, 2002). In each analysis, gender and stress were used as the independent variables and each of the eight self perception measures were employed as a dependent variable. Two stress groups were created using a median split of scores on the stress measure. The top half of scores were labeled "high" stress and the bottom half of the scores were labeled "Low" stress.

The ANOVA for intellectual ability yielded a significant main effect for stress, F = 15.721, p < 0.000. Specifically, the "high" stress group scored lower on intellectual ability. There was no main effect for gender and no interaction.

The ANOVA performed on the close friendships measure produced a significant main effect for stress, F = 19.520, p < 0.000. A significant main effect for gender was also noted, F = 7.805, p< 0.004. In particular the "high" stress group and the females scored lower on close friendships. Also, a significant interaction was observed F = 5.391, p < 0.038.

The ANOVA for the ability to find humor in one's life showed a significant main effect for stress, F= 8.981, p< 0.004. Additionally, there was a significant main effect for gender, F = 6.091, p< 0.016. The "high" stress group and females scored lower on the ability to find humor in their lives. The interaction was not significant.

The ANOVA on appearance yielded a significant main effect for stress, F = 9.942, p < 0.005. The gender effect was also significant, F = 7.060, p < 0.012. Specifically, the "high" stress group and males scores lower on appearance.

The ANOVA for scholastic competence yielded a significant main effect for stress, F = 13.959, p < 0.000, with the "high" stress group scoring lower scholastic competence.

A sixth ANOVA assessed the relations among gender, stress and global self -esteem. There was a significant main effect or stress, F = 36.987, p < 0.000, with the "high" stress group scoring lower on global self esteem. There was no main effect for gender and no interaction.

The ANOVA on social acceptance resulted in a significant main effect for stress, F = 10.889, p < 0.001, with the "high" stress group scoring lower on job competence. There was no main effect for gender or interaction.

DISCUSSION AND CONCLUSIONThis study examined the relation between stress and college students' domain,

specific self perceptions. With respect to the relation between stress and self perceptions the hypothesis was fully supported. Stress was found to be negatively associated with students self concept. Consistent with the results of the study of Macan et al., (1990), students, in this study, with higher stress levels reported less satisfaction in the domain of job competence. Likewise, these results were similar to those reported by (Garden, 1991; Newman, 2005) who found that perceptions of performance were negatively affected by stress. Garg (1992) found those with high levels of "life-change units" or stress, to have a lower levels of self concepts; the results of this study also suggest that those with higher stress had lower levels of global self worth.

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62 M. Meenakshisundaram, Dr. P. T. Saleendran and Dr. N. Panchanatham

The hypothesis that there would be a gender difference in self perceptions was partially supported. In the areas of close friendships and the ability to find humor in one's life and appearance there was a significant main effect, for gender. Interestingly, female participants in this study scored lower on the measure of social acceptance which contradicts earlier work reported by Maccoby and Jaqklin (1974). Further, the significant gender effect for the measure of close friendships, with the females scoring lower on this measure, is consistent with the results of Makosky (1982) and Shin (2005).

The implication that can be taken from this study is that, in fact, stress is negatively associated with self perceptions for college students. Given this relation, perhaps treatment options may be implemented or developed specifically for college students. For example, Zeigler et al., (1991) found counsellor led discussion groups to positively affect the self concepts of elementary school children. If these results were to be generalized to the college student, it would be expected that if a college student had someone to discuss their stress with, perhaps a change in self concept would be apparent, because of ability to work through some of the stress.

References

Abouserie, R. (1994), Sources and levels of stress in relation to locus of control and self -esteem in university students. Educational Psychology, 14, 323–330.

Carveth, J. A., Gesse, T. and Moss, N. (1996), Survival strategies for nurse midwifery students. Journal of Nurse Midwifery, 41, 50–54.

Chapell, M.S., Blanding, M., Silverstein, M.E., Takahashi, M., Newman, Cubi, A. and McCann, N. (2005), Test Anxiety and Academic Performance in undergraduate and graduate students. Journal of Educational Psychology, 97, 268-274.

Cohen, S.T., Kamarck, T. and Mermelstein, R. (1983), A global measure of perceived stress. Journal of Health and Social Behavior, 24, 385-396.

Gadzella, B.M. and Baloglu, M. (2006), Confirmatory Factor Analysis and Internal Consistency of the Student-life Stress Inventory: Journal of Instructional Psychology.

Garg, R. (1992), Academic and nonacademic self-concepts: influence of recent life-change experiences and demographic, social, and health variables. Psychological Reports, 70, 871-882.

Hyde, J. S. and Plant, E. A. (1995), Magnitude of psychological gender differences: Another side of the story. American Psychologist, 50, 159–161.

Kohn, J. P. and Frazer, G. H. (1986), An academic stress scale: Identification and rated importance of academic stressors. Psychological Reports, 59, 415–426.

Lazarus, P.L., DeLongis, A., Folkman, S. and Gruen, R. (1985), Stress and adaptational outcomes. American Psychologist, 40(7), 770-779.

Loeb, R. and Magee, R. (1992), Changes in attitudes self-perceptions during the first two years of college. Journal of College Student Development, 33, 348-355.

Macan, X., Shahani, C., Dipboye, R. and Philips, A. (1990), College students' time management: Correlation's with academic performance and stress. Journal of Educational Psychology, 52(4), 760-768.

Maccoby, E. and Jacqlin, C. (1974), The psychology of sex differences. Stanford, CA; Stanford University Press.

Maio-Esteves, M. (1990), Mediators of daily stress and perceived health status in adolescent girls. Nursing Research, 39(6), 360-364.

Makosky, V. (1982), Sources of stress: Events or conditions? In D Belle (Ed.), Lives in Stress, Beverly Hills, CA: Sage.

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Milkie, M. A. and Thoits, P. A. (1993), Gender differences in coping with positive and negative experiences. Unpublished manuscript, Indiana University.

Misra, R., McKean, M., West, S. and Russo, T. (2000), Academic stress of college students: Comparison of student and faculty perceptions. College Student Journal, 34, 236–245.

Neemann, J. and Harter, S. (1986), Self-perception profile for college students. University of Denver.

Newman, J. (2005), Early Life Stress Linked to Teenage Mental Problems. Oregon Health and Science University.

Sax, L. J. (1997), Health trends among college freshmen. Journal of American College Health, 45, 252–262.

Thoits, P. A. (1995), Stress, coping, and social support processes: Where are we? What next? Journal of Health and Social Behavior, 35, 53–79.

Thomas, S. P. and Williams, R. L. (1991), Perceived stress, trait anger, modes of anger expression, and health status of college men and women. Nursing Research, 4, 303–307.

Varni, J., Katz, E., Colegrove, R. and Dolgin, M (1994), Perceived stress and adjustment of long-term survivors of childhood cancer. Journal of Psychosocial Oncology, 12(3), 1-16.

Winkelman, M. (1994), Culture shock and adaptation. Journal of Counseling and Development,73, 121–126.

Zeigler, E., Scott, B. and Taylor, R. (1991), Effects of guidance intervention on perceived school behavior and personal self concept: A preliminary study. Psychological Reports, 68, 50.

Zuckerman, D. (1985), Confidence and aspirations: self-esteem and self-concepts as predictors of students' life goals. Journal of Personality, 53(4), 543-560.

Zuckerman, D. (1989), Stress, self-esteem, and mental health: how does gender make a difference? Sex roles, 20(7/8), 429-444.

Tung, S. and Chahal, N. (2005), Relationship between Stress and Adjustment Adolescents females; A causal study, Journal of Personality study and Group Behavior, 25, 19-31.

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Dr. N. Kavitha and Dr. A. Ramachandran1 2

ABSTRACTIntellectual property rights have become intricately entwined with discussions

about globalization. This article deals with the legal and economic impact of intellectual propertisation. It provides essays covering key issues including the Indian relations of global intellectual propertisation, the TRIPS Agreement and the tying of intellectual property issues to international trade negotiations and seven areas of intellectual propertisation.

INTRODUCTIONThere is a well-established statutory, administrative and judicial framework to

safeguard intellectual property rights in India, whether they relate to patents, trademarks, copyright or industrial designs. Well-known international trademarks have been protected in India even when they were not registered in India. The Indian Trademarks Law has been extended through court decisions to service marks in addition to trade marks for goods. Computer software companies have successfully curtailed piracy through court orders. Computer databases have been protected. The courts, under the doctrine of breach of confidentiality, accorded an extensive protection of trade secrets. Right to privacy, which is not protected even in some developed countries, has been recognized in India.

CONCEPT OF INTELLECTUAL PROPERTYThe concept of Intellectual Property in India and the world over is taken to be

revered and an impregnable propriety, which has made Patents, Trade Marks, Copyright, Designs, Transfer of Technologies rather tangible in terms of propriety. New laws, for the registration and protection of these rights, have replaced the old and antiquated laws, not only in India but also all over the globe. Intellectual property rights are valuable assets, which need to be scrupulously guarded against from being infringed or misused. The value of Intellectual Property cannot be defined in monetary terms; it is an intangible asset of any corporate entity.

To a lay mind, property means some material object belonging to a particular person. The concept of ownership is critical to the concept of property. Ownership means the right to possess, use and dispose the property at the desire of the owner, to exclude the others. If a society does not recognise ownership, it will not have a concept of property. In the legal sense, property refers to the bundle of rights that the law confers on a person by virtue of the ownership and possession of an object.

However, a material object under one's possession may not amount to much as property if it does not become a resource to satisfy some human want or need. By exertion of his intellect, either in the form of ideas or technology, man converts a


1

Kangayam. Tirupur - 638 108. Email: [email protected] Dr. A. Ramachandran, Director, SNR Institute of Management Studies, SNR Sons College

(Autonomous), Coimbatore - 641 006. E-mail: [email protected].

Dr. N. Kavitha, Faculty of Management, EBET Group of Institutions, EBET Knowledge Park,

INDIAN OUTLOOK: UNDERSTANDING OF INTELLECTUAL PROPERTY RIGHTS

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66 Dr. N. Kavitha and Dr. A. Ramachandran

natural resource into something of utility, making it an item of property. This brings us to the concept of intellectual property. It is simply the property created by the application of human mind. It is non-physical (incorporeal) and it derives its value from idea(s).

SIGNIFICANCE OF INTELLECTUAL PROPERTYIntellectual Property Rights are of great importance for modern industry and

commerce and, in many cases, they have a very important effect on the economy and on the very existence of a business entity. These comprise the right to control the use of technology and creative material, including rights in artistic, musical and literary work, and the right to prevent others from misusing certain marks, symbols and drawings and in distinguishing one from the other.

Intellectual Property Rights provide means by which an owner or an innovator can protect his innovation etc. from being imitated and safeguard the fruits of his valuable labour and investment. Basically, an Intellectual Property Right gives a remedy to its owner against those persons who want to reap the fruits of his ideas or work. The value of Intellectual Property cannot be defined in monetary terms; it is an intangible asset of any corporate entity.

NEED FOR PROTECTION OF INTELLECTUAL PROPERTY RIGHTSKnowledge and information become key drivers of techno-economic growth

and of societal progress in general. Intellectual property is a dynamic area. As science and technology make rapid advances, and as competition for markets becomes ever fiercer, human ingenuity is throwing up ever new ideas and newer products.

Newer areas are emerging with claims for recognition as Intellectual property. They have to be accommodated as Intellectual property either in one of the existing categories or in new categories that have to be created. For example, copyright originally was concerned with works of literature and art, gradually its scope expanded to cover works of drama, music, photography, cinematography, audio-visual recordings, performances, broadcasts and now computer programmes. It is recognised that the term copyright cannot justifiably be applied to all these creations; therefore, the category of related rights or neighbouring rights had to be introduced.

In today's highly competitive business world, brands play very crucial role and protection of IPR is vitally important for pharmaceuticals, biotechnology and other such industries that require risky investments in innovation and discovery. Whenever a new product, service or an idea is created, there is every possibility that some one else may imitate it. Whether or not it could be imitated, depends on the fact whether IPR exists. There is little point in holding IPR unless they can be enforced against people who infringe or intend to infringe the same.

The projection of a product being based in its category now requires not just product positioning but also the positioning of the company manufacturing it. Corporate identity has, therefore, become very important. People buy products or services for what they mean more than what they can do. Similarly, ideas and innovations are required to be protected in order to avoid exploitation.

IPR also enable one to keep ahead of competitors and in order to be used effectively, it is absolutely essential to understand the complex and legal principles of

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67Dr. N. Kavitha and Dr. A. Ramachandran

IPR and apply them in practice.

As was the case with China, India too showed signs of resistance to quick enforcement of international Intellectual Property Right (IPR) protection laws as demanded by the developed countries, particularly the US. Under the terms of the WTO, India is required to implement WTO-standard IPR protection laws by 2005. It must be acknowledged that there has been remarkable progress in IPR protection in the field of software and cinema products. India's general argument was that it does acknowledge in principle the case for strict IPR protection, but this can be done only in phases suited by its own ground reality. The reality is that absence of international IPR protection for some decades has generated employment for millions, so an overnight clampdown on IPR violators would stimulate social unrest.

However, under pressure both from its own domestic industry and the United States, India strengthened its copyright law in May 1994, placing it at par with international practice. The new law, which entered into force in May, 1995, fully reflects the provisions of the Berne Convention on copyrights, to which India is a party. Based on its improved copyright protection, India's designation as a "priority foreign country" under the United States' Special 301 list was revoked and India was placed on the "priority watch list." Copyright enforcement is also rapidly improving. Classification of copyright infringements as "cognisable offenses" expands police search and seizure authority. While the formation of appellate boards under the new legislation should speed prosecution, local attorneys indicate that some technical flaws in the laws, which require administrative approval prior to police action, need to be corrected.

Trademark protection is considered good by the US authorities, and could be raised to international standards with the passage of a new trademark bill that codifies existing court decisions on the use and protection of foreign trademarks, including service marks. The bill was first introduced in 1995 but failed to win parliamentary approval. Passage of the trademark bill is expected in 1998. Enforcement of trademark owner rights had been weak in the past, but is steadily improving as the courts and police respond to domestic concerns about the high cost of piracy to Indian rights' holders.

India's patent protection is weak and has especially adverse effects on international pharmaceutical and chemical firms. Estimated annual losses to the US pharmaceutical industry due to piracy are $450 million, but Indian authorities have a different point of view. India's patent act prohibits product patents for any invention intended for use or capable of being used as a food, medicine, or drug or relating to substances prepared or produced by chemical processes. Consequently, many drugs invented by foreign companies are widely reproduced.

Processes for making drugs are patentable, but the patent term is limited to the shorter of five years from the grant of patent or seven years from the filing date of the patent application. Product patents in other areas are granted for 14 years from the date of filing. However, as a signatory to the Uruguay Round of GATT, including its provisions on TradeRelated Intellectual Property Rights (TRIPS), India must introduce a comprehensive system of product patents no later than 2005.

INTELLECTUAL PROPERTY RIGHTS SCENARIO IN INDIA

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The Indian government has formed an advisory committee to recommend changes in the 1970 Indian Patents Act. A temporary ordinance for patent protection implementing the "mailbox" provisions of the WTO TRIPS agreement and providing for exclusive marketing rights was issued in December 1994. However, the ordinance lapsed and the parliament has yet to pass a new patent bill implementing the provisions of the ordinance. In July 1996, the U.S. initiated WTO dispute settlement procedures over India's failure to implement its TRIPS obligations. The final panel report on this case was issued in August 1997, and ruled that India had failed to meet its obligations under the TRIPS agreement.

Indian officials have pledged to introduce another bill in parliament which, if passed, will put India in compliance with its TRIPS obligations. The bottom line is that India considers itself a responsible member of the WTO which suggests that international class IPR protection should be in place by 2005. Besides, given India's determination to emerge as a power in the global software industry, it is most likely that all IPR protection laws will be instituted and enforced by 2005. Note that Bill Gates, the chief executive officer of Microsoft Corporation, has distinguished India as a most promising base for software development. If such an IPR-conscious business leader like Gates is of this opinion, one can only conclude that India's IPR scene is no deterrent to foreign companies.

WTO AGREEMENT AND INDIAN COMPLIANCE FOR IPLIndia is a signatory to the agreement establishing the World Trade Organization

(WTO), which came into force on 1.1.95. The WTO Agreement, inter alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which prescribes the minimum standards to be adopted within stipulated time-frame by the member countries in respect of the following seven areas of intellectual property:

1. Copyright and related rights2. Trademarks3. Geographical indications4. Industrial designs5. Patents6. Layout-designs (Topographies) of integrated circuits; and7. Protection of undisclosed information.Protection of intellectual property rights in India continues to be strengthened

further. The year 1999 witnessed the consideration and passage of major legislation with regard to protection of intellectual property rights in harmony with international practices and in compliance with India's obligations under TRIPS. These include:

1. The Patents (Amendment) Act, 1999 passed by the Indian Parliament on March 10, 1999 to amend the Patents Act of 1970 that provides for establishment of a mail box system to file patents and accords exclusive marketing rights for 5 years.

2. The Trade Marks Bill, 1999 which repeals and replaces the Trade and Merchandise Marks Act, 1958 passed by the Indian Parliament in the Winter Session that concluded on December 23, 1999.


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3. The Copyright (Amendment) Act, 1999 passed by both houses of the Indian Parliament, and signed by the President of India on December 30, 1999.

4. A sui generis legislation for the protection of geographical indications called the Geographical Indications of Goods (Registration & Protection) Bill, 1999 approved by both houses of the Indian Parliament on December 23, 1999.

5. The Industrial Designs Bill, 1999 which replaces the Designs Act, 1911 was passed in the Upper House of the Indian Parliament in the Winter Session which concluded on December 23, 1999 and is presently before the Lower House for its consideration.

6. The Patents (Second Amendment) Bill, 1999 to further amend the Patents Act, 1970 and make it TRIPS compliant was introduced in the Upper House of Indian Parliament on December 20, 1999.

A MOMENTARY LOOK ON SEVEN AREAS OF INTELLECTUAL PROPERTY 1. Copyright and Related Rights: Copyright is granted in respect of original

literary, musical, artistic or audio-visual works – the creations of authors, playwrights, composers, artists and filmmakers. The rights under copyright include: rights of reproduction, communication to the public, adaptation and translation of work. Copyright is now spoken together with the related or neighbouring rights as one category. Though originality in expression is a requirement for copyright, the quality of the work is not an issue at all. It is to be noted that, though the copyright subsists in works, which are the creation of ideas, it is not the idea that the copyright protects, but merely the expression of the idea as fixed in a particular work. If an author thinks up the plot of a story, it is not the idea of the plot that is entitled for protection under a copyright but only the written form of the story flowing from the idea. Any other person can come up with a differently written story on the same idea and have a valid claim for a copyright over it. If a painter has a copyright in a painting, which depicts sunrise, no one else can legally copy that painting without his permission. However, there is no copyright in the idea of sunrise and anybody is free to paint sunrise as per his or her own imagination, and everyone will be entitled to copyright in one's own creation. The copyright is in the painting, not in the idea of sunrise. Copyright is an inherent right that commences since the completion of the work as an expression of the idea. Copyright comes with the doctrine of fair use, which includes use of the work for purposes of criticism, comment, news reporting, teaching and education, scholarship and research. Fair use does not constitute infringement. We may also remember that unlike patents or registered designs, copyright confers no monopoly rights. In fact if two persons can produce precisely similar work demonstrably working independently of each other, each one will have the legal right to his or her own creation.

2. Trademarks, Trade names and Service marks: Trademarks and service marks are distinctive symbols that help the consumer to distinguish between competing goods or services and are a major part of the goodwill a company enjoys in the trade. A trade name is the name of an enterprise, which also


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individualizes the enterprise in the minds of the customers. They are therefore protected as IP. Thus a trade mark is a sign that individualizes the goods of a given enterprise and distinguishes them from the goods of its competitors. For instance in passenger cars a characteristic star enclosed in a circle, or a characteristic treelike T, enclosed in an ellipse, displayed in the front and the rear of a vehicle immediately proclaims that the first vehicle is from the Mercedes and the second one is from the Tata's stable. Trademarks invariably come to symbolize quality of goods or services in the customer's mind. However, there is no requirement in law that a trade mark has to meet any quality standards. If quality is not maintained, customers will shift to another brand.

3. Geographical Indications: Geographical indications (GI) is a sign used on goods that have a specific geographical origin and possess qualities or a reputation that is solely due to the place of origin. Such goods enjoy an advantage over competing goods solely because of their geographical origin, which thus becomes a kind of IP and is protected. A GI is different from a trade mark. A trademark is a sign that distinguishes the product and services of an enterprise from those of another. The owner of a trademark is entitled to exclude others from using the trade mark. A GI merely tells that a product is produced in a certain place and has certain characteristics which are due to the place of production. All producers who make their products in a place designated by the GI and share the same qualities can use it. For instance, Kolhapuri chappals from Kolhapur, India refer the appellation of origin and indication of source. Indication of source on a product merely indicates that the product originates in the place indicated. Appellation of origin indicates not only the place of origin but also the essential quality link between the product and the area of its origin.

4. Industrial Designs: An industrial design is the ornamental or aesthetic aspect of an article; it may consist of three-dimensional features such as shape or surface, or of two-dimensional features such as patterns, lines or colour. The design serves as a tool for product differentiation and lures customers by enhanced visual appeal. It becomes a kind of IP to be protected. Industrial designs are applied to a wide variety of products of industry or handicraft: watches, jewellery, fashion and other luxury items, industrial and medical implements, house ware, furniture, electrical appliances, vehicles and architectural structures, textile designs, toys etc. An industrial design is distinguished from trade mark primarily because it is constituted by the appearance of a product, which is not necessarily distinctive. A trademark is necessarily to be distinctive to serve as a sign for product differentiation. The functions of, and the justification for protecting industrial designs and trademarks are quite different. Designs must relate to the appearance of the object which is not determined by technical or functional necessity. Design enhances the visual appeal and adds to the commercial value of the product; it also facilitates the marketing and commercialization of the product. For registration, a design needs to be new and original, though the notion of these qualities may vary from country to country. In certain conditions, an industrial design can be protected under copyright law or the law against unfair competition.


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5. Patents: A patent is a statutory right granted for a limited period to an inventor in respect of an invention to exclude any other person from manufacturing, using or selling the patented product or from using the patented process, without due permission. Under the TRIPS Agreement of the WTO, inventions in all fields of technology whether products or processes are patentable if they meet the criteria of novelty, involve an inventive step and are capable of industrial application. Patents are one of the oldest forms of IP protection. The patent system goes back to 1700s. The aim of the patent system is to encourage economic and technological development by rewarding intellectual creativity.

6. Layout Designs of Integrated Circuits: Layout design (topography) of integrated circuits is a relatively new area in IP, which has appeared with computer technology and has acquired importance as the technology makes rapid advances. The programming instructions on a computer chip are implemented through a circuitry printed on semiconductor materials. The design of circuitry on the chip requires great investment of knowledge, skills and capital and it needs to be protected as IP. The right in topography aims to prevent copying of the layout design but reverse engineering to come up with improved design is regarded as fair. It may also be noted that, while for claiming a patent, an invention is required to meet the criteria both of novelty and non-obviousness, a layout design is only required to be original. Protection of layout design confers no monopoly right. Independent development of a design, identical with a protected design is permitted.

7. Undisclosed Information: Undisclosed information gets recognition as a kind of IP that needs to be protected under the TRIPS Agreement. Earlier to it, the WIPO treaty (1967) and the Paris Convention recognized unfair competition as a part of IP. The shift in TRIPS to undisclosed information from unfair competition has important implication. Unfair competition includes all acts contrary to honest practices in industrial or commercial matters; undisclosed information virtually restricts honest practices to protection of trade secrets. However, the TRIPS Agreement does refer to the control of Anti-Competitive Practices in Contractual Licenses. The TRIPS Agreement also empowers member-States to make in their national legislation suitable provisions to prevent abuse of IPRs.

CONCLUSIONCountries have laws to protect intellectual property mainly for two reasons. One

is to give statutory expression to the moral and economic rights of creators in their creations and such rights of the public in access to those creations. The second is to promote, as a deliberate act of Government policy, creativity and the dissemination and application of its results and to encourage fair-trading, which would contribute to economic and social development in view of the immense commercial value of intellectual property.

The intellectual property thus dawn in a creation of human mind involving knowledge, labour and skill. It is the result of sustained intellectual application and efforts of inventors, authors and other creative persons and is a powerful factor of production and wealth generation in a modern economy. The intellectual property is


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References

http://www.indiantaxsolutions.com/main.php?t=28011987&d=1177865866

http://www.aggarwalassociates.com/ip.htm

http://www.legalhelpindia.com/intellectual-property-rights.html

http://did.nic.in/ipr/iprnarr.htm

http://ipmall.info/hosted_resources/ip_india.asp

http://www.ipindia.nic.in

http://www.indianembassy.org/policy/ipr/ipr_2000.htm

http://www.researchandmarkets.com/reportinfo.asp?report_id=354843

http://www.indiaonestop.com/markets-intellectual-prop-rights.htm

http://www.macadvisoryindia.com/intellectualpropertynew.html

http://www.dipp.nic.in/ipr.htm


a significant factor in gaining competitive advantage over rivals in trade and industry as the entire idea of intellectual property law is to protect the owner against its unlawful use by any person or party offering same or similar products or services. The Intellectual Property Rights, as their exercise has evolved in practice, can secure for the owner a broad range of advantages depending on the national law. To fully comprehend the consequences of a national legislation in matters of IPR, it is important to grasp the rationale behind the law.

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CXO Interview

GRG School of Management Studies, Coimbatore conducted the annual Industry-Institute Interface Day on Wednesday, 6th January 2010 on the theme "Social Entrepreneurship: The Future Career Choice?" The programme was inaugurated by Mr. Shrihari M. Udupa, Chief People Officer, PricewaterhouseCoopers India, New Delhi.

Social entrepreneurship is an emerging field that is attracting growing amounts of talent, money and global attention with diverse perspectives of social activists, business people, academics and government. Although the potential benefits offered by social entrepreneurship are clear, there is less certainty about what exactly a social entrepreneur is and does. Mr. Shrihari M. Udupa enlightened the audience about Social Entrepreneurship and the prospects of taking up a career as a social entrepreneur. The excerpts of his speech are presented below.

I believe that it is important for each one of us to keep looking at our own hearts and keep hearing to our hearts and minds as it gives us success in our lives. If we work together, each of us would be able to make a huge change in the organizations where we are working. If one keeps on listening to the inner voice he/she can understand the relevance of that to their life, since it helps us identify the mission of our life. Each of us needs to make a change in the society, make a difference in the society, have something to share with others and leave something better than what we have inherited. There is something we need to do and it does not come out very easily. It may take five or seven years to identify what our passion is and what we need to do. There are many things in the society which are important and relevant to us which we need to think about before making a career choice.

Could we think of taking up a career in Social Entrepreneurship! Ms. Nalini Nayak is an entrepreneur in Kerala. She suffered from cancer and her brother came to take her to Mumbai for treatment. But when he saw many people coming home daily to pray for her recovery, he realised that there is no better place for her to live, and on the day of her surgery there were nearly about 800 people going to nearby churches and temples praying for her recovery. Ms. Nalini felt that there is nothing better in the world than having the goodwill of so many people. What drove her was not the material success that many of us look for. Our normal way of assessing people is to see the progress by the way the amount of material wealth that a person creates. But, there are much better parameters to evaluate success than material success.

Why is social entrepreneurship leveraging? In the last 10 years we have been talking about India shining. The good policies that came out in 1991 and 1992 have allowed us to make significant progress in the economic world and hence we are talking about growth rates of 8% or 9% and double digit figures. India is considered to be a super power and we are likely to have about 25% of the world's working population by 2020 or 2025. Sensex in the last one year has gained about 81% and the market is still bullish.

On the other hand, there are few contradictions to the above. 42% of children below five years of age are underweight (as compared to 28% in sub-Saharan Africa), 15% of rural students in standard eight cannot read the text books of standard two, 37% of Indians live below the poverty line and the literacy level is about 66%.

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Though we have made economic progress, we still need people to work on utilizing and exploiting the available opportunities and that is the focal point of Social entrepreneurship.

The transition of social entrepreneurship over the last 30 years or 40 years could be traced in three phases. The first phase encompasses the contributions given by charity, philanthropy and government. The second phase comprises the government and a few people who had to urge to give back to the society something as they have derived a lot from the society like, Mr. N.S. Raghavan and Dr. G.K. Jayaram of Infosys. They run institutions which foster entrepreneurship growth, generate ideas, help people to generate ideas and realize their visions. They do these things from their heart as a part of their post retirement life and this has paved way for real entrepreneurship to come up. There are multiple things that have transpired over the years and now in the third phase we have a new breed of people who are professionals with so many great ideas, whom we need to find and encourage to take up these activities. To take up and do these activities, we need not do charity or live on charity but lead a comfortable life and still make all the difference we want to make in the society. That is what we describe as social entrepreneurship. The society shows more dignity towards this group of people and gives due respects to this community. It has realized that these people are working for a noble cause and are contributing a lot to the society.

Social entrepreneurship is driven by a public cause that utilizes the available opportunities and still makes a difference. It is value-based. People make money not for themselves but to ensure that it is driven by the society and reaches back to the society. The motive of social entrepreneurship is not profit earning and making money, but to cover more people and ensure that they live a decent and good life. They focus in creating wealth and in ensuring that there is a social change.

With all these transition points, what has the government and business come up with? A new sector - the third sector, the social sector or the citizen sector - has evolved which comprises people with passion who like to contribute to the society and make a difference. Mr. Deep Joshi, the winner of the Magsaysay award in 2009, says that "for people with the finest management, social science or engineering education, there are few more worthy intellectual challenges than rural underdevelopment".

The word 'entrepreneurship' is a French word which means that one takes things in his own hands. They utilize the opportunity to do something. Social entrepreneurs are those who take ownership of a situation where they want to make a change, use their managerial spirit and have the drive to make a social change. It is a not-for-profit organization, but they ensure to have profit to make a greater change in the society. They could be viewed as models of sustainability and they look at the triple bottom line - profit, planet and people. The current focus of business in not in making profit, but on environment sustainability since it is a major problem. The focus is more on the people and the planet. They aim at profit just to ensure that they live a decent life and make a difference.

The social sector has passionate people who, unfortunately, often lack organization skills. The social sector needs people who can professionalize. The

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since these are the sectors that can really transform the bottom of the pyramid and provide us with ample opportunities.

Career is an opportunity to express one's inner self and people need to have an understanding as to why they are there and the purpose of their existence. Though it is a fundamental question, we need to spend enough time to think about it at a younger age than at a later stage. The preference for career drivers for an individual could be opportunities and the growth potential in a sector, opportunities for personal and professional growth, opportunities to contribute in the work and make a difference, compensation and finally the social status. There exists enormous opportunities in the universe and it is in the hands of the individuals to utilize them to achieve their mission.

People think that money is compensation but life is a package deal. Money is the major driver, but life, career and compensation could be viewed in a different way. Compensation could be structured in one's own way. I look at compensation in a slightly different way as to what I get out of my job - Lakshmi representing money and Saraswati representing personal growth. The other components of compensation are having a good family and children, health, friends and society. I believe in the law of harvest, 'we reap what we sow'. The more we give to the society the more we get back from it and what we get back from the society is far more than what we have given. Hence, we need to sow more so that many get benefitted out of it. We need to go by our heart and we need professional and good people. We need to look at whether the social sector helps us to grow and groom as an individual.

The different ways of making ones mission possible are lContinuous learning and investments in personal growthlBeing proactive and taking responsibility and ownershiplProviding top-class, quality output and delivery as promisedlBeing value based, professional, objective, fair, independent in whatever

we dolUnderstanding the bigger picture of business/organization and then doing

what would be in the middle to long term interestlGiving more than what we are taking lAlways leaving the place better than what it was. I would conclude with the story of Sir Edmund Hillary who conquered Mount

Everest. It was the fourth time that he attempted to climb the Mount Everest. He reached 80%, which none had reached before him. The Queen of England wanted to honour him for his great achievement and had a felicitation. One Saturday evening in London, in Royal Albert House the Queen called him for the felicitation. There was a huge painting of Mount Everest there. Hillary went there and stood in front of the picture and said "you are stagnant and I am growing, and one day I will conquer you".

My dear friends, each one of us is growing and in the years to come each one of you will conquer many Mount Everest.

Thank you.

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PRERANA March 2010

77Ms. Vandana Madhavkumar

BOOK REVIEW

THE IDEA OF JUSTICE by Amartya Sen (Allen Lane an Imprint of Penguin Books, London, 2009).

1Ms. Vandana Madhavkumar

1 Ms. Vandana Madhavkumar, Lecturer, GRG School of Management Studies, Peelamedu, Coimbatore. E-mail: [email protected]

Amartya Sen one of the greatest philosophers of today, a leading voice on social and economic reforms in his powerful and thought provoking work, The Idea of Justice presents a rethinking on the mainstream theories of justice. Sen's knowledge on world affairs, history and culture is amazing and he elegantly takes you through an intellectual ride in his book. A theory of justice, Sen believes, should serve as a basis of finding ways to reduce injustice rather than

creating perfectly just societies. This central message is conveyed in the book's first paragraph: "What moves us … is not the realisation that the world falls short of being completely just … but that there are clearly remediable injustices around us which we want to eliminate".

Sen in his The Idea of Justice critically re - examines and presents arguments against the philosophy of justice pursued by Hobbes, Rousseau and Kant-the classical theorists and the contemporary eminent theorists Ronald Dworkin, David Gouthier, Robert Nozick and Rawls in particular. Sen expresses sceptisism about Rawlesian thinking on the choice of just institutions for the basic structure of the society and more about Rawl's highly specific claim about the unique choice, in the original position, of one particular set of principles for just institutions. Sen supports and favours Smithian line of reasoning, involving the impartial spectator, against social contract approach. He reasons for comparative assessment and not merely identifying a transcendental institution and taking note of voices beyond the membership of the contractarian group to avoid being trapped in local parochialism.

Sen brings out the distinction and contrast between the two different words niti and nyaya both of which stand for justice in classical Sanskrit. The term niti stands for organisational propriety and behavioural correctness and nyaya stands for a comprehensive concept of realized justice, which he argues is essential in making societies less unjust. Through the classical debate between Krishna and Arjuna on the battlefield in Mahabharatha or consequence-independent deontology and consequence sensitive assessment, Sen supports Arjuna's argument that what happens to the world must matter and be significant in our moral and political thinking. He asks why should we want only to 'fare forward' and also not 'fare well'? Sen sees relevance in Arjuna's concern as his arguments lean towards the side of nyaya, rather than merely the niti of fighting a just war by giving priority to one's duty as a military leader. Sen calls this understanding 'the significance of human lives'.

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Human lives, freedoms and capabilities are central in reasoned assessments of the world. Sen favours the freedom based capability approach when deciding on the features of the world to concentrate on in judging a society and in assessing justice and injustice. Capability according to him means not just the resources to live certain kinds of life that we have reason to value, but the capability of an individual to choose to use - or not use - the resources at hand to achieve what he has reason to value. Sen is interested in outcomes. However, unlike utilitarians, who are interested in little else, he is also interested in how those outcomes are brought about - especially the extent to which they are brought about through the free choices of individuals.

A passionate economist, Sen cannot keep himself away from his area of interest and makes interesting statements attacking the focus on utility-based or resource-based economic criteria to measure human success.

In Sen's view, sustainable development is best explained by the definitation given by Gro Brundtland, in the celebrated Brundtland Report, published in 1987 as 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs'. Along with the steps that are taken to halt environment destruction, constructive human intervention should be included. This perspective is also according to Gautama Buddha's argument in Sutta-Nipata, discussed by Sen when mentioning about the plurality of impartial reasons. Buddha argues that since we are enormously more powerful than other species, we have some responsibility towards other species that links asymmetry of power.

On human rights, Sen writes. "These rights are not derived from the citizenship of any country, or the membership of any nation, but are presumed to be claims or entitlements of every human being." He interprets the concept and practice of democracy not in terms of the institutions of a democratic state, but in terms of its "capacity to enrich reasoned engagement". Democracy "has to be judged not just by the institutions that formally exist, but by the extent to which different voices from diverse sections can actively be heard".

Sen concludes, that it is through democracy, as understood by the phrase coined by Bagehot as "government by discussion" - a process of collective reasoning that justice can advance. The book is an essential read for anyone interested in political philosophy, social welfare and social justice.

Ms. Vandana Madhavkumar

Issue Dated Deadline for Submission

Issue No. 1 - March December 31

Issue No. 2 - September June 30

Guidelines to Authors

1. All articles are subject to peer review.

2. The manuscripts should be between 2000 – 3000 words (including figures and tables), typed using MS Word in 1.5 line spacing, Times New Roman, 12-point size, on A4 size papers with 1” (2.54 cm) margin on all sides.

3. All references in the manuscript should be placed at the end and arranged alphabetically. The referencing style suggested by the Amer ican Psycho logy Assoc ia t ion may be fo l lowed (www.apastyle.apa.org).

4. The cover page should contain (a) the title of the paper (b) author's name (c) designation and official address (d) address for communication (e) phone numbers and (f) e-mail address.

5. Author(s) should include a brief profile of themselves in about 50 words.

6. A non-mathematical abstract of about 150 words should be submitted along with the manuscript.

7. Two hard copies of the manuscript along with a soft copy in CD should be sent by courier/post addressed to “The Editor, PRERANA, GRG School of Management Studies, Peelamedu, Coimbatore – 641 004, Tamilnadu” and a soft copy to [email protected].

8. Authors(s) should send a declaration stating that the manuscript is not published, copyrighted, accepted or under review elsewhere. Please note that copyright of all accepted articles will be with PRERANA.

9 Each author will receive a complementary copy of the journal.

Deadlines for submission of Manuscripts

About GRGSMS

GRG School of Management Studies (GRGSMS) is a part of the GRG Group

of Educational Institutions in Coimbatore founded by GRG Trust. It is one of

the few Institutions in India dedicated and committed exclusively to the

development of women business leaders and entrepreneurs. The GRG Trust

was founded in 1956 by the late Shri GR Govindarajulu and his wife, Smt G

Chandrakanthi who were industrialists, philanthropists, educationists, and

great visionaries.

GRGSMS, established in 1993, is an autonomous institution, approved by the

All India Council for Technical Education (AICTE), affiliated to the

Bharathiar University, and accredited by the National Accreditation and

Assessment Council (NAAC) with ‘A’ rating.

The flagship programme offered by GRGSMS is the holistic, full-time, two-

year MBA programme. Other programmes offered include a full-time, one-

year PG Diploma in Business Administration.

GRGSMS is presently located within the premises of PSGR Krishnammal

College for Women. The environment-friendly landscape and architecture

provides conducive atmosphere for learning and development. State-of-the-

art infrastructure encompasses well-equipped classrooms, technology-based

teaching aids, latest hardware and software tools, an interactive multimedia

studio, a comprehensive digital studio, conference halls and seminar rooms.

The core members of the faculty at GRGSMS are qualified and experienced,

bringing a judicious mix of knowledge and skills. In addition, expertise of a

team of visiting faculty is drawn regularly to augment the learning

experience.

Executive Editor - PRERANA

Peelamedu, Coimbatore 641 004, Tamilnadu, IndiaPhone: +91 422 257 2222 / 4224 URL: www.grgsms.com

Email to: [email protected]

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