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BUSINESS
REVIEW
VoI. VI, No.1 JuIy 2010- December 2010
(An International Research Journal
on Business & Management)
DEPARTMENT OF BUSINESS MANAGEMENT
H.N.B. Garhwal University
(ACentral University)
Srinagar (Garhwal), Uttarakhand, India
ISSN: 0973-6158
S.S. Khanka
Family Business in India (Survival Ior Three
Generations or Beyond)
C.S. Batra, Monika Kansal
Between Philanthropy and Business case
ReIlections on CSR practices oI BT sustainable
Index companies
Isita Lahiri, Cairik Das
AComparative review oI the Development oI the
Indian Retail Panorama with special emphasis to
organized Apparel Retailing
Akhilesh Chandra Pandey
EIIectiveness oI Marketing Practices adopted by
Rural Intervention Organization in Uttarakhand: A
Comparative Study oI HARC & ATI
Ashok Kumar Sinha, Aisha Singh
Analysis oI Consumer Behavior towards branded
Laptops in India
Bimal 1aiswal, Aamita Aigam
PerIormance evaluation oI mutual Iunds in India
in a post liberalization era: An empirical analysis
1aishikha Aautiyal
Old-school Ior the NewYouth
R. Datta, R.R. Aautiyal
Human Resource EIIiciency Indiacators oI Public
Sector Banks- Acase study oI SBI in Uttarakhand
Ashutosh Priya, K.M. 1oshi & A. Kumar
University- Industry Linkage: In Search oI
Pragmatic Approach Ior Indian Higher Education
J.C. Sharma, Satyendra Kumar, S.K. Srivastava
Customer's Attitude Towards E- Banking AStudy
oI Garhwal Region
Priya Sharma, Saraswati Kala
Study the level oI SelI Consciousness &
Adjustment in practitioners and non- Practitioners
oI Japa & Dhyana
Kavita Bhatt
Tratak: The Yogic Practice Ior the Enrichment oI
HRD Managerial Skills
Garhwal University MBADepartment
GUMBAD BUSINESS REVIEW
Desk Advisor
Prof. S.P. Kala
Editor
Dr. Gajendra Singh
Associate Editor
Dr. A.C. Pandey
Prof. Raj Kumar
Faculty of Management Studies, BHU
Prof. K.M. Upadhyay
Ex 1amia Milia Islamia University
Prof. R.R. Nautiyal
Department of Economics, HABCU
Prof. 1.S. Bisht
Department of Secretarial Practices, H.A.B.C.U.
EDITORIAL BOARD
CONSULTING EDITORIAL BOARD
The Gumbad Business Reviewis published bi-annually by the Department oI Business Management,
HNB Garhwal University Srinagar (Garhwal) A Central University, Uttarakhand and the views
expressed in this journal are those oI the authors. All work published is blind reviewed according to
standard procedures oI reIerred journals. The purpose oI the Gumbad Business Review is to publish
manuscripts reporting original, creative research in the Iield oI management issues related to trade,
business and commerce. Theoretical and applied work including case studies oI companies or
comparative studies given equal weightage in publications consideration in this journal. The Gumbad
Business Reviewpublishes manuscripts only in the English language.
Submission oI manuscripts Ior publication review may be send by post or e-mail addressed to the
Editor, P.O. Box-89, HNBGarhwal University, Srinagar Garhwal (Uttarakhand), Pin-246174.
Contact Phone cum Fax No.-01370-267653
E-mail- acpmanagement70gmail.com
1uly 2010 - December 2010
S.S. Khanka 1-16
G.S. Batra
Monika Kansal 17-24
Isita Lahiri
Gairik Das 25-39
Akhilesh C. Pandey
Mukesh Singh Rawat 40-53
Ashok K. Sinha
Nisha Singh 54-61
Bimal 1aiswal
Namita Nigam 62-73
1aishikha Nautiyal 74-82
R. Datta
R.R. Nautiyal` 83-90
Ashutosh Priya
K.M. 1oshi
A. Kumar 91-97
V.C. Sharma
Satyendra Kumar
S.K. Srivastava 98-102
Priya Sharma
Saraswati Kala 103-105
Kavita Bhatt 106-110
GUMBAD BUSINESS REVIEW
Family Business in India
(Survival forThree Generations orBeyond)
Between Philanthropy and Business case
Reflections on CSRpractices of BTsustainable
Index companies
A Comparative review of the Development of
the Indian Retail Panorama with special
emphasis to organized Apparel Retailing
Effectiveness of Marketing Practices adopted
by Rural Intervention Organizations in
Uttarakhand: Acomparative study of HARC&
ATI
Analysis of Consumer Behavior Towards
branded laptops In India
Performance evaluation of mutual funds in
India in a post liberalization era-an empirical
analysis
Old-School forthe NewYouth
Human Resource Efficiency Indicators of
Public Sector Banks- Acase study of State Bank
of India in Uttarakhand
University-Industry Linkage: In Search of a
Pragmatic Approach for Indian Higher
Education
Customer's Attitude Towards E-Banking A
Study of Garhwal Region
Study the Level of Self Consciousness &
Adjustment in Practitioners and Non
Practitionersof 1apa andDhyana(ShortArticle)
1ratak: The Yogic Practice for the Enrichment
of HRDManagerial Skills
ISSN: 0973-6158
Vol. VI, No. 1
ABOUT THE UNIVERSITY AND THE DEPARTMENT
THEUNIVERSITY
Hemwati Nandan Bahuguna Garhwal University, was established in December 1973 by
the then Uttar Pradesh Government with it's headquarter at Srinagar, District Garhwal,
Northern Himalayas in the then State oI Uttar Pradesh. With eIIect Irom 15th January,
2009 the University has been elevated as a Central University by an Act oI Parliament. In
its present state the University is residential and aIIiliating in nature with its Iour
Campuses located at Srinagar, Pauri, Tehri and Chauras besides with more than 170
aIIiliated colleges and Institutions spread over the Garhwal region oI Uttarakhand State
oI India. There are Fourteen Schools with one hundred one Academic Departments
providing teaching, research and extension indiIIerent areas oI learning.
The University provides the most ideal conditions Ior serious study with the surrounding
area abounding in natural grandeur with river Alaknanda Ilowing with its sylvan beauty
supported by green Iorests accompanied by snowcovered peaks oIIering clean and Iresh
air, water, thus creating a salubrious peaceIul environment, all requisites Ior learning
with excellence and tapasya.
ABOUT DEPARTMENTOF BUSINESS MANAGEMENT
The Department oI Business Management, which is nowpart oI school oI management,
has been set up by the University with the permission oI the then State Government oI
Uttar Pradesh in the year 1996 Ior running two years Iull time MBADegree course on
selI Iinance basis. The two year Iull time M.B.A. Degree course oI the Department has
also been approved by the All India Council Ior Technical Education, New Delhi Irom
time to time.The Department has established its image as a centre oI excellence in
management education. The vision oI the Department is to be and remain a centre oI
excellence in management education and the mission statement oI the Department is to
produce quality managers and good human beings. The Department also admits
Research Scholar Ior Ph.D. in Management. The Department is located at Chauras
Campus oI the University in well structured Building with in house Library, computer
lab, Seminar hall and well equipped class rooms and tutorial rooms.
Case studies, simulation exercises, classroom presentation, class lectures including
group activities like seminars, workshops, guest lectures by outside experts, brain
games, quizzes and Iield works are some oI the techniques used in the course. Besides,
exercises relating personality development, enriching communication skills, and
building team spirit are regular Ieatures. Meditation and participation in cultural and
social activities are unique Ieatures. Summer training, Iield assignment, project work
and industrial tours are essential Ieatures oI the course.
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
1
S. S. Khanka`
Family Business in India
(Survival Ior Three Generations or Beyond)
Abstract
Historically, Iamily as a social institution has
been one oI the oldest surviving business units in India,
as anywhere else, constituting above 75 in terms oI
ownership. Most oI the researches in Iamily business are
limited to western economies. However, the research
interest in Iamily business is recent and stray outputs
have started appearing in developing countries or Asia in
general. Whatsoever research has so Iar been conducted
in Iamily business in India is scattered and our
knowledge about the subject has been Iar Irom
satisIactory. No comprehensive picture is still clear on
most aspects oI Iamily business. As such, currency is
generally given to assumptions and general
predilections Iamily business in the country. One oI the
general assumptions held is the most oI the Iamily
businesses in India survive Ior three generations and
only a Iew go beyond thus, supporting the age-old
saying, 'shirt sleeve to shirt sleeve in three generations.
It is in this context that the present paper makes a modest
attempt to examine the survival issue oI Iamily business
in India. The main Ioci oI paper is to examine the reality
or myth about survival oI Iamily business in India up to
three generations or beyond. Accordingly, the paper has
been presented in two parts. Part I gives the theoretical
perspective oI Iamily business in India and part II
presents the empirical evidences based on some case
studies on Iamily business in India.
Introduction
~Govern a family business as you cook a small fish very gently.
Chinese Proverb
'The saga oI three generations oI Iamily business is in the Iirst generation the scruIIy and astute
patriarch works hard and makes money. Born into money, the second generation does not want
more money. It wants power; it goes aIter it with the single-mindedness oI a Joseph Kennedy, and
Buddenbrook's son becomes a senator. Born into money and power, what else is leIt Ior the third
generation to do but to dedicate itselI to art? So, the aesthetic but physically weak grandson plays
the violin. But the signs oI decline are visible and that this is end oI the Buddenbrook's Iamily.
-Thomas Mann: Buddenbrook (the greatest book about a family business)
Family and business have been coeval since time immemorial. While Iamily is one oI
the oldest surviving social system (Goode 1982), Iamily business is the oldest surviving
economic system. Business history is witness to the Iact that most countries have Iamily
businesses playing signiIicant roles in their economies. Family businesses constitute the largest
size in terms oI ownership; contribute signiIicantly to the gross national production (GNP), total
industrial employment, and total exports oI the country. Though estimates do vary Irom country
`Professor (HRM) and Coordinator National Institute oI Financial Management (Ministry oI Finance, Government
oI India) FARIDABAD 121 001 (Haryana) Email: khankaniIm.ac.in, sskhanka05rediIImail.com
to country, these are above 60 per cent in the majority oI the cases. About a third oI the companies
listed in Fortune 500 are Iamily businesses (Lee 2004: 46-53). For example, even in the US, the
most proIessionalized business nation, more than 80 per cent oI all enterprises are Iamily-owned
businesses which create its 40 per cent oI GDP. Coming to the Indian case, according to the
'Report oI the Monopolies Enquiry Commission, Government oI India (1965), 75 largest
business houses in India controlled 1536 companies accounting Ior 47 per cent oI assets and 44
per cent oI paid up capital oI all non-governmental and non-banking companies. According to
Dutta (1997), more than 70 per cent oI the hundred largest corporations and 99.9 per cent oI all
enterprises in India are either Iamily-owned or controlled. Not surprisingly, this has had a
signiIicant impact on the conduct and development oI business in the country. This clearly
indicates that Iamily business has come to occupy a signiIicant place in Indian industry. In most
oI the countries, much oI retail trade, small industry, and all type oI services are in the hands oI the
Iamily, Irom the corner store to the most high-tech manuIacturing items (Anonymous 1996).
Family businesses exist all over the world Ior centuries Irom shoemakers to
conIectioners to Iarmers. Over 80 per cent oI world business is controlled by Iamilies. They
employ around 50 per cent oI world work Iorce and contribute around 40 to 50 per cent in the
world GDP. The world's oldest documented Iamily business is a construction company, named;
th
'Kongo Gumi' oI Japan Iounded in 578 ADand is currently managed by the 40 generation. Prince
Shotoku brought the Kongo Iamily members to Japan Irom Korea more than 1400 years ago to
build the Buddhist Shitennoji Temple, which still stands in Japan. Over the centuries, Kongo
Gumi participated in the construction oI many Iamous buildings, including the sixteenth-century
Osaka castle. The Kongo Iamily still continues to build and repair religious temples. Presently,
Toshitaka is its president and his son Masakazu Kongo who is 51-year old, is waiting in the wings
to succeed Toshitaka.
Some oI the largest Iamily business Iirms worldwide are:
Wal-Mart (USA): Revenues $245 billion, SamWalton Family
Samsung Group (South Korea): Revenues $98.7 billion, Lee Family
Flat Group (Italy): Revenues $54.7 billion, Agnell Family
McCain Foods (Canada): Revenues $ 3.5 billion, McCainFfamily
Tata Group (India): Revenues $7.9 billion, Tata Family
Following is an overviewoI signiIicant place assumed by Iamily business by nowworldwide:
Over 75 per cent oI all registered companies in the industrialized world
are Iamily businesses (OECD).
One-third oI Iortune 500 has Iamilies at their helm.
70 per cent Iirms in the United Kingdom are Iamily owned.
OI Italy's 100 topcountries, 43 are Iamily owned.
Family owned Iirms employ about 50-60 per cent oI the work
Iorce in the industrialized world.
In India too, 95per cent oI the registered Iirms are Iamily owned.
Companies with Iounding Iamily participation perIormed
better than non-Iamily businesses (Study of Standard and Poors 500).
In India too, the highest creator oI wealth are Iamily-owned businesses. FiIteen out oI the twenty
largest industrial houses in 1997 derived Irom the Vaishya or Bania trading castes. Eight oI them
were Marwaris (Anonymous 1997: 218). But, the sad picture is that only 15 to 20 per cent oI
Iamily businesses survive till the third generation and around 5 per cent go to the Iourth
generation (Sue 1986: 36). Researchers report that Iamily businesses are Iound to split up like
amoeba as they grow, and vary IewoI them, around 5 per cent survive beyond three generations.
Thus, they support the age-old saying, 'shirt sleeve to shirt sleeve in the three generations
Family Business in India (Survival for three Generations or beyond)
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 2
(Carlock andWard 2001, McCulloch 2004: 20-22). ProIessor Pulin Garg at the Indian Institute oI
Management, Ahmedabad (IIMA), used to tell his students, 'Haveli ki umar saath saal` (The liIe
oI a Iamily is sixty years) (http.//gurucharandas.org). Most discussions in this area oI survival oI
Iamily business are based on research on advanced countries like US. However, in most
developing countries including India, this area still remains a black box. The reason being the
academics and industry observers were puzzled to witness the recent amoebic type break up in the
second generation oI the Ambani Iamily, the largest private sector group worth over US $ 20
billion. Even the anecdotal evidence is highly limited to a Iew biographical sketches only
(Tripathy 2004, Piramal 1998) and consultant impressions (Dutta 1997, Sampath 2001).
Indian industry is largely dominated by Iamily businesses. Family businesses have
always been a matter oI great curiosity as they are distinctively diIIerent Irom other Iorms oI
businesses such as public enterprises, joint sector enterprises, and cooperatives in more than one
term such as their entrepreneurial, managerial and organizational behaviours and styles. This is
because oI the Iact that their behaviours and styles are inIluenced by the emotions oI Iamily
members, inter-personal pressures oI relatives and owners, and most importantly, the conIlicting
interest oI Iamily and business. Then, such uniqueness on these aspects leads the Iamily business
to exhibit distinct operational characteristics and also unique set oI problems and challenges. It is
against this backdrop, the present paper makes a modest attempt to discuss the nature oI Iamily
business in India and also unIold the unique challenges and problem oI management succession
considered important in Iamily owned businesses. Also given are suggestions towards the end oI
the paper to make Iamilybusiness more eIIective in India.
Family Business Defined
Family business has been as common in the Indian economy like elsewhere in the world,
it is perceived in a common sense. Various terms like 'Iamily-owned,' Iamily controlled,' 'Iamily
managed,' 'business houses,' and 'industrial houses' are used to reIer to Iamily business. Thus, the
term Iamily business conjures up diIIerent meanings to diIIerent people. While some view it as
traditional business, others consider it as community business, and still others mean it as home-
based business. As such, there are various deIinitions oI Iamily business given looking at the
diIIerent aspects oI Iamily business. For the convenience oI understanding, all deIinitions have
been broadly classiIied into two types based on the structure and process involved in Iamily
business.
Structured Definitions: These deIinitions are given based on ownership and/ or management oI
Iamily business. AIewsuch deIinitions are:
'Ownership control bythe members oI a single Iamily. - Barry
'Majority ownership by a single Iamily and direct involvement by at least two members in
its operation. - Rosenblatt, de Mik, Anderson, and Johnson
'Single Iamily eIIectively controls Iirm through the ownership oI greater than 50 per cent
oI the voting shares; a signiIicant portion oI the Iirm's senior management is drawn Irom
the same Iamily. - Leach et al.
Process Definitions: These deIinitions are based on how the Iamily is involved in the business.
Following are some oI such important deIinitions oI Iamily business:
'Family business is a Iirm which has been closely identiIied with at least two generations oI a
Iamily and when this link has had a mutual inIluence on company policy and on the interests and
objectives oI the Iamily. - R. G. Donneley (1964: 93-105)
'Family businesses are those where policy and decision are subject to signiIicant
inIluence by one or more Iamily units. This inIluence is exercised through ownership and
sometime through the participation oI Iamily members in management. It is the interaction
between two sets oI organizations, Iamily and business, that establishes the basic character oI the
Iamily business and deIines its uniqueness. - P. Davis
Some researchers argue that a broad deIinition oI a Iamily business should incorporate
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
3
Family Business in India (Survival for three Generations or beyond)
some degree oI control over strategic decisions by the Iamily and the intention to leave the
business in the Iamily. Shanker and Astrachan (1996) note that the criteria used to deIine a Iamily
business can include: Percentage oI ownership; Voting control; Power over strategic
decisions; Involvement oI multiple generations; and Active management oI Iamily members.
In an eIIort to resolve the deIinitional ambiguity surrounding Iamily business research, Litz
(1995: 71-81) suggests that a business can be deIined as a Iamily business when its ownership and
management are concentrated within a Iamily unit. Furthermore, he argues that to be considered a
Iamily business; the business' members must strive to achieve, maintain, and/or increase intra-
organizational Iamily-based relatedness.
In sum and substance, a Iamily business can simply be deIined as a business one that includes two
or more members oI a Iamily with Iinancial control oI the company. In other words, a Iamily
business is one actively owned and/or managed by more than one member oI the same Iamily
Characteristics
The deIinitions oI Iamily business given above indicate the Iollowing characteristics oI Iamily
business:
Agroup oI people belonging to one or more Iamilies run one business enterprise.
Position in Iamily business is inIluenced by the relationship the Iamily members enjoy
amongthemselves.
Family exercises control over business in the Iorm oI ownership or in the Iorm oI
management oI the Iirm where Iamily members are employed on key positions.
Family exercises the inIluence on the Iirm's policy direction in the mutual interest oI
Iamily andbusiness.
The succession oI Iamily business goes to the next generation.
Family business in India is largely caste-related.
Every caste enjoys a dominant culture which gets duly reIlected in their Iamily
businesses also.
Types of Family Businesses
Having deIined and outlined the salient characteristics oI Iamily business, we can nowproIitably
classiIy Iamily businesses into various types as Iollows:
Family-Owned Business: This is a Iamily business in which a controlling size oI ownership
either in the Iorm oI shareholding or any other is owned either by the Iamily or a member oI the
Iamily member. Most oI the Iamily businesses especially when these are small in size Iall this
type oI Iamilybusinesses.
Family-Owned and Managed Business: In this type oI Iamily business, a controlling size oI
ownership, be in the Iorm oI shares or other Iorm oI ownership, rests with the members oI a single
extended Iamily or with a single member oI the Iamily but greatly inIluenced by other members
oI the Iamily. Such a controlling ownership conIers the Iamily permission to devise and decide
the objectives, methods Ior achieving them, and policies Ior implementing the methods. One or
more Iamily members exercise the ultimate control over the management oI the Iamily business.
Family-Owned and Led Business: This type oI Iamily business is, to a great extent, similar to
that oI above i. e. 'Family-owned and managed' business. Nonetheless, it is diIIerent Irom above
one in the sense that at least one member oI the Iamily is a member oI the board oI directors oI the
company / business. This enables him / her to exert inIluence over the business's direction,
culture, and strategies.
Family Business in India (Survival for three Generations or beyond)
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 4
Family Business in India: AHistorical Perspective
Family business in India had been in practice since long, oI course, with its changing
nature and structure over the period. India enjoys a rich and glorious history oI Iamily-owned
business. The origin oI Iamily business in India is traced back to the ba:aar system in the ancient
times. Initially, Iamily business in India started in the Iorm oI trading and money lending
involving the hustle and bustle oI the ba:aar. It was also conIined to certain communities, notably
the Jains and Marwaris especially in the northern India. Its industry Iorm is relatively oI recent
origin, going back largely to the British rule and the First World War. Here is one such instance to
it. Cawasji Davar set up the Iirst cotton mill, or say, the Iirst manuIacturing enterprise in Bombay
(nowMumbai) in 1854. Consequent upon this, some trading communities started textile mills in
th
Mumbai and Ahmedabad during the last halI oI the 19 Century. The trading communities
emerged as Aggarwals and Guptas in the North, the Chettiars in the South, the Parsees, Gujarati
Jains and Banias, Muslim Khojas and Memons in the West, and Marwaris all over India.
Nowadays Aggarwals are mostly reIerred to as Marwaris. Here is an interesting legend oI how
Aggarwal Iamilies emergedas most dominatingandsuccessIul inbusiness inIndia(Roy2008: 84).
The Agrawals
TheAgrawals claim descent Irom the legendary king Agrasena oI Agroha. According to
the legend, Agroha was a prosperous city and hundred thousand traders lived in the city
during its heydays. An insolvent community person as well as an immigrant wishing to
settle in the city would be given a rupee and a brick by each inhabitant oI the city. Thus,
the person would have hundred thousands bricks to build a house and hundred thousand
rupees to start a newbusiness. Gradually, the city oI Agroha declined and Iinally gutted
in a huge Iire. The residents oI Agroha, i.e. the Agrawals, moved out oI Agroha and
spread to other parts oI India. In his book, 'Agarwalon ki utpatti, Bhartendu
Harishchandra categorized Agrawals into Iour branches: Marwaris, Deswal, Purabiya,
and Pachihiye. Nowadays, Agrawal Iamilies are mostly reIerred to as 'Marwaris.'
Jamshedji Tata started his various business enterprises like cotton mill in Nagpur, the Taj Hotel in
Mumbai, his Iamous steel plant in Jamshedpur, and several real-state developments. These
enterprises, in turn, prompted other people to join the business Ioray. Anumber oI Iamilies, such
as Birlas, Bangurs, Khaitans and Goenkas started their business in Kolkata and developed the city
as a centre Ior commerce.
Initially Iamily businessmen were engaged in small-size businesses requiring small investments
managed by themselves only. But, once they entered into manuIacturing sector, they Ielt the need
Ior more and heavy investments not manageable by themselves. At the same time, they also knew
that once they allowsomeone to join business, their control over management oI the business will
weaken which they, however, did not want. In such a case, Iamily businesses inducted their
Iamily members or relatives or Iriends in the business by allotting them blocks oI shares while
making sure that the majority control and, in turn, the management oI the business remained with
the promoting Iamily itselI. This is how corporate management was born embedded by a
combination oI joint stock principle and Iamily control over business. Because stock markets
were yet to gain suIIicient momentum, on the one hand, and the joint Iamily system was also
intact, on the other, business Iamilies were holding control over their business empires built up
through the ingenious device, popularly known as the 'managing agency system.' The managing
agency system continued till 1970 as an instrument oI maintaining Iamily control over business
enterprise. As such, all critical decisions about the business were taken by the promoting Iamilies,
euphemistically termed managing agents. This system oI corporate management got so rooted in
due course oI time that hardly any industrial Iirm remained out oI its orbit. In other words, this
indicates that all businesses were controlled and managed by a IewIamilies in the country. R. K.
Hazari, a well-known industrial economist, had concluded aIter an exclusive analysis that most
oI the prominent industrial Iirms on the contours oI Indian business during the 1950s, were in the
hands oI just 18 Indian Iamilies and two British houses. However, the period oI 1950s
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
5
Family Business in India (Survival for three Generations or beyond)
experienced certain changes with some developments shaking and disturbing the business
environment, in general, and Iamily business, in particular. The consequence was the earlier
tranquil situation that the Iamily business was enjoying in the country got greatly disturbed
especially by Iour major developments as mentioned below:
1. With a resolution to accelerate the pace oI economic development during the post-
Independence period to solve the problem oI unemployment and poverty stalking the land,
the Government invited private sector to partake oI new opportunities available Ior
business and industrial development, oI course, amidst a myriad oI restrictions imposed
on the Ireedom oI enterprise.
2. The Governments, both at Central and State levels, set up various Iinancial institutions to
provide Iinance to private sector enterprises in the country.
3. The joint Iamily system, once the bedrock oI the Indian social structure in India, started
experiencing severe strains and threats and, in turn, increasingly loosing its place in the
social structure. For such a sorry state oI situation, thanks to inter alia growing
urbanization and ever increasing westernization in the country.
4. The right oI possession oI private property and its inheritance has been one oI the major
Iactors inencouraging Iamilybusiness in India.
In lump sum, these changes, in turn, caused changes in Iamily business in the country. With
increase in the magnanimous size oI inIrastructural projects in the country, business Iamilies
were no longer capable enough to mobilize the required resources including Iinance Irom their
own resources. As a result, Iinancial control oI business started gradually shiIting Irom
promoting Iamilies to Iinancial institutions. Also the business Iamilies started splitting and
cracking. To quote, the Dalmias were the Iirst prominent business house in the country to break up
aIter Ireedom. The pace oI splitting Iamily businesses started accelerating in the country
beginning with 1970 and since then, it has been increasingly growing. Business history is replete
with increasing number oI Iamilies splitting in the country over the period. Birlas, Modis,
Sarabhais, Bangurs, Singhanias, MaIatlals, Shrirams, Thapars, Walchands, Goenkas and the
most recently, the Ambanis are the illustrious Iamily businesses in our country who have
experienced split in their businesses. Nonetheless, it is worth mentioning that inspite oI various
changes like loosing Iinancial control over business and growing splits in businesses, the Iamily
control over management oI business still remains impaired in the hands oI promoting Iamilies.
This is indicated by the Iact that the management oI as many as 461 out oI 500 most valuable
companies is still under Iamily control in our country. One oI the signiIicant changes in Iamily
business in India is induction oI proIessionals to manage the aIIairs oI business. Tatas, Birlas,
Reliance, Wipro, and Murugappa Group are some oI the illustrative Iamily businesses employing
proIessional managers to look aIter the management issues oI their businesses. With increase in
size oI business has also led to increase in split in Iamily businesses in the country over the period.
Goenka Iamily and Ambani Iamily are such examples oI split in Iamily business in our times. The
changing environment oI Iamily business in India can be summed up as Iollows:
Earlier Presently
Business as Iamily Family as business
Family wealth and prosperity Shareholder' value and prosperity
Growth strategies Economic value added (EVA)
Expansionand diversiIication Core and competitive competencies
Familysuccession planningIor next Planning Ior attraction and retention
generation oI proIessionals
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Why Family Business?
'When it works right, nothing succeeds like a Iamily Iirm. The roots run deep, embedded in
Iamily values. The Ilash oI the Iast buck is replaced with long-term plans. Tradition
counts (Facts and Figures: Family Business in the US, Family Business Maga:ine).` A
Iamily business provides a range oI advantages which other enterprises (non-Iamily
businesses) do not. These include but not conIined to the Iollowing only:
Common Values: Entrepreneur and his / her Iamily are likely to share the same ethos
and belieIs on howthings should be done. This will give entrepreneur an extra sense oI
purpose andpride - anda competitive edge Ior his / her business.
Strong Commitment: Building a lasting Iamily enterprise means entrepreneur is more
likely to put in the extra hours and eIIort needed to make the business a success. At the
same time, his / her Iamily is more likely to understand that he / she needs to take a more
Ilexible approachto his / her working hours.
Loyalty: Strong personal bonds, called loyalty, means entrepreneur and Iamily
members are likely to stick together in hard times and show the determination needed
Ior business success. Loyalty leads to commitment which gets translated into hard work
and perseverance which are the prerequisites oI success in any endeavour including
business.
Stability: Purpose provides stamina and stability in eIIorts. Knowing one is building Ior
Iuture generations encourages and strengthens his / her eIIorts in terms oI long-term
thinking and tenacious eIIorts needed Ior growth and success oI his / her business. Yes,
at times it can also produce counterproductive eIIects in terms oI entrepreneur's
inabilityto respond to requirement.
Decreased Costs: Unlike non-Iamily businesses, members oI Iamily business may be
more willing to make Iinancial sacriIices Ior the sake oI the business. For example,
accepting lower pay than they would get elsewhere to help the business in the longer
term, or deIerring wages during a cash Ilow crisis. The Iamily business can also hold
down the costs oI governance, in terms oI special accounting systems, security systems,
policy manuals, legal documents and other mechanisms to reduce theIt and monitor
employees' work habits. This is possible because employees and managers oI business
are well relatedand have trust and conIidence on each other.
Following is an example oI Bajaj Iamily business conIirming how Iamily business proves cost-
eIIective:
We may run businesses oI diIIerent sizes but we have the same standard oI living,'
says Neeraj Bajaj. 'Rahul runs the Rs 2500 crore Bajaj Auto and Shekhar runs the Rs
200 crore Bajaj Electricals, but they get equal salaries and equal pocket money. Splits
take place when there is visible inequality. We take pains to observe absolute equality,
and our 15 rules keep us honest. We travel in the same types oI cars; we are allowed
the same class oI air travel; we usually vacation together; thus, we minimise
diIIerences andcomparisons.
'Every year at Diwali the Iamily members get together and we reviewthe 15 rules by
which we run our joint Iamily. These rules relate to what each Iamily member gets as
pocket money, vacation allowance, what women spend on jewellery, and so on. Each
year the Iamily members update their allowances under the leadership oI Rahul, who
is presently the head oI the household aIter my Iather Ramakrishna's death. And we
meticulously stick to our pocket money. No exceptions! And I should knowbecause I
am currently the treasurer oI the Iamily, responsible Ior managing the Iamily wealth,
disbursing Iunds, Iiling tax returns and looking aIter the Iamily aIIairs (Das 1996).
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Family Business in India (Survival for three Generations or beyond)
Family Business Suffers from Disadvantages too
All is not well with Iamily business. It also suIIers Irom certain disadvantages as
mentioned below:
Risk oI Ownership: Family members hold the impression that the Iamily business will
continue to earn proIit and, thus, ensure receipt oI cash and other beneIits on a recurring
basis. However, when business either earns less income or incurs loss, receiving cash
and other beneIits becomes uncertain especially Ior non-active members. Then they start
challenging and questioning the ownership oI business to ensure their share in the
business cake. This produces various implications Ior the business like weakens Iamily
unity and commitment, conIlict surIaces between active and non-active Iamily members
and relatives, and businesses' market share starts dwindling and ultimately the business
dies out.
Controlling Ambiguity: Every entrepreneur wants the control oI his/ her business should
rest with the closest and trustworthy one. In practice, business control generally rests
with the siblings, the minority shareholders have only a minimal control over the
business. Minority shareholders normally are given protection oI their ownership by
having a say in: sale or merger oI the company, the issuance oI stock to others, borrowing
moneyinexcess oI a set amount, a major capital expenditure.
The Subtle Messages oI a Buy/Sell Agreement. We encourage Iamilies to put an
agreement in place that will make it relatively easy Ior a shareholder to exit ownership oI
the business. However, some Iamilies believe multiple shareholders will be in place
Iorever. In general experience, this is not the case in 99 per cent oI Iamily businesses.
Buy/sell agreements protect the company and it's stock, Ior example, against a
shareholder getting divorced and giving an ex-spouse an ownership stake, where the
stock must go in case oI death, what must happen to the stock in the event oI a
shareholder declaring personal bankruptcy, and iI the stock can be pledged as security
Ior other business investments. Sometimes, a shareholder just wishes to have control oI
his or her own investments and opts out oI the Iamily business. This raises questions like:
Are they disappointing their deceased parents?Are the active siblings sending a message
to the non-active that they do not trust them or their intentions?
Inability Ior Shareholders to Cash Out oI the Family Business: Mostly Iamily businesses
lack the Iinancial ability to Iund the redemption oI stock Irom one major shareholder.
Funds are typically not available, and most owners will reIuse to go to the bank Ior a loan
as it might put the company in a poor Iinancial position. Thus, the minority shareholder
wanting to cash out either cannot do it or must Iollow certain company policy, which
normally discusses the conditions and timing oI a stock redemption.
Major Challenges Faced by Family Business in India
Although Iamily business has been an integral part oI industrial economy oI India, it
also Iaces some major challenges but not conIined to the Iollowing only:
Challenge of Inter-relationships
One oI the peculiarities oI Iamily business is that the boundaries between work and
Iamily are quite intermingled, complex and also multiIaceted. Such an inter-related context at
times creates three overlapping perspectives that inIluence the actions and decisions oI Iamily
business owners (Hoy and Verser 1994: 9-23). These are: (i) The Iamily wants to take care oI
Iamily members. (ii) The concern Ior ownership by doing what is in the best interests oI Iamily
business. (iii) The concern Ior management by doing what is the best interests oI other
organizational employees, i.e. non-Iamily employees. Howthese three overlapping perspectives
create challenges Ior Iamily business can be exempliIied with an imaginary example:
Let us consider a Iairly common Iamily business situation in which a Iamily member
needs a job. From the Iamily perspective, one probably would see this as a chance to help out
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someone in need oI job in the Iamily. From the ownership perspective, one might have concern
about the impact oI an additional employee on organizational expenses and, in turn, proIits. From
the management perspective, one might be concerned about the eIIect oI hiring an employee Irom
Iamily on other non-Iamily employees. We Iind each oI these perspectives is valid and justiIiable.
But the issue is which oI the perspectives takes precedence. Remember, these perspectives might
not be mutually exclusive all the times, but might be overlapping each other. Nonetheless, there
might be situation in which business action or decision is going to be inIluenced more strongly by
one oI the perspectives. Here needs the entrepreneurial ability oI the Iamily business to properly
balance all three perspectives simultaneously in managing the complex and overlapping
relationships in running the Iamilybusiness in an eIIective manner.
Challenge of Management Succession
Management succession has been Iound the second major challenge Iacing the Iamily
businesses everywhere in the world including India. Research studies on Iamily business have
reported that, on average, only 30 percent oI Iamily businesses survive to the second generation,
and only 10 percent make it to the third generation (Zimmerer and Scarborough 1998: 17). The
statistics is pretty alarming. Then what is the reason Ior such a sorry and alarming situation? The
reason is not diIIicult to seek. Many entrepreneurs Ior their own reasons dream oI passing on the
Iamily business to their children or kins and kiths. But, the human traits such as lack oI interest or
competence or jealousy usually get into business with their evil eIIects on business. The
consequence is Iailure oI business.
Here the Iollowing two excerpts relating to succession in Iamily business seem worth
citing:
Pulin Garg, the thoughtIul ProIessor at the Indian Institute oI Management,
Ahmedabad, used to tell his students, 'Haveli ki umar saath saal' (The liIe oI a Iamily
business is sixty years).
Thomas Mann, the Nobel Prize winning German writer, expressed the same thought in
his great novel Buddenbrooks, which is arguably the greatest book about a business
Iamily. It describes the saga oI three generations oI Iamily business: in the Iirst
generation the scruIIy and astute patriarch works hard and makes money. Born into
money, the second generation does not want more money. It wants power; it goes aIter it
with the single-mindedness oI a Joseph Kennedy, and Buddenbrook's son becomes a
senator. Born into money and power, what else is leIt Ior the third generation to do but to
dedicate itselI to art? So, the aesthetic but physically weak grandson plays the violin.
But the signs oI decline are visible and that this is end oI the Buddenbrooks Iamily.
That madness, i.e. intoxication oI power causes damages is very beautiIully illustrated in the
Iollowing Urdu couplet:
'Intoxication oI liquor leaves you, but intoxication oI power continues to grow, takes hold oI you,
and Iinally drowns you.
Sibling Rivalry
One oI the challenges Iamily businesses Iace is sibling rivalry. Why does sibling rivalry
surIaces? The main reason Ior this is the share in Iamily business cake the members get. This
happens particularly when business starts Ilourishing and expanding over the period. The sibling
rivalry ultimately culminates to split in Iamily business. As Ramachandran (2009) puts, Iamily
businesses are Iound to split up like amoeba as they grow, and very Iew oI them survive beyond
three generations. The reason is sibling rivalry surIaces mainly due to siblings' anxiety to prove
their mantle better than the others. Rivalry with each other oIten amounts to pull each other down
at the cost oI the organizational resources. The rivalry Iurther gets Iuelled and even complicated
when some members oI the Iamily in one way or other Iavour one oI the siblings. This Iurther
leads to the complication as one oI them Ieels oI unjust and undue Iavouritism. II rivalry is not
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Family Business in India (Survival for three Generations or beyond)
resolved well in time, it may lead to split in the Iamily business and, thus, may damage the age-old
Iamily business. That sibling rivalry destroys Iamily business is very well conIirmed by rivalry
between Ambani brothers. Here is the story:
The great visionary and astute entrepreneur, Dhirubhai Ambani, who loved to dream big
and to attain them, lacked the vision to carve a succession plan Ior such a giant corporation. He
passed in 2002 without providing the company with clear cut succession route. May be that he
never thought that even such huge empire will Iail short oI the aspirations oI his two young
Ambanis. He Iailed to understand the strategic importance oI planning the succession in advance
and in the year 2004; the sibling rivalry in reliance became the most talked story in the business
world. Sharp diIIerences between the two brothers started cropping up leading to a nasty seven-
month-long ownership row. On the height oI rivalry between the brother, on June 18, 2005, aIter
much public dilemmas, Prime Minister and Finance Minister has tried to mediate between two
Iighting brothers. Mukesh and Anil Iinally reached an agreement to divide assets aIter a long
drawn battle, split the Reliance Empire to steer ahead their own interests.
Followingwere the split consequences:
Step 1:
Split the Ambani Iamily stake in RIL in the 30 : 30 : 40 ratio among the
two brothers and Kokilaben. Anil Ambani to relinquish control to
Mukesh, who gets Iull control oI Reliance Industries' core oil and gas
business.
Step 2:
Create a special purpose vehicle to house RIL's stake in Reliance Energy
andreliance Capital. Anil Ambani to continue heading the two Iirms.
Step 3:
In lieu oI Anil giving up control in RIL, Mukesh Ambani transIers part oI
his 45 stake in InIocomm to anil, who nowgets to run the venture
Reliance split is a burning case to conIirm that Iamily business gets split over ego clashes. Hence
presents the biggest challenge Ior any Iamily indulged in business. Just aIter the split the
company slipped in Forbes list. Even iI the Reliance does not suIIer severely, it certainly devalues
status oI the Iamily in the society and the trust oI the customers and shareholders. II Mr. Dhirubhai
Ambani had planned a business envisioning the inherent conIlict it could have been another story
altogether where both the siblings would have complemented each other with their unique skills
and have consolidated the empire created by their Iather into a well established and cared Iamily
business not just another business.
We have seen split in Iamily business due to diIIerences and ego clashes among Iamily
members during the past ten years among the Modis, the Walchands, the Raunaq Singhs, the Bhai
Mohan Singhs and a dozen other joint Iamily Iirms who have separated (Das 2010). Family
business split generally happens with increase in the size oI Iamily, or say, joint Iamily. In a way,
living in joint Iamilies is a bit like liIe under socialism. Joint Iamily does not work in the long run
in the same way that socialism does not work. Joint Iamilies require strict equality to succeed.
But, because human beings are by nature unequal and they need material incentives to perIorm, a
joint Iamilies break up in the end. In such situation, a strong and Iair leader can help Iamily
business to prolong like Rahul Bajaj in case oI Bajaj's mentioned earlier. Bajaj's experience
shows that having a Iamily constitution or Iamily rules help to prolong the liIe oI Iamily business
on perpetual basis.
There are yet more reasons that make Iamily business ineIIective and, in turn, unsuccessIul.
Flaming (2000) terms these reasons as seven deadly sins that can run Iamily businesses into the
ground or make them less valuable in the market place. These are given in the Iollowing :
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Table 1: Seven Deadly Sins of Family Business
Sins Consequences
1. It's the same oldsong. Family members' childhood behaviour and
belieIs Iollowthem into the business
2. We're one big, happyIamily. The Iailure to recognize that running a business
requires diIIerent practices than running a
Iamily.
3. They mayhave become adults, The parents are unable to accept and treat
but they'll always be mychildren. their grown children as adults.
4. You're not loyal tothis Iamily iI The Iailure is to acknowledge and treat Iamily
you insist onbeingselIish. members as individuals.
5. Father knows best. Founders usually possess dominating
personalities and may be totally consumed
by the business.
6. May be it will go away iI we Ignoring problems only adds to their
ignore it. destructive potential.
7. Tell me about your childhood. Children oIten enter the business beIore
resolving childhood issues, which can aIIect
the way that may work.
Besides, Indian Iamily businesses also have some weaknesses that make them ineIIective.
Following are the Iour most important ones as reported by Das (1999):
1. An inability to separate the Iamily's interest Irom the interest oI the
business.
2. Lack oI Iocus and business strategy.
3. Short-term approach to business, leading to an absence oI investment in
employees and in product development.
4. Insensitivity to the customer, largely because oI uncompetitive markets,
but resultinginweak marketing skills.
No doubt, there are challenges and pitIalls that make Iamily business suIIer. But it doesn't mean
that Iamily business can not run eIIectively. There are ways that Iamily businesses can do to be
eIIective and successIul. We are goingto look at this important topic next.
Business Succession Planning
We all know that sooner or later, every one retires Irom service, business or even Irom
liIe. But retirement Irom business is not just a matter oI deciding not to go to oIIice anymore. It is,
in Iact, much more than that. The paramount question that arises on retirement Irom business is
what happens to the business aIter one retires Irom the business. Who is going to manage the
business when one no longer works in the business? Howwill ownership be transIerred? Will one
business carry on or will sell it? Business succession planning seeks to address and manage these
vital issues involved in Iamily business by setting up a smooth transition between ther owner-
leader and the Iuture one oI the Iamilybusiness.
Let us begin with deIining the term 'succession planning.' Some people term 'succession
planning' as 'multi-generational planning' or 'replacement planning.' Be it called by any names,
succession planning means planning Ior succession or making preparations on who will succeed
the owner-leader oI the business. Succession planning is a process Ior identiIying and
developing Iamily members with the potential to succeed the key role oI owner-leader in the
business. According to Charan, Drotter and Noel 92001), succession planning is concerned with
developingthe second order owner-leader to run the Iamily business.
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Family Business in India (Survival for three Generations or beyond)
Research studies report that only about 30 per cent oI Iamily businesses survive into the
second generation, 12 per cent are still viable into the third generation, and only about 3 per cent
oI all Iamily businesses operate into the Iourth generation or beyond. Such trend supports the age-
old saying, 'shirt sleeve to shirt sleeve in three generations (Carlock and Ward 2001). The
obvious question is why does this happen? More oIten than not, the lack or Iailure oI a solid
business succession planning is to blame to this sorry situation. Since evidences indicate that
good succession planning makes the Iamily business survive and thrive generation aIter
generation and absence oI it derails the business down and die out. Hence, there is a need Ior solid
succession planning in Iamily business to make the business perpetuate through generations.
However, as much succession planning is signiIicant Ior Iamily business is not so simple. It
requires thoroughthinkingand solid preparations to which we turn our attention subsequently.
There is substantial body oI literature on the subject oI succession planning. However,
the Iirst work on this topic was done by Walter Mahler (1973) in his book entitled 'Executive
Continuity.' In Iact, Mehler who was highly inIluenced by peter Drucker was responsible in the
1970s Ior helping to shape the General Electric succession process which became the gold
standard oI corporate practice. Later, other researchers (Kesler 2002: 32-44, Goldsmith and
Carter 2010) expanded the succession strategies developed by Mehler and recommended Ior a
process owner Ior talent andsuccession management in business Iirms.
As mentioned earlier, Iamily businesses Iace unique situations and, in turn, challenges
that set them apart Irom the typical business. Foremost among them is maintaining a Iine balance
between business and Iamily, that is, making decisions and undertaking actions that will honour
the Iamily values as well as beneIit the business. An instance oI imbalance would be, Ior example,
iI a Iather were to pick his oldest son to take over his business, simply because he is the Iirst-born,
when the youngest son is clearly the more competent Ior the job / business. In nutshell, business
succession planning needs to be done with serious thinking. Following are some oI the important
steps involvedin making a successIul succession planning Ior a Iamily business:
1. Make a Solid Case for Succession Planning: Remember people do not resist changing, they
resist to be changed. ThereIore, iI one wants to inIluence Iamily members' opinions about
business succession, s/he wants Iirst to make a strong case Ior succession planning. Convince the
Iamily members, with real liIe examples, the need Ior and signiIicance oI having succession
planning Ior ensuring the smooth and eIIective running oI Iamily business generation aIter
generation. Give the Iamily members' Iacts and Iigures like nearly 90 per cent oI small enterprises
are Iamily-owned, but only 30 per cent oI them succeed into the second generation, while 15 per
cent make it to the third generation, and only 3 per cent reach to the Iourth generation. Thus,
convince them that the lack oI succession planning is to blame this sorry state oI Iamily business.
The Iact remains that having a solid succession plan is like having a good insurance policy Ior the
perpetual continuity oI Iamily business through generations. Educate and help Iamily members
understand the value oI putting a succession plan into place well in time. Here the views oI
Jamshed J. Irani expressed about introducing organizational change seem worth citing to
appreciate the signiIicance oI planning Ior succession well in ahead: 'Change when you are still
strong and when change appears unnecessary do not wait for the day when you have no option
but to change.`
2. Prepare an Exit Plan: ClariIy in advance under what circumstances the succession plan will
take eIIect: whether on retirement or unplanned departure or changing Iinancial situations. These
question help determine what the succession plan should detail most. Keep in mind that both
early-exit and late-exist oI the owner-leader have advantages as well as disadvantages Ior Iamily
business.
3. Identify the Successor: IdentiIying the right successor is one oI the most signiIicant steps in
succession planning. The business successor should be identiIied by competence, not by any
other considerations and compulsions. One way to do so is to Iirst identiIy the qualities or
attributes a successor must possess to succeed the business. The Iamily member who possesses
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the maximum oI so identiIiedattributes should be selected Ior business succession.
4. Grooming and Developing the Successor: Once a successor is identiIied, s/he needs to be
groomed and developed to assume the headship oI the business. It can be done through various
ways like giving on-the-job training, working under mentors and advisors, and delegating some
authority to the successor much beIore the actual passing on oI the baton takes place. OI course,
grooming more than one member to become the successor oI business is not a bad idea, but at
times it may create conIusions and complexities leading to strenuous succession battles. Business
history is replete with evidences, like the recent one oI Ambani brothers, that extreme succession
battle may cause a split in the Iamily business. Yes, some may not consider the split as a bad thing
considering the Iact that the split between Ambani brothers led to a dramatic increase in the value
oI their individual holdings in the erstwhile Iamily business.
How to Make Family Business More Effective?
One way to Iind out eIIective ways to run Iamily business will be to discover the best
practices oI successIul Iamily businesses. Following are the most important ones:
Focusing on business, not Iamily needs: Although a Iamily business entrepreneur may
Ieel obligations to take care oI Iamily problems oI one type or other. S/he should not use
business as employment agency Ior Iamily members. Neither s/he should use business
Iunds Ior Iamily purposes (Anonymous 1998: ENT3). Ultimate Iocus oI running Iamily
business shouldbe Iamilyas business, not business as Iamily.
Ploughing back oI proIits in the business: ProIits earned by Iamily business should not be
used Ior meeting Iamily requirement, but should be reinvested in the business to Iurther
strengthenand sustain it inthe market place.
Using caution with Iamily: Be cautious about the implications oI hiring Iamily members in
the business to avoid likely conIlicts and conIrontations among the Iamily members.
Delegating authority or decision taking: AIamily business entrepreneur should delegate
decision taking to those who are competent and capable oI making right decisions. This
gives more time to entrepreneur to concentrate on business issues involving more serious
thinking and visioning. The Iamily entrepreneur who makes all decisions by himselI and
does not delegate to others is viewed as control Ireak. Such entrepreneur does not get
wholehearted and willing cooperation and support Irom others.
Viewing Big and Broader Picture: Family business entrepreneur should view big and
broad, that is, s/he should consider others' interests as well while running the business. In
other words, the entrepreneur while running business should strike a Iine balance among
three broad perspectives oI Iamily business: Iamily, ownership, and management, also
lumped together as the 3-Circle Model oI Iamily business.
Planning Ior Management Succession: Because Iamily business runs Ior a long period oI
time, hence there is always a need to have a good management succession plan in place to
carry on the business eIIectively. While planning Ior management succession,
entrepreneur should keep six Iactors into consideration: (i) the role oI the owner during the
transition; (ii) Iamily dynamics; (iii) income Ior Iamily members employed in the business
and shareholders; (iv) business conditions during transition; (v) treatment oI long-term
and loyal employees; and (vi) tax consequences (Brothers 1996: S11). Evidences suggest
that each oI these Iactors aIIects the choices made during the transitions and inIluence
whether the outcome is smoothing, Iunctional, and eIIective. In case no Iamily member
wishes to join the Iamily business, then the decision is to be made to transIer the Iamily
business to some non-Iamily member. In such case, the owner needs to address a key
question is ownership what type and howmuch ownership, iI any, will be retained by the
Iamily? In nutshell, the main thing in either case, i.e. transIerring the business to Iamily
member (s) or transIerring to non-Iamily member(s) is planning well in ahead. So to say,
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Family Business in India (Survival for three Generations or beyond)
the entrepreneur should not wait until something happens and then Iorced to take rush and
ill-advised actions and decisions. Here the views oI Jamshed J. Irani expressed about
introducing organizational change seem worth citing to appreciate the signiIicance oI
planning (succession) well in ahead: 'Change when you are still strong and when change
appears unnecessary do not wait for the day when you have no option but to change.`
Prepare the Family Constitution: The Iamily constitution also called 'Iamily rules,' in
simple sense, reIers to do's and don't do's in the business. It elaborates about the good
governance practices to be practiced in the Iamily business. Like corporate and political
governance, Iamily governance Iacilitates the smooth running oI Iamily business. It
maintains harmonious and cordial atmosphere in the Iamily and business. We have already
mentioned earlier how Bajaj Iamily through its IiIteen Iamily rules or call it Iamily
constitution, has been running successIully Ior generations. Similarly, austerity and the
lack oI visible symbols oI inequality, among other rules, have helped Murugappa Iamily
(one oI the Iew old Chettiar Iamilies that is still together) in running Iamily business
successIully over the generations. Here one such instance is worth citing. It is Ior austerity
and equality reasons, the young Vellayan, who runs some oI the TI companies, was reIused
an air-conditioned car some years ago. The rule or logic was iI the old patriarch, M. M.
Aunachalam, did not have an AC car, how could Vellayan? Obviously, Ior the sake oI
equality and uniIormity, Vellayan had to learn to sudue his ego to the bigger Iamily cause.
Following is an example oI 'The Family Constitution' oI a growing Iamily business in
inIrastructural Iield: G. M. Rao InIrastructure Limited (GMRIL):
The Family Constitution`
Sitting across a number oI his borrowers during his days at Vysya Bank in which he
also owned a sizeable stake that he sold to start GMR InIrastructure G. M. Rao
watched a number oI Iamily businesses Iail because oI deep divisions between
members oI Iamilies who borrowed Irom his bank. 'At that time, I decided that it
would be one oI the Iirst things I took care oI when I started GMRIL, he says. And
thus the Iamily constitution was born.
The constitution is more than just a succession plan Rao is just 60 and a decade away
Irom retirement as group Chairman it is a model oI governance
that applies to all his companies and howthey are run. It lays down a code oI behaviour
that applies to all Iamily members his two sons (Kiran Grandhi and G. B. S. Raju) run
key parts oI the group alongwithhis son-in-law(Srinivas Bommidala).
The next chairman oI the group will be selected by a three-member constitution board;
iI no decision is made, then a deadlock trustee will make the Iinal decision. The
constitution is an elaborate document it runs into over 150 pages and lays down entry
and exit procedures Ior Iamily members, and a dispute resolution mechanism, should
the need arise.
Spouses are the part oI the Iamily council too, and the members oI the Iamily go on
annual treats as part oI the constitution's requirements. In the next Iew months, says
Prasad M. Kumar, executive director oI the GMR Group he played a key role in the
initiation and draIting oI the document.- the Iamily constitution will be legal
document once all Iamily members Iinish signing it; the equivalent oI taking an oath oI
oIIice.
*Source: Business World, 21 June 2010, p. 35.
It is Iound that an entrepreneur is generally worried about ensuring that his or her business not
only survives, but also thrives to nurture the next generation. Then, question is howto ensure the
same? Some years ago, some researchers (Hunt and Handler 1999) examined the strategies
behind successIul Iamily businesses. They Iound that success is generally tied directly to how
Family Business in India (Survival for three Generations or beyond)
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 14
well a Iamily business manages the Iive unique resources every Iamily business possesses
1. Human Capital: The Iirst resource is the Iamily's human capital, or "inner circle." When the
skill sets oI diIIerent Iamily members are coordinated as a complementary cache oI
knowledge, with a clear division oI labor, it produces synergy. The result is the likelihood oI
success improves signiIicantly.
Social Capital: The Iamily members bring valuable social capital to the business in the Iorm
oI networking and other external relationships that complement the insiders' skill and
knowledgesets.
3. Parent Financial Capital: The Iamily Iirm typically has parent Iinancial capital in the Iorm
oI both equity and debt Iinancing Irom Iamily members. Such a Iamily relationship
betweenthe investors andthe managers reduces the threat oI liquidation.
4. Survivability Capital: The Iamily business must also manage its survivability capital, that
is, the Iamily members' willingness to provide Iree labor or Iunds in time oI urgency so that
the venture doesn't suIIer Irom the two and, in turn, does not Iail.
5. Lower Costs oI Governance: The Iamily business must manage its ability to hold down the
costs oI governance. In non-Iamily Iirms, these include costs Ior things such as special
accounting systems, security systems, policy manuals, legal documents and other
mechanisms to reduce theIt and monitor employees' work habits. But, a Iamily business can
minimize or eliminate these costs signiIicantly because employees and managers oI
business are well related andhave trust and conIidence on each other.
II these Iamily resources are clearly delineated and judiciously leveraged into a well-coordinated
management strategy, the chances Ior success oI Iamily business greatly improve.
Ramachandran (2009) has identiIied ten dimensions oI a Iamily business which are interrelated
between succession planning and conIlict resolution and ownership structure. It is the synergy
created by the interaction and reinIorcements oI these dimensions that help Iamily businesses to
perpetuate. He terms them the Ten Commandments of Family Business.
Concluding Remarks
There is evidence to believe that like Iamily as a root-unit oI social system, Iamily
business has also been the seedbed Ior business and industrial development all over the world
including India. The greatest advantage oI Iamily business is that when it works right, nothing
succeeds like a Iamily business. It has contributed and will always contribute signiIicantly in
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
15
Family Business in India (Survival for three Generations or beyond)
Retirement
and Estate
planning
Induction &
Grooming
Family
&
Business Ownership
structure
Preserving
Wealth ConIlict
resolution
mechanism
Figure 2: Ten Commandments oI Family Business
ProIessor K Ramachandran, ISB, Hyderabad
Compensation
& Rewards Ior
Iamily
Recruitment
and reward oI
non-Iamily
proIessionals
Business
vision,
strategy &
governance
Family vision,
strategy &
governance
Succession
Planning
terms oI production, employment, income, and exports oI the economies. However, running oI
Iamily business has not been so simple. It's successIul running is so sensitive and complex that, as
expressed in the Chinese proverb, it needs to be governed as one cooks a small Iish very gently.
Evidences are galore to reIer to conIirm that the success or Iailure oI Iamily business depends on
inter-relationships, sibling relationship (rivalry), role and place oI Iamily members, management
succession, and Iamily council /constitution. More Iavourable these key Iactors are, more are the
chances Ior the success oI Iamily business and vice versa. Thus, Iamily businesses need to
strengthen themselves inthese matters as quickly and eIIectively as possible.
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http://www.marketingteacher.com/Lessons/lessonvaluechain.htm
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expansion/77171/
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http://www.raymondindia.com/oIIretltrs.asp
http://www.raymondindia.com/grpra.asp
http://www.raymondindia.com/oIIbrnd.asp
http://www.vishalmegamart.net/aboutus.htm
http://www.vishalmegamart.net/apparelsbrand.htm
http://www.pantaloon.com/companyinIo.asp
http://www.investmentcommission.in/gems&jewellery.htm
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Acomparative review of the Development of the Indian Retail Panorama with special emphasis to organized Apparel Retailing
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
39
Dr. Akhilesh Chandra Pandey `
Mukesh Singh Rawat``
:
*Assistant ProIessor: Department oI Business Management, HNB Garhwal University, Srinagar Garhwal
** Research Asssociate, AICTE Research Project, Department oI Business Management, HNB Garhwal University
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 40
Abstract
There has been a significant shift in the focus of
economic policy in India in the last few years, with
issues of equitable growth getting more importance.
Economist and policy makers are trying that economy
should not only maintain the tempo of growth but also
spread the benefits of growth to all sections of the
society and geographical regions of the country. This
change in approach is particularly important for the
hilly regions of the country, as they constantly struggle
with under development. Same circumstances are also
with our newly formed state Uttarakhand. This paper is
an effort to analy:e the various rural intervention
organi:ations operating in Uttarakhand to promote the
products manufactured by various unorganised people
and NGOs.This is a study of Effectiveness of Marketing
Practices adopted by Rural Intervention Organi:ations
in Uttarakhand. The study reveals that the rural
intervention organi:ations has been successful in
bringing women of remote hilly areas into the main
stream of development by organi:ing them into group
and cooperative further involving them in micro
enterprise activities. There has been a remarkable and
visible change in the confidence and leadership level of
the women. They are not only playing an important role
in the economic development of their families but are
equally involved in social and developmental issues.
With enhanced leadership and management qualities
they are capable of accessing financial institutions to
get loan for renovation of their houses, opening
provisional store for their children and selling
vegetables, processed items in the market directly or
through the cooperatives organised by NGOs. The
access to cash has increased their bargaining power at
home as well as community level.
Key words: Input-Intensive Agriculture, Livelihood,
Technical Intervention
'EIIectiveness oI Marketing Practices adopted by Rural
Intervention Organizations in Uttarakhand: Acomparative study oI
HARC & ATI
Introduction: There has been a signiIicant shiIt in the Iocus oI economic policy in India in the
last Iew years, with issues oI equitable growth getting more importance, economist and policy
makers are trying that economy should not only maintain the pace oI growth but also spread the
beneIits oI growth to all sections oI the population and geographical regions oI the country.This
change in approach is particularly important Ior the hilly regions oI the country, as they
constantly struggle with under development. Same circumstances are also with our newly Iormed
state Uttarakhand, separated Irom U P state in 2000, which is among relatively less-developed
Indian states.Uttarakhand which is primarily a mountainous state with only about ten percent oI
its total geographical area in the plains oI the seventeen districts, Haridwar, Udham Singh Nagar
and some parts oI Dehradun and Nainital districts are in the plains, while the remaining areas oI
~Effectiveness of Marketing Practices adopted by Rural Intervention Organizations in Uttarakhand: Acomparative study of HARC & ATI
the state are hilly. Further, with more than three-Iourths (78 percent) oI its total population
dependent on agriculture Ior livelihood, the economy oI Uttarakhand is predominantly dependent
on mountain agriculture. However the scope Ior agricultural policies based on modern input-
intensive agriculture has several constraints in the hilly regions oI this state due to various
physical, geographical and environmental problems. This has resulted in the majority oI the rural
population in the hills either surviving on subsistence agriculture or migrating to other parts oI the
country Ior employment. In the Iace oI such economic backwardness in the rural mountainous
areas non government organizations can play an important role by adopting eIIective marketing
policies and practices Ior marketing oI diIIerent agro and craIt products and giving an
opportunity to populationIor generating remunerative livelihoods at there own.
Marketing by an NGO usually means attracting human and capital resources. NGOs
today use various marketing principles and techniques to inIluence a target audience to
voluntarily accept, reject, modiIy or abandon a behavior Ior the beneIit oI individuals, groups or
society as a whole while in other terms we can say marketing focuses on the satisfaction of
customer needs, wants and requirements. The philosophy of marketing needs to be owned by
everyone fromwithinthe organi:ation. Future needs have to be identified and anticipated.
Uttarakhand, in spite oI being a small state, has certain key Ieatures that make it distinct
Irom other states oI the country and highlights its potential Ior development. However,
development has predominantly been in the plains, and the hill districts have been leIt behind, in
our study we will pay more attention on the eIIectiveness oI marketing policies adopted by rural
development organizations in hilly areas. All the hill districts have subsistence Iarming as their
main economic activity. Due to subsistence livelihood, migration and a remittance economy
Operate in the hill districts. They are land-locked with huge distances between the Markets and
resources, because oI these constraints, traditional agriculture cannot be the lead sector Ior
development. Thus the state Iaces the challenge oI promoting Livelihoods to minimize migration
through local employment and income generation, and to enhance the quality oI liIe oI people
living in villages. DiIIerent rural interventions organizations who are working Ior increasing the
livelihoods oI villagers through inIrastructure development, tourism promotion, agriculture
diversiIication, poultry wool-based livelihoods, Iorestry, Iishery, mining, handicraIts are
RATIONALE OF THE STUDY
Researchers Irom diIIerent regions had identiIied marketing policies and practices adopted by
various public and private sector organizations. This study draws an attention towards the
eIIectiveness oI marketing policies and practices adopted by rural interventions organizations in
the Uttarakhand as they are perIorming in the state Ior the last many years withdrawing
signiIicant monetary Iunds Irom the state and central government. For eIIective marketing
practices an organization has to understand diIIerent marketing policies which itselI are complex
one with multiple trajectories by which an organization engaged in the marketing oI products can
reach to its ultimate goal. The proposed study will also examine the IruitIulness oI diIIerent
NGO'S in the state and policy priorities that can enable the state to achieve inclusive growth.
important sectors which can play a signiIicant role in Uttarakhand's economy not only in
providing employment to a vast segment oI craIt persons in rural and urban areas but also in terms
oI generating substantial Ioreign exchange Ior the country.
The problem which is Iaced by this Iield is non availability oI a developed market;
NGOs can do this thing in a better way by designing a proper marketing mix oI Product, Price,
Place,and Promotion Ior them. This will enable the artisans to achieve better returns Ior their
product besides creating productive employment in rural areas. However, villagers and rural
population is not that much, literate and mainly comes Irom remote and rural areas do not get
adequate opportunities to access the domestic /international high end markets. To enhance their
access rural interventions organization can implement marketing support & services schemes Ior
domestic marketing and export promotion scheme Ior international marketing, by domestic
Marketing, International Marketing, and Publicity.
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
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Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 42
Review of Literature:
Richard Ingwe, (2009) ~The urgency of improving good governance and participation in
the state economic empowerment and development strategy It was concluded that process
has inception in 2004-2005 systematically excluded key 'publics and stakeholders in civil
society, NGOs, Iaith organizations, private sector and communities thereby preventing them Irom
participating in and determining the actions that are capable oI Iacilitating their empowerment:
reducing poverty and unemployment and promoting economic growth and value re-orientation.
The exclusion oI stakeholders has been perpetrated by government Iunctionaries and violates the
new global paradigm oI development planning that emphasizes participation. The consequence
oI this poor approach has been the dismal perIormance oI, which Iailed woeIully to cause
observable, experiential, statistical or quantiIiable improvements in the state's economy under the
multiple sectors Ior which policy thrusts, targets, strategies and Iunding Ior implementation were
set at the outset oI the plan. The exclusion oI competent civil society Irom consultations resulted
Ingwe 043 in the rather narrow conception oI the 7-point agenda oI the state government, which
lacks an all-inclusive multicultural strategy Ior reducing poverty and unemployment.Thokozani
Ian Nzimakwe (2008) ~South Africa's NGOs and the quest for developmentThe study
concluded that NGOs are increasingly recognized as an important role-player in community or
people-centered development. They are a large category oI structures responsible Ior
development. NGOs have oIten been viewed as important Ior democracy because oI their strong
support at grassroots level and their capacity to develop and empower poor communities. They
are extremely important mechanisms in rural development and they enjoy the goodwill and
acceptance oI the community. ThereIore NGOs have become very important players in the Iield
oI social development and upliItment. The democratization oI South AIrica has opened new
opportunities Ior NGOs to make a meaningIul contribution to the development oI South AIrican
society. This is particularly so at grassroots level. The primary aim oI NGOs is to improve the
living conditions oI people through development in general. This entails various aspects oI
human liIe, such as literacy, human dignity, justice and economic ability, essentially the joy oI
liIe. This paper attempts to address questions such as what is meant by development, what role
have NGOs previously played in the development process, and lastly what role should they be
playing.
Kumar Anant (2007). ~NGOs in Bihar: Voluntary sector and its credibility International
NGO 1ournal This study is based on the Iield visits, and interaction with over Iour hundred
NGO's representatives, staII and Iunctionaries in Bihar. He concluded that NGOs have lost their
credibility in people because they are not consistent, transparent, honest and accountable to their
work being done. Despite the recent cancellation oI the registration oI hundreds oI 'Iake non-
government organizations (NGOs) in Bihar, a large number oI people, including those belonging
to Naxalite outIits, have made a beeline Ior getting their new organizations registered.
Interestingly, people belonging to various Naxalite outIits and women activists top the list oI
those who have set up their NGOs in diIIerent parts oI the state. Transparency and sharing
inIormation and knowledge is a best way to build credibility which helps in building the
intellectual base oI the NGO, and its ability to articulate the views oI the people it is speaking Ior.
There is no Iix set oI guidelines Ior NGOs, which we have Ior other sectors like government,
corporate and other institutions. Nidhi Srinivas (2006) ~NGO advocacy and marketing:
Handloom weavers in India Presented in the Milano:She concluded that the handlooms
policies Irom the start mandated the establishment oI cooperative societies as an implementation
mechanism. Cooperatives have a long history in India. The logic Ior their creation was a dual one,
oI representation and eIIiciency. Governed by member-elected boards they had the potential to
represent membership accurately; at the same time they oIIered a ready target Ior governments
eager to assist local communities (Baviskar & Attwood, 1996). Funds to a cooperative would
reach members and their community. Thus weaver-cooperatives became crucial to the Indian
Government's policy goals, as a means oI reaching weaver communities across India, assisting
them in learning new techniques and helping them sell their products.Tahirou Abdoulaye and
~Effectiveness of Marketing Practices adopted by Rural Intervention Organizations in Uttarakhand: Acomparative study of HARC & ATI
1ohn Sanders (2005) ~New technologies, marketing strategies and public policy for
traditional food crop New technology introduction in this semiarid region oI the Sahel is
hypothesized to be made more diIIicult by three price problems in the region. First, staple prices
collapse annually at harvest. Secondly, there is a between year price collapse in good and very
good years due to the inelastic demand Ior the principal staple, millet, and the large changes in
supply Irom weather and other stochastic Iactors. Thirdly, government and NGOs intervene in
adverse rainIall years to drive down the price increases. Marketing strategies were proposed Ior
the Iirst two price problems and a public policy change Ior the third. To analyze this question at
the Iirm level a Iarm programming model was constructed.Amy Coen and Chris Dunfo( 2005)
~The Working Group on Evaluation and Program Effectiveness InterAction They studied
that with the 'The Working Group on Evaluation and Program EIIectiveness Interaction'. They
Iocused on the criteria Ior success in bringing about meaningIul changes in terms oI its mission
and major program goals. They also recommended that regularly evaluation oI progress towards
such success is very mandatory & mainstream monitoring and evaluation in policy, systems and
culture is also a part oI evaluation and program eIIectiveness interaction.Anara Alymkulova&
Didara Seipulnik,(2005).~NGO strategy for survival in central Asia financial
sustainability He studied on the topic 'NGO Strategy Ior survival in central Asia: Financial
sustainability'. The most sustainable Iinancing strategy is to diversiIy income sources. A
sustainable approach to NGO Iinancing is one that avoids dependency on any single source oI
revenue, external or internal. It is diIIicult to determine a Iormula Ior the percentages that need to
be derived Irom various sources in order to support a 'Iinancially sustainable NGO. However, a
balance between externally and internally generated resources is necessary to allow an
organization to meet its operating and administrative expenses while maintaining the Ireedom to
determine its program priorities and projects, irrespective oI donor preIerences.Gaby Ramia
(2002) ~International NGOs and global social policyISAxv world congress of sociology:
He studied the partial globalization oI the social policy is seen in the growth in importance oI
welIare programs emanating Irom super national and global government and non-govt
institution yet while there is literature Irom within the social policy research community on the
international institution response to the poverty and increasing inequality oI world resource
development relatively little appreciation is given to the importance oI the re-design oI
organization management. Michael Edwards & David Hulme (1995)~Scaling up NGO
ImpactsIt was concluded that Iundamental requirement Ior successIul inIluencing is a degree
oI openness on the part oI the organization that is being lobbied. II this is not present, no amount
oI inIormation or experience-sharing will induce changes in the system. For the majority oI
British development charities, however, there is no escaping the linkage between practical
experiences and inIluencing, Ior it is their practice base which generates the themes and the
evidence (and thereIore the legitimacy) Ior their related, but subsidiary, inIormation and
education work. However, as the role oI northern NGOs changes in response to the growing
strength and range oI southern development institutions, this linkage will become less directly
controllable by the northernagencies themselves.
Objective: The Broad objectives oI the study are to examine the various marketing strategies
adopted by non-governmental organizations in marketing oI diIIerent products and study the
potential growth and perIormance oI rural markets in Uttarakhand.There is also an attempt to
study the Government policies Ior promoting NGO's Ior marketing the diIIerent products
manuIacturedbySHGs.
Research Methodology
The respondents Irom various NGOs have been considered as the population Ior data collection
in this study. The units being studied in this case has been two rural interventions organisations in
Uttarakhand state only. The extent oI universe in this study was especially rural and hilly areas oI
the state. The total sample size oI the proposed study is two major NGOs, Irom operating in
districts Pauri,Tehri, Rudraprayag, Chamoli, Almora and Bageshwar oI Uttarkhand Irom where
the responses were taken Ior conducting the research.These regions are marked with diversity in
~Effectiveness of Marketing Practices adopted by Rural Intervention Organizations in Uttarakhand: Acomparative study of HARC & ATI
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
43
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 44
the context oI language, literacy level, customs, liIe styles and economic growth. This
heterogeneity holds many implications to the marketers especially to those who want to study the
decision making aspects oI rural consumers. ThereIore, the selection oI these areas represents a
true perspective Ior the proposed study.
Data Collection: The data has been collected through questionnaires. A structured
questionnaire have been designed to Iind out responses Ior eIIectiveness oI marketing policies
and practices adopted by rural intervention organizations in Uttarakhand. The sources oI
secondary data include Internet, magazines, journals and books Irom various concerning
libraries and registrar oIIice oI NGOs in Uttarakhand.
Technical Intervention forLivelihood
One oI the key thrust areas oI HARC is technical intervention Ior increasing agriculture
production, Iood and economic security and Ior ensuring livelihood Ior rural poor. Agriculture is
the main source oI livelihood in the hills. For sustainability in production oI agricultural produce
and to address the problems oI low productivity and lack oI technical knowledge, HARC
provides technical support during pre-cultivation, cultivation and post-cultivation period to the
Iarmer interest groups and their Iederations. High quality production, diversiIication oI crops,
organic Iarming, promotion oI rural technology, conservation and propagation oI traditional
local seeds and value addition to local products are the major areas oI Iocus under technical
interventionIor livelihood promotion.
HARCpromotes organic Iarming in the hills by building the capacities oI the Iarmers in the areas
oI organic Iarm planning, organic documentation, internal control system (ICS), Iarm mapping
system, training and demonstration on techniques oI organic Iarming like- vermi-compost,
NADEP, liquid manure, wormi wash. HARCis Iacilitating the process oI organic certiIication oI
900 hectares oI agricultural land oI more than 4000 Iarmers in districts Uttarkashi, and Chamoli.
DiversiIication in production oI cash crops as well as the traditional crops is being promoted to
increase the income oI rural households. For this HARC emphasizes on annual crop cycle and
Iarm planning, development oI production zones, introduction oI variety oI crops, propagation oI
traditional local seeds and development oI common Iacility centres to provide technical
assistance.
HARC organises trainings, demonstrations, interIace events between Iarmers and scientists, Ior
disseminating advance agricultural techniques to promote scientiIic and healthy agricultural
practices. The major agricultural techniques promoted by HARC are - integrated pest
management (IPM), conservation oI traditional seeds, polyhouse technology, plant protection,
soil conservation, iron wire staking, nursery raising & orchard management etc . HARC also
Iacilitates the linkage building between Iarmers and diIIerent technical institutions, agri-input
service providers and technical experts to ensure the regular availability oI agri-inputs and
technical knowledge to Iarmers.
More than 10,000 Iarmers have been beneIited in the region through extension services oI
HARC. A cadre oI para technicians (Bare-Ioot Scientists) developed by HARC have been
instrumental totake the mission Iorward.
Majorinitiatives of rural interventions in Uttarakhand by HARC
Livelihood Promotion through self-help Group
One oI the core practice areas oI HARCis promoting and sustaining rural livelihood Ior the local
poor through agri and agri allied activities. HARC has developed and diversiIied the livelihood
scale according to the needs oI people and availability oI resources in the region. HARCprovides
technical support Ior high quality agricultural production and business development services to
local people Ior the promotion oI agri-based enterprise. These interventions are being carried out
by Iorming and strengthening community based institutions and their Iederations in rural areas.
The collective approach has also helped in creating a niche in the local and national market Ior
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agri and agri-based products oI hill-region.
Promoting good governance
HARC's concept oI promoting good governance is, that the institutions Iormed under
constitutional act (institutions Ior local selI-governance) should be strengthen in such a way that
they act as strong, active and eIIective institutions oI local development and provide a platIorm to
citizens Ior articulating their voices, concerns, priorities, problems and issues, which are directly
and indirectly aIIecting their liIe. This means, promoting transparency, responsibility and
accountability among these institutions by increasing the leadership qualities, awareness,
knowledge and Iunctional skills oI elected representatives as well as oI common villagers. Under
this theme HARC is working Ior strengthening Panchayati Raj Institutions in rural areas and
urban local bodies in urbanareas.
Farmer's Crower's FederationsReorganized As Producer's Company : HARC has registered
two grower's Iederations under Producer's Company Act. Devrana Valley Fruit & Vegetable
Grower's Association, earlier registered under Society Registration Act, registered as 'Devrana
Jalley Fruit & Jegetable Producer Company Pvt. Ltd. Another Iederation known as Aromatic
Plant Grower's Association, consists oI 140 growers engaged in cultivation oI Lemon Grass,
Marigold & Citronella in Sahaspur block oI Dehra Dun district, has been registered as 'Pachawa
Doon Agri & Aromatic Producers Company Pvt. Ltd. HARC, helped in reorganizing the
production, processing, marketing strategies and internal management system oI newly Iormed
producer's companies. During the whole process HARChas extended its support to the Iarmers in
preparing the by-laws oI both the companies and organized orientation workshops on the
company related internal management system. Both the companies are gradually strengthening
their internal systems, production and marketing management according to the company
regulations. The unique Ieatures oI this model are that only a grower can become a member oI this
company and its proIit cannot be disbursed among its members, but it will be used only Ior the
capacity development and providingservices to its members.
Freedom from Mediators through Cash Credit Limit (CCL)
Fruit & Vegetable Grower Association, Purola, encouraged by HARC, has more than 200
members. These members are organized as FSHGs at village level. For last 3-4 years association
has been engaged in providing services to its members in production and marketing oI agriculture
produce. The association has developed its linkages with Mother Dairy and Okhla wholesale
market oI Delhi. The association has also done networking with diIIerent technical institutions
and agri input suppliers to provide technical inIormation, seed, manure, pesticides and other agri
inputs to its members Ior the quality production. In this area the middlemen have a strong network
oI their agents and some Iarmers are still under inIluence oI these middlemen. The agents oI the
mediators in the villages get the commission Irom the payment oI villagers and this management
makes the Iarming less proIitable Ior Iarmers. The cultivation oI Pea crop is higher in this region.
But due to lack oI other option, the Iarmers were getting seed Irom these middlemen on their terms
and conditions. To get rid oI this system oI mediators the association, with the motivation oI
HARC, prepared a strategy to get its members Iree Irom the clutches oI middlemen. The
association developed its direct linkages with seed companies and was successIul to make them
agree on providing quality seeds to the association. The companies started providing pea seeds to
the Iarmers but due to unavailability oI money on time Iarmers were still dependent on the
mediators.In this regard, HARCIntervention has made the Iarmers Iree Ior the marketing oI pea
on their own terms andcondition and no more dependency on mediators
Employment opportunities by cultivation of aromatic plants with support of National
Medicinal Plant Board
Aromatic and medicinal plant cultivation was initiated by HARC this year Ior the Iirst
time with support oI NMPBin district chamoli with an aim to increase the livelihood and income
earning opportunities in the area. The program Iocuses on increasing the production oI Mint,
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Tulsi, Anardana, Amla in the area and providing value addition techniques so that the products are
sold in the market at good price.
In the Iirst stage oI the project the production oI Japani Mint has been initiated in 2
hectares oI land with 46 Iarmers. The production oI Rama, Shyama and sweet vessel Tulsi had
been initiated in 3 hectares oI land with 210 Iarmers. The training on package oI practices was
organized so that the Iarmers could have the technical knowledge about the production. In
villages Umatta, Hadakoti and Kaleshwar the work is being done by the members oI the SelI Help
Groups at community level.A distillation plant has been installed at HARC`s community
Iacilitation center at Kaleshawar value addition to the produce. This plant is used to extract Tulsi
and Mint oil. The products are dried by the drier and with the help oI SHGs Mint and Mint Tea is
be prepared. This helped inincreasing the employment opportunities Ior the Iarmers.
Procurement and Supply Chain Management
Procurement and supply chain management is one oI the important components oI agri
business. For proper planning and strengthening oI the management oI procurement and supply
chain, HARC Iacilitated and build the capacities oI Ranwai Valley Autonomous Multipurpose
Cooperative society, Iruit and vegetable grower associations oI Naugaon, Purola and producer's
company oI Dhari KaInaul. These interventions aimed at Iacilitating well-planned procurement
and quick supply oI the product Irom the intervened area. Under this process, the Iarmers
associations, women cooperative and producer's company were provided help to prepare their
procurement plans. As a Iollow up oI procurement plan the Iacilitation was provided Ior
marketing oI the surplus produce as estimated by the target groups to the local and New Delhi
wholesale (mandi) market. The Iollowing steps were taken to strengthen the procurement chain.
Procurement and Supply Chain of Fruits & Vegetable produce
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Procurement and Supply-Chain of Cereal, Grain, Pulses and ValueAdded Product
For ensuring production and supply oI agriculture produce according to market demand, a Iace-
to-Iace interaction between National Dairy Development Board (NDDB) and members oI Iour
Iruits and vegetables grower association was organized in May 2007 at ward level. During this
interaction a procurement plan was prepared and market was ensured to the producers by
developing marketing linkages with marketing agencies such as NDDB and other local and
national Mandies.
HARCprovides a platIorm to Buyers and Sellers by organizing Buyer Seller meet to Iacilitate the
Iresh Iruits and vegetable supply chain.
The Iacilitation Ior organic Iood supply chain was done Ior Rawain Women Cooperative,
which is involved in trading oI Iood grain, spices and millets. Through this Iacilitation women
cooperative got an opportunity to do negotiations with buyer on their own. The cooperative
collected the products Irom its members and sold it in the market. This Iacilitation resulted into
the huge sale oI chillies, Rajma, Amla Candi and Anardana.The Cooperative has identiIied
export companyIor supplying oI Anardana and Chillies also.
Farmers getting millions of rupees by marketing of fruits and vegetables through
organized supply chain
Under the livelihood promotion mission, HARC made its eIIorts to link the Iarmer
directly to the market so that they can control the supply chain themselves through their
Iederations. As a result oI this a strong supply chain and multi optional marketing channel is
available to producers. During year 2007-08 the producers oI Ranwai Valley had sold 31080 tons
oI Iruits and vegetables worth INR318.3405 millions.
Market promotion for the products of women cooperative
Market promotion is one oI the most important tools Ior ensuring marketing oI products
oI groups at village level. HARC has organized various promotional activities Irom time to time
Ior product presentation and penetration in the market. This year, under the product promotion
strategy, the main concentration was on household and institutional level marketing oI products.
At institutional level such institutions were who have a positive attitude and understanding
towards rural economic development. Direct delivery oI products to customer at household level
was started with a target oI covering 300 households in Dehradun at initial stage. Seeing the
encouraging response oI the customer, it is being planned to increase household coverage upto
1000 household in next year. This year cooperative introduces a giIt pack on the occasion oI
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Deepawali Iestival. This giIt pack was marketed at the household level, in the retail shops, and at
government and non-government institutions by organizing promotional activities during the
Iestival oI Diwali.
Significant Achievement of HARC:
The major achievement oI HARC is increased capacities oI the institutions at Iinancial and
administrative Ironts. These institutions are nowcapable oI managing their internal systems
and Iinancial processes eIIiciently. The documentation system has become strong and some
Iederations have taken the initiatives to prepare their annual report. Internal and external
audit oI the institution is being done. The responsibility oI management oI the Gravity Based
Ropeway that was constructed last year with support Irom oIIice oI Principal ScientiIic
Advisor, Govt. oI India and Indian Institute oI Technology, Roorkee has been owned by the
association. The association is maintaining the ropeway Iunctioning very well.
The institutions have now access to various types oI inIormation such as bank schemes,
agriculture techniques etc. Increased access to loan has reduced the exploitation oI Iarmers at
the hand s oI middlemen. People nowtake loan Ior purchasing seeds and are then Iree to sell
the product tothe customer oI their own choice.
The signiIicant change in the attitude oI members oI the institutions towards social security is
an achievement. The constant eIIorts oI HARC to sensitize and encourage the members oI
the institutions Ior spending some money on their social security was successIul to some
extent. More than 2000 members oI diIIerent institutions have taken liIe insurance, health
insurance and accidental insurance policies this year. This also proves that the economic
status oI the people has increased as they are investing money Ior their social security.
HARC has been successIul in bringing women oI Rawain and Alaknanda valley into the
main stream oI development by organizing them into group and cooperative and involving
them in micro enterprise activities. There has been a remarkable and visible change in the
conIidence and leadership level oI the women. They are not only playing an important role in
the economic development oI their Iamilies but are equally involved in social and
developmental issues. With enhanced leadership and management qualities they are capable
oI accessing Iinancial institutions to get loan Ior renovation oI their houses, opening
provisional store Ior their children and selling vegetables, processed items in the market
directly or through their cooperative. The access to cash has increased their bargaining power
at home as well as community level.
Knowledge building oI men and women on various aspects oI Iarming has been the biggest
achievement oI HARC. Increased technical knowledge and enhanced skills in scientiIic
Iarming which includes plant protection, organic Iarming, quality control, pre and post
harvesting technologies, crop cycle planning, best Iarm practices, seed and other agri inputs
management etc. resulted into better utilization oI available resources especially optimum
and scientiIic use oI agricultural land. Due to lowproductivity oI traditional crops about 30
agricultural land remained barren with out cultivation oI any crop. With the use oI new
Iarming technologies and proper crop cycle planning this 30 barren land is converted into
productive land. This has increased the production that leads to increased Iood security and
cash income oI the Iamily.
The major change can be seen in the Iarming methods adopted by the Iarmers. Earlier
Iarmers were able to take one or two crop cycle but now proper Iarm planning most oI the
Iarmers is getting 3-4 crops in a year. The various newvarieties oI Iruits, vegetables, spices,
Iood grains introduces by HARCin the region this year which has brought diversiIication oI
crop and created various options Ior livelihood and increased Iood security. The increase in
production oI Iood, grains and vegetables. The producers aIter their home consumption are
selling surplus produce to the market. Thus providing Iood security and also economic
security to the people. Due to diversiIication the local people have now more sustained
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livelihoodoptions.
HARC' has been successIul in increasing the production and Iood security through technical
interventionin RawainValley.
The processing oI rawIruits and vegetables has been taken as a mission to increase the shelI
liIe oI the products and to provide an option Ior income generation Ior women. Earlier
without value addition techniques the highly perishable Iruits and vegetables were available
only in the season. But nowwith value addition the Iruits and vegetables are available in the
Iorm oI processed items round the year Ior selI-consumption and Ior marketing. The best
part is that the income earned by the selling oI these products is coming in the hands oI
women thus increasing their access to direct cash.
One oI the biggest achievements oI HARC is increased area oI organic Iarming. On one
hand organically produced crops are contributing to the health oI the soil and protecting the
environment Irom pollution by organic Iertilizer and pesticide, on the other hand healthy
Iood is available topeople.
Breaking the nexus between market agencies and middlemen and Ireeing the Iarmers Irom
the clutches oI the middlemen is the major success oI HARC. This has helped to reduce the
exploitation oI the people to a great extent and now the Iarmers have direct access to the
market. This resulted into increased IlowoI money towards Rawain Valley.
Good quality oI production and Iarmer's direct access to market through well managed
supply chain has improved the Ilow oI money in the region. Earlier due to dependency on
middlemen Ior the marketing oI produce the Iarmer used to get the money aIter 2-4 months.
Now due to well-established and transparent system oI procurement and supply chain, the
Iarmers are getting money Ior the sale oI their produce within 10-15 days. ThereIore
Iinancial losses due to delay in payment has been minimized. This has led to increase
purchasing power oI the people.
The strength oI HARC is its strong linkages with 51 institutions like agri-input supply
companies(seeds, Iertilizers, packaging material), technical institutions, agricultural and
horticultural universities, marketing institutions, training institutions, central and state
government institutions, Iinancial institutions etc. within and out side the state. This network
oI institutions is a very strong base oI HARC Ior promoting agricultural diversity at one
place, which has been done nowhere in Uttrakhand
Taking Right to InIormation at grass root level is one oI the achievements oI HARC. The
special eIIorts Ior manual preparation under section 4 (1) (b) oI RTI were initiated by HARC
at Panchayat level. HARCcould reach more than 5000 people who were educated on various
provisions oI RTI. As a result many people Iiled application to get the important inIormation
Irom various departments.
HARC`s intervention Ior strengthening the role oI panchayati raj institutions in
implementation oI National Rural Employment Guarantee Scheme were recognized at grass
root level as well as state level. The major Iocus on initiation oI perspective planning in some
panchayats Ior model building. This initiative was recognized at district and state level.
HARC was also successIul to raise some oI the very important issues related to smooth
Iunctioning oI NREGS at state level through advocacy workshops and Iace to Iace
interaction between panchayat representatives, citizens and state level concerned authorities
Appropriate Technology India
Appropriate Technology India's Goals
Expanding local capacity to harvest, process and market Non-Timber Forest
Products - oak tasar silk, honey, bamboo and rajma.
Strengthening community-based conservation and development institutions like Van
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Panchayats, Mahila Mandal Dals, SelI Help Groups.
Providing ecologically sound, productivity enhancing, cost-eIIective technologies,
training and services Ior sustainable enterprise development.
Creating income and employment opportunities Ior thousands oI mountain villages
in Uttarakhand.
Conducting biological and socio-economic research and monitoring.
Providing Iinancial and insurance services to meet community needs through
microIinance.
Conserving biodiversity through action research, participatory monitoring. oI natural
resources and plantation programs.
The above range oI activities requires a suIIicient range oI skills and expertise to execute
them. In most oI the livelihood sub-sectors that the programme is involved, AT India initiatives
have invariably been the Iirst oI their kind in Uttarakhand. This means that the organization is
today a repository oI skills and expertise that are unique and not easily replaceable. Currently ATI
has 76 persons on its permanent pay roll. About 95 oI the staII comprises oI home-bred
Garhwalis, ascribing it a distinctlylocal identity notwithstanding its broad global vision.
450 Iar-Ilung villages bounded by the mighty Himalayas, typiIy the poverty and
hardship that characterizes most mountain villages oI India. But a closer look reveals a
heartening phenomenon. These remote villages have been integrated into a unique community
owned enterprise, creating alternatives to a subsistence economy, where there were none. The
result being- villagers producing premium Iinished products like tasar silk and organic honey Ior
distant high-end markets; them hosting urban tourists in their quaint village homes; highland
villages Iully commercializing dairy operations. All this in tandem with protecting their
biodiversity.
AT India initiated its livelihood diversiIication programme 14 years ago in 1994. It
commenced operations in the sericulture and bee-keeping sub-sectors by adding economic value
to the available oak leaves, diverse nectar and pollen rich herbs and shrubs, in the project area.
Currently, AT India has 5 livelihood sub-sectors under its ambit (viz. sericulture; bee-keeping;
dairy development, eco-tourism, and dwarI bamboo) with roughly 7926 beneIiciaries. ATIndia's
approach to livelihood development is not merely to provide local communities with income
generatingopportunities but also toenable them to consistently increase their incomes.
AT India's livelihood programmes are conceived with a conservation dimension to ensure
synergy between their economic and ecological principles. By building the villagers' economic
stake in their surrounding Iorests and natural resources, AT India has revolutionized community
perspectives on the use oI these resources. Although, the project has not reached the stage where
measurable impacts through reduced levels oI extraction can be claimed yet the substantial
regeneration work being undertaken with the help oI the local communities is an indicator oI their
shiIt in perception. AIar sighted approach towards natural resources is Iurther evident through
the large number oI saplings being planted on private lands under AT India's nurseries and
plantation programme
Significant Achievement of ATI:
Biodiversity Conservation Network: ATIndia took the lead in establishing, commercially
viable oak tasar sericulture through village based enterprises. Since its inception 15 years ago, AT
India has developed a range oI novel livelihood activities enabling steady returns to beneIiciaries
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who nownumber approximately 7926, generating beneIits oI around 20 million INRper annum.
Thus, what started as a biodiversity conservation project in 1994, with the mandate to
develop an enterprise based model Ior conservation, has evolved into a vibrant livelihoods
diversiIication and skills development programme. Even so, it has remained true to its original
ideal oI biodiversity conservation. The Iorest-based enterprises developed under the programme
exempliIy AT India's vision oI economic security Ior local Iorest-dependent communities.
Simultaneously the improved community perceptions oI their natural resource base, along with
the apparent health oI the project area Iorests, demonstrate its IulIillment oI the sustainable Iorest
resources use ideal.
Today ATIndia is acknowledged to be at the IoreIront oI innovation in the development
strategies, both in the context oI livelihood development and conservation, in the Western
Himalayas. It's strategy oI raising value oI existing resource base to enlist community
participation in the conservation eIIorts, on this wide a scale, has perhaps been tested Ior the Iirst
time in India.
Self Sustainability: In a bid to decentralize its operations and make them selI-sustainable, AT
India, Irom its early years, organized its production activity into community owned enterprise.
Currently, AT India works in alliance with two other entities that have evolved Irom its main
programs, andhave complementary but distinct roles:
Devbhumi Natural Products Producers Company Limited (DNPCL) Iounded in 2007, has
been designated to provide product development and production management services in the
non-organized rural sector and establish linkages with main stream markets. It comprises oI the
p r o d u c e r s , wh o a r e t h e a c t u a l s h a r e - h o l d e r s o I t h e c o mp a n y.
Ushamath Mahila Mahasangh (UMM) Iounded in 2005, is a micro-Iinance institution in the
cooperative sector apart Irom being the apex body oI the 729 women SHGs Iunctioning under the
project. It works as a community owned, managed and controlled MFI, oIIering credit and micro-
insurance services not just to its 7617 women members but thousands other in rural and semi-
urban areas oI Uttarakhand.
AT India is leIt with the primary role oI developing technical skills and local capacities
Ior production oI goods and services at the community level. Alongside, it also seeks to pursue
program relatedresearch and conservation initiatives
The presence oI the above two enterprises is expected to play a signiIicant role in
ensuring the long-run viability oI AT India's projects even aIter its withdrawal.
AT India's future Plans: Projects in the pipeline include expanding Business Development
Services and Value Chain integration operations in 2 sub-sectors, dairy and bee-keeping along
with assessing the potential oI introducing two new sub-sectors- selected spices and citrus, Ior
which Uttarakhand has both comparative and competitive advantages. The project has been
started to use a market driven strategy based on value chain analysis and development oI business
development services markets in the respective sub-sectors. This model has already been
successIully employed by AT India in the dairy, beekeeping and sericulture sub-sectors. The
project planned over three years will create and Iacilitate income opportunities Ior 8000 client
households in remote villages oI the Himalayas. It is anticipated that 70 oI the clients are
women.
Appropriate Technology India -Business Development Model
To attain economic security under its various livelihoods activities, AT India adopted a Value
Chain or Business Development Services approach. This strategy is being implemented in a
number oI economic sub sectors including the sericulture value chain oI oak tasar and eri silk;
beekeeping and honey processing, dairy development, dwarI bamboo, eco-tourism and other
organic commodities. The BDS model involves the Iollowing:
Organization oI the community into entrepreneurial groups, to capture and generate
economies oI scale;
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Training entrepreneurs to act as commercial technology transIerors at the community
level thereby providing incentive Ior input services to enhance the production and
productivity;
Creating provision Ior establishing stand alone output services Ior collection,
distribution and marketing services; and
Linkingproducer groups with Iinancial services.
This strategy has multiple long term implications as AT India in the long-run wants to graduate
Irom the organizational aspects oI production, processing and distribution and Iocus only on
upgrading technology and establishing market linkages.
Conclusion: The major achievement oI these rural intervention organizations are their
increased capacities oI the institutions at Iinancial and administrative Ironts. These institutions
are now capable oI managing their internal systems and Iinancial processes eIIiciently. The
institutions have started to empower the rural people with various types oI inIormation such as
bank schemes, agriculture techniques etc.More inIormation and increased access to loan has
reduced the exploitation oI Iarmers at the hands oI middlemen. People now take loan Ior
purchasing seeds and are then Iree to sell the product to the customer oI their own choice.The
consistent eIIorts oI these rural intervention organizations have become successIul to sensitize
and encourage the members oI the institutions Ior spending some money on their social security.
More Rural people have started taking liIe insurance, health insurance and accidental insurance
policies too. This also proves that the economic status oI the people has increased as they are
investing moneyIor their social security.
These rural intervention organizations have become successIul in bringing women oI t hi s
state into the main stream oI development by organizing them into group and cooperative and
involving them in micro enterprise activities. There has been a remarkable and visible change
in the conIidence and leadership level oI the women. They are not only playing an important
role in the economic development oI their Iamilies but are equally involved in social and
developmental issues.
Knowledge building on various dimensions oI Iarming has been the biggest achievement oI
these interventions. Increased technical knowledge and enhanced skills in scientiIic Iarming
which includes plant protection, organic Iarming, quality control, pre and post harvesting
technologies, crop cycle planning, best Iarm practices, seed and other agri inputs
management etc. resulted into better utilization oI available resources..
The major change can be seen in the Iarming methods.The various new varieties oI Iruits,
vegetables, spices, Iood grains introduces diversiIication oI crop and created various
options Ior livelihood and increased Iood security. The producers aIter their home
consumption sell surplus produce to the market. Thus providing Iood security and also
economic security to the people. Due to diversiIication the local people have now more
sustained livelihood options.
These rural intervention organizations have been successIul in increasing the production and
Iood security through technical intervention in the state.The technical interventions Ior
increasing livelihood options brought a change in the liIe oI rural people and they have
adopted systematic and scientiIic ways oI Iarming. With the use oI newIarming technologies
and proper crop cycle planning 30 barren land has been converted into productive land.
This has increased the production that leads to increased Iood security and cash income oI the
Iamily
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53
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Issue 35
Silvia del Amo Rodriguez and Maria del Carmen Vergara-Tenorio (December,
2008)'Strategies Ior social and cultural inclusion on development and natural resource
management International NGOJournal Vol.4(2), pp. 27-033.
Thokozani Ian Nzimakwe (2008) 'South AIrica's NGOs and the quest Ior development
International NGOJournal Vol. 3(5), pp. 090-097
Tahirou Abdoulaye and John Sanders (2005) 'New technologies, marketing strategies and
public policyIor traditional Iood crop StaII Paper #05-07.
http://www.ua.nic.in
www.ceehimalya.org
www.harcuttrakhand.com
(We thankIully acknowledge all India Council oI Technical Education, New Delhi Ior
Sponsering the research project.)
www.atindia.org
~Effectiveness of Marketing Practices adopted by Rural Intervention Organizations in Uttarakhand: Acomparative study of HARC & ATI
Prof. Ashok Kumar Sinha`
Dr. Nisha Singh``
ANALYSIS OF CONSUMER BEHAVIOR TOWARDS BRANDED
LAPTOPS IN INDIA
ABSTRACT
In the modern day market customer is said to be the king.
The companies in order to create value based services,
products and earn proIits will always have to consider
the consumers and take their problems into
consideration Ior expansion in newmarkets and sectors.
Laptops are becoming increasingly popular with
consumers mainly because they oIIer portability,
convenience and perIormance in one small package. So
when we think oI buying a laptop, diIIerent parameters
such as, technical conIigurations, aIter sales services,
price, screen size, battery liIe, looks and warranty
period, are considered.
Due to globalization, we have a lot oI choice owing to a
lot oI players in the mobile computing market through
various brands in the market. So Ior every brand to
continuously keep increasing their sales it is necessary to
have unique Ieatures in order to diIIerentiate their
oIIerings Irom their competitors. It is the diIIerentiation
which makes any seller leader oI the market. There were
sever al i mpor t ant aspect s such as , br and
equity,availability,its various Ieatures, modelsusp, etc.
which were analysed and the conclusion will pave the
way Ior the laptop companies to consider while
Iormulating marketing strategy,launching new products
and expanding markets.
Research Methodology
Descriptive research is used to obtain inIormation concerning the current status oI the
phenomenon to describe "what exists" with respect to variables or conditions in a situation. The
methods involved range Irom the survey which describes the status quo, the correlation study
which investigates the relationship between variables, to developmental studies which seek to
determine changes over time.
We have done a descriptive study oI the market to have a better understanding oI the market in
terms oI the actual availability oI laptops at the points oI purchase as against what is mentioned on
the respective websites oI the major players oI the market.
Two Methods used Ior collectionoI data:-
1) Primarycollection oI Data.
2) Secondaryanalysis oI available Data.
For the collection oI primary data we did a survey, in which we collected Iirst hand
inIormation Irom the major dealers across Delhi NCR.
* Executive Director: Quantum Global Campus,Roorkee, INDIA
Email-proIsashokyahoo.co.in
** ProIessor-Business,Vorheese College, South Carolina,USA
Email-nishasinghrkeyahoo.co.in
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 54
We visited close to 100 stores in Delhi- NCRto gather the data & insights into diIIerent identiIied
brands.
A) SecondaryData: This mainly involved collection oI data Irom the respective
websites oI identiIiedlaptopbrands.
Competition mapping: An initial database was created consisting oI the laptop models
oI all the identiIied brands as per their conIigurations.
Tools Used:
Checklist togather diIIerent views oI dealers.
MS word - Ior documentation and Iinal report.
MS Excel - to perIorm one-to-one analysis oI laptops oI same speciIication oI diIIerent
brands.
SPSS -capturing the data across 100 stores visited to generate reports to assist in Iindings
and conclusion.
INDUSTRYANALYSIS:
Here are some Iacts about IndianITindustry
India is one oI the Iastest growing ITmarkets in the world.
India is also the Iastest growing PC market in the ASIA-PaciIic region, and also the
country with the Iastest growth in the internet usage in this region.
It is now predicted that laptop computers will outsell desktop machines by 2013-14.
Many executive and also lower positions require employees to have access to mobile
computing power in the Iorm oI a laptop. This saves time at the workplace thus
improving employee productivity.
The inIormation technology industry ended its worst year ever with the worldwide IT
spending declined to 5.2 in 2009. However, this industry would return to growth in
2010 with $3.3 trillion oI total spending, registering a 3.3 increase Irom 2009.
IT industry body Nasscom has projected a single-digit growth rate Ior the current
Iinancial year (between4 and 7).
PCPenetration
India has one oI the lowest PC penetrations in the world at less than 4 as per latest available
reports Irom Department OI InIormation Technology, GOI. Other developed and emerging
economies have much higher PCpenetration rates:
INDIA 36/1000
CHINA 122/1000
USA 734/1000
NORWAY 773/1000
India is expected to sell around 8 million PCs as compared to 21 million Ior China. In order to
reach at China's PC penetration levels India needs to grow its PC manuIacturing at CAGR oI
about 30 Ior the next 5 years. With rising income levels, increasing awareness about computers
through school level education combined with GOI's readiness project the penetration level in
India is set to growmany Ioldin coming years.
Overall the cost diIIerence between a desktop and a laptop based on the components only is
around 30 Ior the same conIiguration. At the same time diIIerence between selling price oI a
laptop and a desktop oI same conIiguration stands at around 60.This enables payers to have
better margin in case oI higher proportion oI laptop sales in total sales oI company. Absence oI an
unorganized assembled market in laptop segment enables players to have more pricing and
branding power as compared to a desktop product. This also helps in commanding better margins
in laptop business.
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
55
Table1
India PC Shipments ('000s) by Form Factor` and Growth Trends: 1an-March 2010 vs.
Oct-Dec 2009 and 1an-March 2010 vs. 1an-March 2009
Form Factor 1Q2009 4Q2009 1Q2010 Growth Growth
(Jan-March (Oct-Dec Jan-March 1Q2010over4Q 1Q2010over1Q2009
2009) 2009) 2010) 2009) 2009)
Desktop PCs 1,213 1,271 1,436 13 18
NotebookPCs 166 699 803 15 72
Total Client PC 1,679 1,970 2,240 14 33
`Source: IDC's India Quarterly PC Tracker, 1Q 2010 May 2010 release
In the overall PC (Notebooks and Desktops combined) market, HP retained the top spot
with a market share* oI 16.5, while Dell (13.6) and Acer (13.0) took the second and
third spots, respectively.
The largest selling Brand/Product(Analysis)
H.P HCL
LENOVO ACER
DELL SONY
COMPAQ Others(Toshiba, Asus, Samsung, Wipro &Gateway)
The U.S.P oI the brands(Analysis)
Looks AIter Sale Service
Brand Image Features
Price Others (speciIications etc.)
The most popular screen sizes(Analysis)
12 13.3
14.1 15.4
15.6
Time Periods oI the OIIers
Festivals. First week oI the Month.
Last week oI the Month. Quarterly.
Arbitrarily
The actual market availability oI Laptops VS Projected
0 25 25-50
50-75 75 and above.
The time taken Ior delivery oI a particular model oI the selected brand
On the same day. Within 3 days.
Within a week. More than a week
The Most Enquired Brand
H.P HCL
LENOVO ACER
DELL SONY
COMPAQ Others
ANALYSIS
Availability oI laptop models as against mentioned in the websites oI the identiIied brands.
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 56
Table: 2
Models ShelI Web
Availablity Availablity
Brands (No.) (No.)
ASPIRE ASPIRE ASPIRE
ACER ASPIRE4736Z 5738Z 4740 5740 4 6
DELL INSPIRON14 INSPIRON 15 STUDIO14 3 16
DV42000 DV6 2125
HP/Compaq SERIES CQ510 CQ610 TX 4 18
LENOVO G550 G460 G560 Y450 3 54
SONY EA15 EB14 EB15 3 38
HCL AE1VO555 AXOP3857 AXOP3857 AXOP4114 4 10
Total 21 152
Figure:-3
ACER scores the most in terms oI actual availability as compared to its competitors with 67
availability against its site which is Iollowed by HCL (40), HP (22), DELL (19), SONY
(8), and LENOVO (6).
This inIormation is derived aIter visiting the various retailers at diIIerent locations like Noida,
Delhi, Gurgaon, Faridabad, and Ghaziabad.
The Iargest seIIing brand/product
Frequency Percent Valid Cumulative
Percent Percent
Valid HP/Compaq 24 24.0 24.0 24.0
HCL 17 17.0 17.0 41.0
Lenovo 10 10.0 10.0 51.0
Acer 13 13.0 13.0 64.0
Dell 23 23.0 23.0 87.0
Sony 8 8.0 8.0 95.0
Others 5 5.0 5.0 100.0
Total 100 100.0 100.0
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
57
TabIe: 4
Figure:5
HP/Compaq and Dell are highest selling brands Iollowed closely by HCL.
The U.S.P. of the brand
Frequency Percent Valid Cumulative
Percent Percent
Valid Looks 3 3.0 3.0 3.0
After sale Service 20 20.0 20.0 23.0
Brand mage 33 33.0 33.0 56.0
Features 16 16.0 16.0 72.0
Price 28 28.0 28.0 100.0
Total 100 100.0 100.0
TabIe: 6
Figure:7
Brand image, price and aIter sales service are the major determinants which aIIect the
customers' buying behavior.
The most popuIar screen sizes
TabIe: 8
Frequency Percent Valid Cumulative
Percent Percent
Valid 12" 3 3.0 3.0 3.0
13.3" 6 6.0 6.0 9.0
14.1" 47 47.0 47.0 56.0
15.4" 16 16.0 16.0 72.0
15.6" 28 28.0 28.0 100.0
Total 100 100.0 100.0
A2) Which is the largest selling brand/product?
A3) What is the U.S.P of the brand?
HP/Compaq
HCI
Lenovo
Acer
Dell
Sony
Others
Looks
After sale service
Brand Image
Features
Price
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 58
Figure:9
14.1 is the most preIerred screen size
The generaI time period of the offers
TabIe: 10
Frequency Percent Valid Cumulative
Percent Percent
Valid Festivals 11 11.0 11.0 11.0
First Week of Month 9 9.0 9.0 20.0
Last Week of Month 10 10.0 10.0 30.0
Quarterly 26 26.0 26.0 56.0
Arbitrarily 44 44.0 44.0 100.0
Total 100 100.0 100.0
Figure: 11
Most oI the oIIers are announced in a staggered manner by various brands and they include USB
data card, cleaning kit, mobile phones, antivirus soItware, and price discounts to name a Iew.
The time taken for deIivery of a particuIar modeI of the seIected brand
TabIe: 12
Frequency Percent Valid Cumulative
Percent Percent
Valid Same Day 57 57.0 57.0 57.0
Within 3 Days 16 16.0 16.0 73.0
Within a Week 6 6.0 6.0 79.0
More than a week 21 21.0 21.0 100.0
Total 100 100.0 100.0
A4) Which are the most popular screen sizes?
A5) What is the general time period of the offers for the
customers offered by the company/dealer?
12"
13.3"
14.1"
15.4"
15.6"
Festivals
First Week of Month
Last Week of Month
Quarterly
Arbitrarily
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
59
Figure:13
Majority oI the models on the shelI are delivered on the same day.
The most enquired brand
TabIe: 14
Frequency Percent Valid Cumulative
Percent Percent
Valid HP/Compaq 26 26.0 26.0 26.0
HCL 15 15.0 15.0 41.0
Lenovo 13 13.0 13.0 54.0
Acer 15 15.0 15.0 69.0
Dell 20 20.0 20.0 89.0
Sony 4 4.0 4.0 93.0
Others 7 7.0 7.0 100.0
Total 100 100.0 100.0
Figure:15
Dell and HP/Compaq are the most enquired brands.
FINDINGS & CONCLUSION
In our attempt to understand the communication which Ilows Irom the companies to the
channel partners to end customers, we managed to come up with the Iollowing results:-
Promotional strategies around leading brand of laptops Marketing Pitch for different
brands .
1.HP- very good service, over 732 service centers Use oI Chrome body makes it resistant to
scratches.
2.Acer- Best value Ior money Consumer can have the best conIiguration at minimum price.
3. Dell- Customization at aIIordable price.
A6) What is the timetaken for delivery of a particular model of
the selected brand?
A7) Which is the most enquired brand?
Same Day
Within 3 Days
Within a Week
More than a week
HP/Compaq
HCI
Lenovo
Acer
Dell
Sony
Others
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 60
4. Compaq- meet diIIerent consumer requirements (two market strategy)
5. Sony - Technology innovators and snob value.
6. Lenovo Innovations and Ieatures.
7. HCL- Indian Company, Value Ior money, 24*7 support service.
Brand Positioning-
1. Dell Based on customization
2. Acer- Price Sensitive and brand conscious
3. Sony Tech Savvy and upwardly mobile people.
4. HP- Brand Conscious and value.
5. Compaq - To attract price sensitive consumers.
6. Lenovo Business oriented users and Tech savvy
7. HCL- Price Sensitive, high on technology
Conclusion
HP/Compaq and Dell are highest selling brands Iollowed closely by HCL.
Brand image, price and aIter sales service are the major determinants which aIIect the
customers' buying behavior.
14.1 is the most preIerred screen size.
Most oI the oIIers are announced in a staggered manner throughout the year by various
brands and they include USB data card, cleaning kit, mobile phones, and antivirus
soItware to name a Iew.
Majority oI the models on the shelI are delivered on the same day.
Dell and HP/Compaq are the most enquired brands.
Disclaimer: This survey was carried throughout Delhi & NCR region across 100 stores and
the results Ior a PAN India survey may vary.
Biblioraphy & References
1) Business world magazine.
2) Marketing management 12 e, Philip Kotler , Kevin Keller.
3) State oI the art marketing research by- Albert Blankenship, George Breen, Alan Dutka-Business &
Economics
4) Internet marketing Ior inIormation technology companies: Proven Online
5) India BrieIing: quickening the pace oI the change Edited by Alyssa Ayres, Philip Oldenburg.
6) IDC report on Indian computing industry Ior 2009.
7) Research Methodology, by R Panneeraselvan
8) Research Methodology, by S.C.Sinha, A.K.Dhiman
9) Marketing Research, by Naresh K Malhotra
(10) Indian Journal oI MarketingVol : XL, October 2010
(11) Business Research (An International Business Magazine) INDJ- 03783
(12) Global Journal oI Emerging Market Economics INDJ- 05305 Business Wire (OCT 4-2010
Websites:
(1) www.hclstore.in (2) www.hclinIosystems.in (3)www.lenovo.com/in/en
(4) www.welcome.hp.com (5) www.dell.co.in (6) www.sony.co.in
(7) www.acer.co.in (8) www.timesoIindia.com (9) www.idcindia.com
(10) www.newtechnology.co.in
Analysis of consumer behavior towards branded laptops in india
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
61
Performance evaluation of mutual funds in India in
post-liberalization era-an empirical analysis
Abstract
In this paper performance evaluation of mutual fund
schemes in India is carried out through risk-return
analysis and various performance evaluation tools like
sharpe ratio, treynor ratio, fenson measure and fema
measure .The period of study is seventeen years which
starts from the post liberali:ation period from 1993 to
2009.25 open ended equity , balanced and income
mutual funds are randomly selected for the study
keeping in view that every scheme has operated for at
least period of eight years since its inception.
Mean return and of
sample mutual fund schemes during the period of study
were calculated to be 5.201 and 17.087 .,which is
found to be more then the mean return of market
portfolio which is 4.89 with lower mean risk as
compare to market portfolio( 20.46)
risk measured by standard deviation
Introduction
A mutual Iund is a portIolio oI stocks, bonds, or other securities that is collectively owned by
hundreds or thousands oI investors and managed by a proIessional investment company. The unit
holders are people who have similar investment goals. Each Iund has speciIic investment criteria,
which are spelt out in its prospectus, the oIIicial booklet that describes the mutual Iund. Investors
then knowwhat they are getting and can match their objective to that oI a Iund. The pooled money
has more buying power than one investor alone, so that a Iund can own hundreds oI diIIerent
securities. Thus, its success is not dependent on how just one or two companies perIorm but on
perIormance oI several stocks, which Iund is holding.
Amutual Iundmakes moneyintwo ways:
`By earning dividends or interest on the investments it owns
`By selling securities that have appreciated in value.
Investors make money in the Iorm oI dividends and interest that are passed on to them and the
increase (or decrease) in the Iund's value. The mutual Iund manager keeps constant watch on
Iinancial markets and adjusts the portIolio to achieve the highest returns. By owning part oI a
Iund, the hard work oI selecting and monitoring stocks and bonds is done Ior investors. The
majority oI mutual Iunds available are open-ended Iunds. Open-ended Iunds can have an
unlimited number oI investors or money in the Iund. These Iunds are always open to accept
money Irom investors and to return the money back to investors. This gives the investor the
Ilexibility to enter into the scheme or to exit Irom the scheme or to exit Irom the scheme as and
when required as per their needs. Managers oI closed-end Iunds, on the other hand, decide upIront
howmany units they will issue and when they will sell them. The only way to purchase shares in a
closed-end Iund, once the original shares have been sold, is to buy them Irom a current investor.
Bimal 1aiswal`
Namita Nigam``
* Asstt. ProIessor, Department oI Applied Economics, Faculty oI Commerce, University oI Lucknow, Lucknow.
Email: bimalsiyaramyahoo.com
** Asstt. ProIessor, Institute oI Environment And Management, Jankipuram, Kursi Road, Lucknow.
E-mail: nigam.namitarediIImail.com
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 62
Occasionally, open-end Iunds can and do close to new investors, oIten because oI high cash
inIlows that cannot be invested in a timely manner. They do not become closed-end Iunds,
however, because current shareholders can still buy additional shares Irom the Iund , When
investors purchase a mutual Iund, they own a piece oI an investment portIolio. They share in the
gains, losses, and expenses in proportion to the amount they have invested in the Iund. At the close
oI every trading day, a mutual Iund company tallies the value oI all the securities in its portIolio
and deducts its expenses (e.g., management Iees, administrative expenses, and advertising costs).
The balance is divided by the number oI shares owned by shareholders to arrive at the value oI one
unit oI the mutual Iund. The net asset value or NAVis the price that Iund pays you per unit when
you sell. For a majority oI people, mutual Iunds are a major part oI their investment portIolio-
unless they have a lot oI money and ample time to devote in individual securities. The
IewdeIinitionoI mutual Iunds are given below
The Security & Exchange Board oI India Mutual Fund regulation 1996 deIined 'Amutual
Iund is a Iorm oI a trust established to raise money through the sale oI units to public or a
section oI public under one or more scheme Ior investing in securities including money
market instruments. Mutual Fund come under the previewoI Indian Trust Act, 1882.
Encyclopedia Britannica deIines a mutual Iund as 'Mutual Fund also called Unit Trust or
open ended Trust a company that invests the Iund oI its subscribers in diversiIied securities
& in turn issues units representing shares in those holdings. They make continuous oIIering
oI newshares at net asset value & redeem the share on demand at net asset value determined
daily by the market value oI the securities they hold.
Objective of the Study
1) To Studythe status oI mutual Iunds industry in the post libralisation period.
2) To assess the Iinancial perIormance oI Indian mutual Iunds in terms oI risk & return aIter
liberalization.
3) To compare the perIormance oI Iunds with a bench mark portIolio (market index).
Scope of the Study
The time span oI study is post liberalization period i.e. it starts Irom year 1993 and ends with year
2009.
The study is limited toopenended mutual Iund scheme with growth option in India.
Thus time span is very long period about seventeen years & thereIore is quite suIIicient to study
the perIormance oI the mutual Iund industry in India.
Reviewof literature-
Several researchers have undertaken lots oI study on mutual Iunds and its perIormance
evaluation Irom manyyears .BrieI oI IewoI them is given below-
Kon, S.F., (1983), in his paper evaluated perIormance in terms oI selectivity & timing parameters
over a period, January 1960 to June 1976. The sample was 37 Iunds. The study concluded that
individually Iew Iunds have shown positive selectivity & timing skills but collectively mutual
Iunds Iailed toperIorm satisIactorily.
Henriksson, R.D., (1984), evaluated perIormance in terms oI market timing abilities with sample
oI 116 open-ended investment schemes during the period, February1968-June 1980. The
empirical results obtainedindicatedunsatisIactory timing skills oI the Iund managers.
Vaid, S., (1994), in his paper looked at the perIormance in terms oI the ability oI the mutual Iund to
attract more investors & higher Iund mobilization. It shows the popularity oI the mutual Iund as it
is perceived to pay superior returns to the investors. She concludes that even Ior equity-oriented
Iunds, investment is more in Iixed income securities rather than in equities, which is a distortion.
Sarkar, J. & Majumdar S., (1995), in his paper evaluated Iinancial perIormance oI Iive close-
to invest
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
63
ended growth Iunds Ior the period February1991 to August 1993, concluded that the perIormance
was below average in terms oI alpha values (all negative & statistically not signiIicant) & Iunds
possessed high risk. No reIerence was provided about the timing parameters in their study.
Jaydev. M., (1996), in his paper evaluated perIormance oI two schemes during the period, June
1992 to March 1994 in terms oI returns/benchmark comparison, diversiIication, selectivity &
market timing skills. He concluded that the schemes Iailed to perIorm better than the market
portIolio (ET's ordinary share price index). DiversiIication was unsatisIactory. The perIormance
did not showany signs oI selectivity & timings skills oI the Iund managers.
Gupta, O.P. & Sehgal, S., (1997), in his paper evaluated mutual Iund perIormance over a Iour
year period, 1992-96. The sample consisted oI 80 mutual Iund schemes. They concluded that
mutual Iund industry perIormed well during the period oI study. The perIormance was evaluated
in terms oI benchmark comparison, perIormance Irom one period to the next & their risk-return
Characteristics. Gupta & Sehgal in another paper 'Investment PerIormance oI Mutual Funds:
The Indian Experience, 'presented at UTI-ICM Second Capital Market ConIerence, Dec. has
reported that Mutual Fund Industry had perIormed reasonably well during their period oI study.
Mishra (2001) evaluated perIormance over a period, April 1992to December 1996.The sample
size was 24 sector sponsored mutual Iunds. The perIormance was evaluated in terms oI rate oI
return, Treynor's, Sharpe & Jensen's measures oI perIormance. The study also addressed beta's
instability issues. The study concluded dismal perIormance oI PSU mutual Iunds in India, in
general, duringthe period, 1992-96.
Narayan & Ravindran (2003) studied the perIormance oI Indian Mutual Funds in a bear market
using relative perIormance index, risk-return analysis, Treynor's ratio, & measures oI Shape,
Jensen & Fema.
Research Methodlogy
The data used in the study is totally secondary data. On 31 march 2009 there are 1001 mutual
Iunds scemes are Iloated by various mutual Iunds companies with total oI 417300 crs asset under
management,in which 293 schemes are equity mutual Iunds schemes, 509 schemes are income
schemes and 35 scemes are balanced schemes. Out oI these available scheme , 25 actively traded
equity,balanced and income schemes with growth option are taken Ior study. Thus sample size is
25 equity schemes. The study period is post liberalisation period which start Irom 1993. thus the
study period is 17 years Irom December 1993 to June 2009.
Net Asset Value (NAV)
The average logerithemic return on mutual Iund.is calculated by taking month end NAVs.The
sourse oI the data is webside oI ascociation oI mutual Iund oI India. (AMFI) The net asset value is
the mirror image depicting the worth oI the investment per unit. It is an indicator oI the capital
appreciation oI the Iunds under the schemes as on date oI NAV. NAVrepresented Iunds per share
market value. The NAVis calculated by dividing the aggregate value oI the net assets oI a scheme
by the number oI outstandingunits under the scheme.
Benchmark portfolio-
BSE-100 index is used as a bench mark in present study and is considered as market portIolio
.The average logrithem return is used as a return Irom market portIolio.
Risk-Free asset
A risk Iree asset is that asset which has zero verability oI return. Investor buy an asset at the
begining oI the holding period with the none terminal value, such type oI asset can be considered
as risk Iree asset. Government sequirities and nationalized bank diposits Iall under this category
as the Government sequirities are not easely avilable to the commen man.,.Nationalized bank
diposits are considered as risk Iree asset and interest rate on such diposit are considerd as risk Iree
return. The interest rate on bank deposits is collected Irom the webside oI RBI and logerithemic
returns are calculated to Iind mean return.
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 64
Performance evaluation-
Following tools are used forPerformance evaluation
For each mutual Iund scheme in the sample return have been calculated by taking year end NAVs
.the annual returnIor the sample schemes are calculated by using the Iollowing equation--.
Rpt Log (NAVt/NAVt-1)
Where Rpt is the annual return on mutual Iund portIolio Ior the period t
NAVt net asset value Ior the (t) Period.
NAVt-1 net asset value Ior the (t-1) Period
The returns on the Iund portIolio are averaged as Iollows
n
Rp _ Rpt/n
t-1
Rp is average return on the mutual Iund portIolio.
S.D. oI Iund returnis used tocalculate total risk oI mutual Iund portIolio.
Measurement of BETA-
Beta calculation requires covariance oI the scheme returns & market returns. Covariance
essentially measures towhat extent the schemes returns & market returns move together.
|c|mu|ofc| co|cu|o|ngBeo}
Beta Cov(r r )/Var(r )
p, m m
Where
Cov(r r ) Covariance between the index's return & the mutual Iund scheme's return.
p, m
Var(r ) Variance in the indexreturn.
m
Sharpe Ratio: - This ratio given by William Sharpe in 1996 & is one oI the most useIultool Ior
determininga Iund's perIormance.
The sharpe ratio represent the tradeoII between risk & return. At the same it also Iactors in the
desire to generate returns, whichare higher than those Irom risk Iree return.
The assumption behind the sharpe ratio is that small investor invest Iully in the mutual Iund &
does not hold any portIolio to eliminate unsystamatic risk & hence demand a premium Ior the
total risk.
It is a ratio indicating the relationship between the portIolio additional return over risk Iree return
& total risk oI the portIolio measured in terms oI standard deviation. As the standard represents
the total risk experienced by a Iund, the sharpe ratio reIlects the returns generated by undertaking
all possible risk.
This ratio is also reIered as reward to variability ratio. The sharpe ratios Ior diIIerent mutual Iund
schemes as well as benchmark portIolio have been completed by using the Iollowing Iormula: -
Sharpe Ratio r -r
p f / p
Risk Premium / Total Risk
Where: r Average ReturnoI the Iund
p
r Average RiskFree Return
I
o Standard Deviation i.e. total risk oI the portIolio
p
& Benchmark Comparison r -r o
m I / m
Where r Average Return oI the benchmark portIolio &
m
o StandardDeviationoI Market PortIolio.
m
The Sharpe ratio is a measure oI relative perIormance, in the sense that it enables them to compare
two or more investment opportunities.
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Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
65
AIund with the higher Sharpe ratio in relation to another Iund or market portIolio is preIerable as
it indicates that the Iund has higher risk premium Ior every unit oI total risk.
The major limitation oI sharpe ratio is that it is based on the capital market line. The major
character oI the capital market line is only the eIIicient portIolios can be plotted on the Capital
Marker Line, but not ineIIicient portIolio. Hence we assume that a properly managed portIolio
(mutual Iund schemes) is aneIIicient portIolio.
Treynor's Ratio: - Jack Treynor in 1965 conceived an Index oI portIolio measure called as
reward to volatilityratio.
He assumes that the investor can eliminate unsystematic risk by holding a diversiIied portIolio.
Hence this perIormance measure adjusts excess return over the risk Iree return Ior systematic
risk.
TheTreynor ratios Ior the sample schemes have been computed by using the Iollowing Iormula:
TreynorRatio Risk Premium / Systematic Risk
r -r
p I / p
Where r Return oI PortIolio
p
r Risk Free Return
I
Systematic Risk oI PortIolio.
p
/s neoI the market portIolio is equal to 1.
Treynor RatioIor Benchmark PortIolio (r -r )
m I
Where r Return on Market PortIolio.
m
II Treynor ratio oI the mutual Iund schemes is greater than (r -r ), then scheme has outperIormed
m I
the market.
For a completely diversiIied portIolio on without any unique risk, the two measures give identical
ranking, because total variance oI completely diversiIied portIolio is its systematic variance.
Whereas a poorly diversiIied portIolio could have a high ranking on the basis oI Treynor ratio &
as a lowrankingonthe basis oI Sharpe ratio.
Thus two ratios mayrankthe schemes diIIerently
1ensen Measure
Sharpe & Treynor ratio rely mainly on ranking oI portIolio in comparison to the market portIolio
but they are unable to evaluate that whether the Iund has given return more/less than expected
return. Hence there is a need Ior a better perIormance measure.
Michael Jensen has developed another method Ior evaluate oI perIormance oI a portIolio. This
measure is based on diIIerential return & is known as Jensen's Ratio, the Jensen's Ratio measures
the diIIerences between the actual return oI a portIolio & expected result oI a portIolio in viewoI
the risk oI the portIolio. The model based on Capital Asset Pricing Model (CAPM), where
expected return oI the portIolio is measured as:-
r r + (r r )
s f p m f
Where r ~ ||s| f|ee |eu|n, beta coeIIicient oI the portIolio, r return Irom benchmark
I p m
portIolio.
CAPM gives the expected return oI a security or portIolio in view oI it systematic risk. The
diIIerential return gives an indication, how well portIolio has perIormed. The perIormance
measure or diIIerential return is measured by the Iactor J & is deIined by the equation.
p
J PortIolio return- expectedreturn oI the portIolio
p
r r + (r r )]
p f p m f
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 66
II 1p is positive, it shows that the portIolio has perIormed better & it has outperIormed the market
& lies above the security market line.
II 1p is negative, it means that the portIolio has under perIormed as compared to the market & lies
belowthe securitymarket line.
II 1p is zero, it indicates that the portIolio has just perIormed what its expected to & expected
return & actual return oI the portIolio both would be on the Security Market Line (SML).
Jensen's measure, J is based on the systematic risk & |equ||es & Security Market Line. It
p
measures the distance between the portIolio & the Security Market Line. Thus Jensen'sIndex
attempts toconstruct a measure oI absolute perIormance.
Fema Measure
Fema's Model attempts to measure the perIormance in terms oI the components oI risk oI
portIolio.
Jensen's measure computes excess returns over expected returns based on premium Ior
systematic risk, Eugene F Fema (1972) goes one step ahead. In view oI Capital Asset Pricing
Model, the return oI a portIolio is consisting oI risk Iree returns & risk premium.
r r +risk premium
p f
The risk premium is consisting oI reward Ior risk bearing & reward Ior stock selection.
Risk Premium Reward forRisk +Rewards forSelection.
The reward Ior stock selection is Ior the better selection oI stock Ior the portIolio. It's the return
earned on a portIolio over & above the return in view oI the risk oI the portIolio the reward Ior
stock selecting may be negative. It shows that return is not suIIicient because oI poor selection. As
Fama's measure is based on total risk, it Iocuses on the vertical diIIerence between the portIolio
return & the Capital Market Line.
Every portIolio has systematic as well as unsystematic risk. So, the reward Ior risk can be
decomposed into reward Ior systematic risk & reward Ior unsystematic risk. Thus, Fama
breakdown the observed return in Iour components.
1- Risk Iree return (r )
f
2- Reward Ior Systematic Risk(r )-- (r r )
m f
3- Reward Ior unsystematic Risk (rid) --(r r ) |( / ) ()]
m f p m
4- Reward Ior Stock Selection- (r -r ) - ( / ) (r r )
p f p m m f
Fema says that the portIolio perIormance can be judged by the net superior returns due to
selectivity. His perIormance measure denoted by F is deIined by equation.
p
F Portfolioreturn- risk free returns due to all risk
p
(r -r ) |( / ) (r r )]
p f p m m f
Where F Fama's measure forportfolio
p
r portfolio return
p
r risk free return
f
standard deviation of portfolioreturn
p
standard deviation of the market return
m
Apositive value oI F indicates that the Iund earned return higher than expected returns & lies
p
above Capital Market Line, & a negative value indicates that the Iund earned returns less than
expected returns & lies belowCapital Market Line.
Data Analysis and Conclusion
Table (I) shows that
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
67
Average Return on Iund ~ Average return on market portIolio ~ Average return on risk Iree asset
Average Risk(o) oI Iund Average Risk on market portIolio.
The table 1 shows that any return oI portIolio oI Mutual Fund is greater than one any return oI
Benchmark portIolio which is (BSE-100), whereas average Total risk oI Mutual Fund portIolio is
lesser than Benchmark portIolio. The average systematic risk oI Mutual Fund is 0.8105 which is
less than average oI Benchmark portIolio which is always1.
Average Return oI Mutual Fund is greater than the Benchmark as well as Risk Iree rate oI
return.This shows that portIolio was properly managed by Iund managers giving high average
return at lesser risk as compare to Benchmark portIolio.
The average mutual Iund with its mean annual return oI 5.20 at total risk level (o) oI 0.17087
out perIormedthe market with4.89 return at a risk level 0.20463.
Table 2 and 5 shows that out oI 25 Iunds 17 Iunds have under perIormed the market & no equity
Iund have returnlesser thanriskIree rate.
Table 3 shows that there is no portIolio with negative return. 9 Iunds have return between 2-4 . 9
Iunds between 4-6 whereas 6 Iunds have return between 8-10 out oI 25 equity diversiIied
open ended Iunds selectedIor the study.
As Iar as systematic risk is concerned 3 Iunds are oI low risk, 7 with average & 10 average
systematic risks whereas only 5 withhigh more than 1 out oI 25 Iunds selected.
This shows that most oI the Iunds lies between average to above average systematic risk category.
Table 3 shows that 7 Iunds have average systematic risk and 10 Iunds belong to above average
systematic risk category while 5 Iunds have high systematic risk.
Table 4it shows that 9Iunds here are average total risk & 12 Iunds are with high total risk.
On comparing Table 3 & 4 it seems that equity Iunds have out perIormed the market but still they
are not properlydiversiIied. There is Iurther scope Ior diversiIication & Iund manager should take
more eIIorts todiversiIythe portIolio & to reduce the diversiIiable risk
Table 6 shows that out cf 25 selected equity mutual Iunds 17 Iunds have lesser then oI market
portIolio which is 1.this shows that portIolio is properly managed and containing lesser risk as
compare to equity shares.
The sharpe index measures the risk premium oI the portIolio relative to the total amount oI risk in
the portIolio. Table 7 shows that 14 Iunds have greater sharpe index then the benchmark portIolio
out oI 25 selected Iunds, while 13 Iunds have higher treynor ratio as compare to the benchmark
portIolio. Both the ratios are giving same ranking Ior the selected Iund shows that portIolio is well
diversiIied.
II J is positive, it shows that the portIolio has perIormed better & it has outperIormed the market.
p
In the analysis table 8 shows that 16 Iunds having positive J have outperIormed the market &
p
better managed portIolio. Whereas 9 Iunds with the negative J has under perIormed as compare
p
to market i.e. their perIormance is lesser than what it should be in viewoI risk.
18 Iunds have positive F shows that out oI 25 Iunds 18 Iunds have positive reward Ior stock
p
selectivity showing good stockselection ability oI Iund manager.
Thus the results oI perIormance measures suggest that more than 50 sample mutual Iunds
schemes were able to satisIy the investor's expectations by giving more return at lesser risk as
compare to market portIolio. The study also shows that most oI the sample Iunds were giving
excess return over expectedreturns based on both premium Ior systemic risk and total risk.
Bibliography
Bevis Charles, W, (2002 November), The Future oI Mutual Fund Industry, Financial
Research Corporation
Change, E.C. & Lewellen W., (1984), 'Market Timing & Mutual Fund Investment
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 68
PerIormance', publishedinJournal oI Business, (January), pp.57-72
Gupta, O.P. & Sehgal, S., (1997), 'Investment PerIormance oI Mutual Funds- The Indian
Express', 'Indian Capital Market- Trends & Dimensions', published in Tata McGraw Hill
Publishing CompanyLtd. (on behalI oI Institute oI Capital Market, Navi Mumbai),
Henriksson, R.D., (1984), 'Market Timing & Mutual Fund PerIormance: An Empirical
Investigation', published inJournal oI Business
Jaydev. M., (1996), 'Mutual Fund PerIormance: An Analysis oI Monthly Returns', published
in Finance IndiaVol. X, No.1, (March), pp.73-84.
Kar Pratip; Natrajan, I and Singh, J.P. (2000) Survey oI Indian Investors, SEBI and NCAER
Kon, S.F., (1983), 'The Market Timing PerIormance oI Mutual Fund Managers', Journal oI
Business, (July), pp.323-47.
Reid Brian K and Rea John D,(2003 July), Perspective, Mutual Fund Distribution Channel
and Distribution Costs, Investment Company Institute
Rustagi R. P.,Investment analysis and portIolio management, sultan chand & sons
publication, NewDelhi,ISBN81-8054-528-8
Sarkar, J. & Majumdar S., (1995), 'Weak From oI EIIicient Market Hypothesis' published in
ASpecial Analytical Investigation', Vikalpa, (April-June) pp25-30
Vaid, S., (1994), 'Mutual Fund Operation oI India', published in Rishi Publication, Varanasi,
India. Pp101-19
Appendix
Table -1
Average Return onIund (Arp) 0.052013
Average Risk (o) oI Iund (Aop) 0.0170878
Maximum ReturnonIund 0.097593
Minimum Return on Iund 0.0219
Maximum RiskonIund 0.215864
Minimum Risk Iund 0.030576
on
Average () oI Iund (Ap) 0.810556
Maximum Return on market portIolio rm 0.085846
Minimum Return on market portIolio 0.040582
Maximum risk on market portIolio o 0.192751
m
Minimum riskon market portIolio o 0.167399
p
Average returnonmarket portIolio (Ar 0.0489061
m)
Average Risk on market portIolio ( Ao .2046374
m)
Average returnonrisk Iree asset (Ar -0.013566
I)
Minimum return onrisk Iree asset r -0.00807
I
Maximum returnon risk Iree asset r 0.007881
I
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
69
Table- 2
o
Table- 3
Risk () & Return of Mutual Fund
Fund rp p rm m rI
Baroda Pioneer ELSS 96 0.022259 0.169704 0.057269 0.17989 0.00119
Birla SunLiIe -95 0.097593 0.159868 0.051682 0.174092 -0.00807
Canara Robecco Bal Fund-G 0.036136 0.115336 0.041957 0.167399 -0.00212
DBS Chola Growth Fund-G 0.055684 0.228367 0.085846 0.191144 0.007881
DSP Black Rock 0.082054 0.137992 0.046007 0.18834 0.00119
Escort Balance -G 0.084584 0.161592 0.085946 0.191144 0.007881
Franklin Tempelton
India Bluechip-G 0.057661 0.215864 -0.040582 0.173181 -0.00502
HDFC Equity-G 0.084156 0.196342 0.040582 0.173181 -0.00502
HDFC Capital Builder-G 0.048237 0.188172 0.040582 0.173181 -0.00502
ICICI Pru FMCG-G 0.048894 0.159776 0.046007 0.18834 0.00119
ICICI Pru Growth -G 0.089982 0.21239 0.67808 0.192751 -0.00308
ICICI Pru Income -G 0.040186 0.030576 0.06780 0.192751 -0.00308
SBI Magnum Balanced -G 0.043059 0.209325 0.05168 0.174092 -0.00807
SBI Magnum Contra Fund 0.053745 0.185688 0.046007 0.18834 0.00119
SBI Magnum FMCG 0.006434 0.157804 0.046007 0.18834 0.00119
SBI Magnum Multiplier Plus 0.034329 0.240781 0.040582 0.173181 -0.00212
Principal Balanced -G 0.039146 0.144942 0.046007 0.18834 0.00119
Principal Index 0.041138 0.16383 0.046007 0.18834 0.00119
Kotak- 30 0.080141 0.209683 0.067808 0.192751 -0.00308
JM Balanced -G 0.0219 0.150856 0.051682 0.174092 -0.00807
JM Equity -G 0.038696 0.201403 0.051682 0.174092 -0.00807
LIC MF Equity 0.030588 0.195145 0.046007 0.18834 0.00119
LIC MF Govt. Sec -G 0.033698 0.042813 0.046007 0.18834 0.00119
LICMF Growth 0.030775 0.215079 0.046007 0.18834 0.00119
SBI Magnum Global -G 0.049759 0.237163 0.051682 0.174092 -0.00807
Risk/Return .2 .2 .5 Average Above High risk Total
Low Risk Below Risk .5 average ~1.
Risk .7 risk
7 1
0 0 0 0 0 0 0
0 - 2 0 0 1 0 0 1
2 - 4 1 0 3 2 3 9
4 - 6 1 0 2 3 2 9
6 - 8 0 0 0 0 0 0
8 - 10 1 0 1 5 0 6
~ 10 3 0 7 10 5 25
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 70
Table- 4
Risk () & Return of Mutual Fund
o
o
o o o o o
Table- 5
Risk return grid diagrame
o o o o
o o o o
Risk/Return Low Risk Below Average Above High risk Total
average Risk average ~1.
.7 risk
.05 .05 .09 .09 .12 .12 .18 .18 .25
0 0 0 0 0 0 0
0 - 2 0 0 1 0 0 1
2 - 4 1 0 3 2 3 9
4 - 6 1 0 2 3 2 9
6 - 8 0 0 0 0 0 0
8 - 10 1 0 1 5 0 6
~ 10 3 0 7 10 5 25
rp~rm, p m rprm, p m
Birla SunLiIe -95 Franklin Tempelton India Bluechip-G
DSP Black Rock HDFC Equity-G
ICICI Pru FMCG-G HDFC Capital Builder-G
SBI Magnum Contra Fund Kotak- 30
rp~rm, p~ m rprm, p~ m
Baroda Pioneer ELSS 96 DBS Chola Growth Fund-G
Canara Robecco BalanceFund-G ICICI Pru Growth -G
Escort Balance -G SBI Magnum Balanced -G
ICICI Pru Income -G SBI Magnum Multiplier Plus
SBI Magnum FMCG JM Equity -G
Principal Balanced -G LIC MF Equity
Principal Index LICMF Growth
JM Balanced -G SBI Magnum Global -G
LIC MF Govt. Sec -G
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71
Table- 6
Fund rp p p
Baroda Pioneer ELSS 96 0.022259 0.169704 2.52
Birla SunLiIe -95 0.097593 0.159868 0.740695
Canara Robecco Bal Fund-G 0.036136 0.115336 0.58703
DBS Chola Growth Fund-G 0.055684 0.228367 0.662978
DSP Black Rock 0.082054 0.137992 0.6497
Escort Balance -G 0.084584 0.161592 0.719056
Franklin Tempelton India Bluechip-G 0.057661 0.215864 1.029
HDFC Equity-G 0.084156 0.196342 0.836684
HDFC Capital Builder-G 0.048237 0.188172 0.92200
ICICI Pru FMCG-G 0.048894 0.159776 0.95036
ICICI Pru Growth -G 0.089982 0.21239 0.94272
ICICI Pru Income -G 0.040186 0.030576 -0.090706
SBI Magnum Balanced -G 0.043059 0.209325 0.96750
SBI Magnum Contra Fund 0.053745 0.185688 0.805192
SBI Magnum FMCG 0.006434 0.151804 0.584688
SBI Magnum Multiplier Plus 0.034329 0.240781 1.2309
Principal Balanced -G 0.039146 0.144942 0.68405
Principal Index 0.041138 0.16383 0.60927
Kotak- 30 0.080141 0.209683 0.961970
JM Balanced -G 0.0219 0.150856 0.585884
JM Equity -G 0.038696 0.201403 1.060116
LIC MF Equity 0.030588 0.195145 0.926869
LIC MF Govt. Sec -G 0.033698 0.042813 -0.13588
LICMF Growth 0.030775 0.215079 0.994956
SBI Magnum Global -G 0.049759 0.237163 1.22070
Table-7
Fund Treynor Ratio Sharpe Ratio
Tp Tm Sp Sm
Baroda Pioneer ELSS 96 0.318597 0.056079 0.124151 0.311740
Birla SunLiIe -95 0.1426538 0.059487 0.66093 0.343220
Canara Robecco Bal Fund-G 0.065168 0.044077 0.331691 0.263305
DBS Chola Growth Fund-G 0.072103 0.077965 0.209325 0.40788
DSP Black Rock 0.124463 0.044817 0.586004 0.23795
Escort Balance -G 0.107947 0.078136 0.474670 0.408780
Franklin Tempelton India Bluechip-G 0.06091 0.045602 0.29037 0.26331
HDFC Equity-G 0.097719 0.045602 0.454187 0.2633198
HDFC Capital Builder-G 0.057762 0.045602 0.28302 0.263319
ICICI Pru FMCG-G 0.050195 0.044817 0.298567 0.38165
ICICI Pru Growth -G 0.098716 0.68118 0.36776 0.23795
ICICI Pru Income -G -0.47699 0.070888 1.4150 0.36776
SBI Magnum Balanced -G 0.052846 0.059752 0.244256 0.343220
SBI Magnum Contra Fund 0.06527 0.044817 0.283028 0.237957
SBI Magnum FMCG 0.00896 0.044817 0.034544 0.237957
SBI Magnum Multiplier Plus 0.029611 0.042702 0.151378 0.246574
Principal Balanced -G 0.055780 0.044817 0.26187 0.237957
Principal Index 0.065567 0.044817 0.243838 0.237957
Kotak- 30 0.086509 0.070888 0.39688 0.367769
JM Balanced -G 0.051153 0.059752 0.198666 0.343228
JM Equity -G 0.044115 0.059752 0.232201 0.34322
LIC MF Equity 0.031717 0.044817 0.150646 0.237957
LIC MF Govt. Sec -G -0.239181 0.044817 0.759302 0.237957
LICMF Growth 0.029734 0.044817 0.137554 0.237957
SBI Magnum Global -G 0.04737 0.059752 0.243836 0.343220
o
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Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 72
Table- 8
Fund r Jenson measure Fema measure
I
p p (J ) (I )
Baroda Pioneer ELSS 96 0.00119 -0.12025 -0.031834
Birla SunLiIe -95 -0.00807 0.061404 0.050793
Canara Robecco Bal Fund-G -0.00212 0.0123814 0.007887
DBS Chola Growth Fund-G 0.007881 0.003886 0.045344
DSP Black Rock 0.00119 0.051746 0.048027
Escort Balance -G 0.007881 -0.2172327 0.010647
Franklin Tempelton India Bluechip-G -0.00502 0.015756 0.233528
HDFC Eq-G -0.00502 0.0510215 0.037475
HDFC Capital Builder-G -0.00502 0.0112119 -0.001312
ICICI Pru FMCG-G 0.00119 0.0051117 0.0096840
ICICI Pru Growth -G -0.00308 0.549100 0.588118
ICICI Pru Income -G 0.00308 0.0496959 0.032021
SBI Magnum Balanced -G -0.00807 -0.006681 -0.018031
SBI Magnum Contra Fund 0.00119 0.0164687 0.008369
SBI Magnum FMCG 0.00119 -0.020959 -0.030878
SBI Magnum Multiplier Plus -0.00212 -0.016112 0.022921
Principal Balanced -G 0.00119 0.007460 0.003465
Principal Index 0.00119 0.012642 0.026582
Kotak- 30 -0.00308 0.015028 0.006104
JM Balanced -G -0.00807 0.005037 0.024278
JM Equity -G -0.00807 -0.016578 0.022357
LIC MF Equity 0.00119 0.012141 -0.017038
LIC MF Govt. Sec -G -0.13588 0.038597 0.022312
LICMF Growth 0.00119 -0.015005 -0.215947
SBI Magnum Global -G -0.00807 -0.015110 -0.034029
Performance evaluation of mutual funds in India in a post liberalization eraan empirical analysis
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
73
Old-School for the New Youth
Why is today's urban youth bringing Old-School trends back? An Indian Perspective
1aishikha Nautiyal`
*Alliance University, BTM 1st Stage, Bangalore, Karnataka
Email: jaishikhangmail.com
Abstract
Various researches have been carried out to understand
the role oI nostalgia or retro marketing in inducing old-
school/vintage purchases among consumers (mainly
Generation X or baby boomers). This research paper
explores the mindset oI the younger urban consumers in
India (primarily major Indian metropolitans) and their
Iascination with old-school products and dispensing
with the same when they became outdated in the past.
The idea is to comprehend the perceptual lure behind the
category 'old-school', the psyche oI the urban youth in
reviving styles oI the past and the Iactors that inIluence
the same. Considering the youth-centricity oI the paper,
diIIerentiation has been tried to be created among the
lines oI gender and levels oI propensity toward old-
school trends. These questions have been answered by
means oI an online survey comprising 45 respondents.
Key Words: Old-school trends, India, Urban youth
Introduction
What is the great appeal that lies in the things oI the past? What is 'old-school'?According to web
resources like Wikipedia, old-school can be deIined as anything belonging to the past or an earlier
era and looked upon with high regard or respect. In some cases, within a certain context, it might
be considered as a pejorative. The term 'old-school' primarily applies to trends in music, clothing,
gaming or language.
The motivation behind this research is to comprehend as to why old-school trends and products
are lapped up more willingly by the modern consumer viz. the urban youth. OI course, new
products and newer technologies drive an average consumer, but why is it that a trend or a product
having Iormerly been written oII as out-dated, cliched or passe at the time it was in demand,
garners universal acclaim, once it hits the 'old-school category'. The research also aims to explore
the young and urban Indian consumer mindset behind a Iascination towards products or
phenomena that 'make a comeback'. By means oI this report, it is argued and bolstered by
evidence that 'old-school' trends bear immense value in the young consumers' minds. The attitude
oI the consumers toward the same is Iavorable and most people tend to subscribe to the past to
boost their present estimation oI the selI. In the course oI this work, changes in the willingness oI
the consumers to dissociate with a mass-popular product at a given point in time and attempts to
endorse the same vintage product as haute couture in later times were observed.
To elucidate the research angle better, one can consider the example oI The Converse All Star, a
th
sneaker brand that was originally established in the early 20 century. From being the most stylish
Iootwear choice in the 60s, 70s and the 80s and later getting outmoded, the brand has again Iound
st
its lost swing in the 21 century. The Converse All Star is once again a rage among modern
consumers and has been heralded as the sneaker du jour brand. Another example that stands out
is Hats and more speciIically the 'Fedora'. While it was practically a social Iaux pas to go places
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 74
without a hat in the yester years, the practice gradually wore out, as the times became more casual.
The 90s sawthe 'old-school' Fedoras coming back again as they were endorsed by stylish rappers
and became synonymous withthe uber-cool hip-hop culture.
The point to be noted in the above examples is that when old-school accessories make a
comeback among consumers oI a certain time, while their physical Iorm may remain the same
with slight alterations, their sense oI purpose and associations with the consumers change
drastically. So, while wearing a hat signiIied tradition and gentlemanliness in the 1950s, it relates
more with style, chic, and urbanity in the 2000s. It can also be said that an old-school product will
only make a comeback iI it canIit within the present value Iramework oI the modern consumer.
The concept oI revisiting the past is not new to consumers. And various reasons could be
attributed to this phenomenon. Some studies Iocus on howone tends to opt Ior nostalgic products
or events like eating a childhood candy treat or watching an old episode oI a Sit Com oI the yester
years, so as to IulIill the social need to belong somewhere or Ieel connected (Loveland, Smeestars
and Mandel, 2010). This recourse to nostalgia can be extrapolated to give credence to the ambit oI
the present study. There is a marked tendency in consumers to usher in Old-school trends Irom
time to time.
Similar researches conducted in the past (Silverman, 1995) suggest that consumers might turn to
the past, looking Ior brand authenticity, a sense oI well being, convenience and a yearning Ior the
good old days. As noted by (Barrager, 1993), the retrogressive trends mentioned in the present
research and strongest among the young consumers, are not just symbolic oI nostalgia, but also
have a strong sentimental appeal.
Some researchers note that an old-school brand serves a dual purpose. While the nostalgic
elements that it creates, are more synonymous with today's Gen Xers and Boomers (taking them
back to their days oI childhood glory), it also connects with the global youth. The connect is
deIined by an inspiration to relate with a past that wasn't witnessed by today's youth in person. It
gives them an opportunity to create new experiences out oI this past memorabilia closet. Old-
school products are also well received by the youth because they meet the present Iunctional
requirements (like the all newrevamped Beetle), and still manage to create that reminiscent touch
among their youthIul users (Brown, Stephen, Robert V. Kozinets, and John. F. Sherry, Jr. (2003)).
There are some old-school styles that are better received by the younger generation. Examples
could include Jeggings, Silly Bandz, Bell Bottoms, Skinny Jeans et cetera. One phenomenon that
has really taken the youth by storm is the reappearance oI the Geek Look. This look is primarily
spearheaded by large glass Irames which have bold looks. This style is being espoused heavily by
the youth and savagely endorsed by younger celebrities across the globe. While this look was
panned heavily in the 90s as passe since it Iound huge similarities with the Iashion oI the 60s, the
st
21 century has seen a miraculous resurgence oI the same. Going by the geek look, Ray Ban
WayIarers have garnered a huge Ian Iollowing by the masses, typically the youth. This evergreen
asymmetric style by Ray Ban, once the mecca oI style in the 70s, lost its way out in the 90s. Nowit
is in vogue again and the WayIarers cannot serenade the younger consumers enough. They are
also better tweaked with today's requirements as the 'Iunk-element' in them has been revamped by
way oI more colorIul designs. But they are as beautiIully juxtaposed with the past as they are with
the present.
Method
The ultimate question being asked in the present study is iI the youth is keen on reviving Old-
school trends in Iashion, music, gaming, language et cetera. And iI the previous question is
answered aIIirmatively, what is their inspiration behind doing so? In other words, it can be said
that the present research looks at uncovering the Iactors that govern the youth's inclination
towards retro trends. Since age oI the consumers is being narrowed to the youth, it would be
interesting to study the role oI gender in its receptivity to back in time styles. The awareness and
responsiveness levels oI young Iemale and male consumers can be compared to understand the
Old-school revival.
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
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For the purpose oI empirical research, the research hypothesizes the Iollowing:
Ho: The younger urban Indian consumers are not keen on reviving Old-school trends
H1: The younger urbanIndian consumers are keen on reviving Old-school trends
H2: Old-school trends are promoted more by young urban Indian Iemales than young urban
Indian males
An online survey was conducted to gauge the Old-school sentiment among the young consumers
in India. The survey comprised a mix and match oI closed and open ended questions so as to
Iacilitate preciseness and also leave room Ior imagination in the process. Arandom sample oI 45
respondents was considered and the ratio oI male to Iemale respondents was tried to be kept
consistent so as to compare their involvement with old-school trends and avoid the scales tipping
in Iavor oI any one gender. Basic statistical percentages were employed as the response
barometer.
Analysis and Findings
The basic line oI diIIerentiation in the research was on the basis oI gender and its respective
involvement in the revival oI old-school trends among urban Indian youth. This was the pivot
around whichvarious analyses were made and conclusions reached.
Although the age bracket Ior the survey was conIined to 16-39, a majority (75.6 ) oI the
responses came in Irom the 22-27 age group (reIer to table and chart 1.0).
Most oI the inIormation was collected Irom the leading Indian metropolitans like Delhi, Mumbai
and Bangalore, as it is practicable to extrapolate the revival and acceptance oI old-school trends
Table 1.0
Age
Gender
Answer Options Male Female Response Response
Percent Count
16-21 3 4 15.6 7
22-27 15 19 75.6 34
28-33 3 0 6.7 3
34-39 1 0 2.2 1
answered question 45
skipped question 0
Age group of the respondents
Chart 1.0
Age group of the respondents
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 76
by the urban Indian youth, witnessed in these cities, to other tier 1 and 2 cities oI India (reIer to
chart 1.1). The respective cities are represented by their states in the tables and charts and show
participation levels oI male and Iemale respondents in each state.
State-City wise representation of the respondents (Cender)
Although the concept oI global revival oI past trends has been studied by many researchers in the
past under heads like nostalgia and retro marketing among others, it was imperative to understand
what the respondents thought oI the present research, as it was being conducted under the old-
school umbrella. To this end, 95.6 oI the respondents, when asked howthey deIined old-school
trends, pointed at them as styles/products/trends oI the past (reIer to table and chart 1.2).
1able 1.2
State-City wise representation of the respondents (Cender)
1able 1.2
What is your deIinitionoI Old-School?
Gender
Answer Options Male Female Response Percent Response Count
An old place to study 1 1 4.4 2
Aschool Ior the old 0 0 0.0 0
Styles/products/trends oI the past 21 22 95.6 43
answered question 45
skipped question 0
Relevance of the respondents' definition of old-school
Chart 1.2
Relevance of the respondents' definition of old-school
50
State
31.8
43.5
18.5
26.1
13.6
8.7
4.5
13.0
0.0 0.0
Karnataka
Delhi
Maharashtra
Gujarat
All Other Responses
Male
Female
40
30
20
10
0
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
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The primary purpose oI the study was to explore iI the young urban Indian consumer was
interested in reliving the past via old-school styles witnessed across a breadth oI media and
liIestyle choices. The survey unraveled that 55.6 oI the respondents oI the survey were
'moderately' interested in sporting a look or style oI the past (reIer to chart 1.3). The research also
aimed at understanding iI the old-school trends were propagated more by young urban Indian
Iemales as opposed to their male counterparts. The study revealed that out oI the total sample size
56.5 oI the Iemale respondents were 'moderately interested' in sporting a look or style oI the
past. This Iigure was moderately higher than 54.5 oI the male respondents with a similar
response. 8.7 oI the Iemale respondents were 'extremely interested' in adopting old-school
styles as opposed tonil by the male respondents.
Chart 1.3
Inclination of the urban Indian youth toward old-school trends and styles
The areas where the urban Indian youth witnessed the retro trends most were also central to
exploration in the study. The common trend areas were represented by Automobiles, Books,
Fashion, Food, Gaming (video), Language, Movies, music and others could be speciIied (reIer to
chart 1.4). For 82.6 oI the Iemale respondents, there was a tie between movies and Iashion
where old-school trends were majorly witnessed. The choices by Iemales were supported by
examples oI old-school revival in high waist trousers, tweed jackets with suede elbow patches,
big Ilowery prints, big Iramed geek glasses, bell bottoms, ripped denim, contemporary but back
in time movies like Dabangg, Action Replayy among others.
Chart 1.4
Areas where old-school styles are witnessed and possibly adopted by urban Indian youth
Least
Extremely
Indifferent
Less
Moderately
How keen are you on sporting a look or style of the past?
56.5
4.5
22.7
4.3
8.7
13.0
17.4
Male
Male
4.5
Gaming (video)
Food
Books
Language
Automobiles
Music
Fashion
Movies
Female
Female
18.2
54.5
60
100
80
60
40
20
0
40
20
0
9.1
18.2
27.3
45.5
72.7
77.3 72.7
73.9
82.6
82.6
30.4 30.4
17.4 17.4
17.4
Which area have your encountered these old-school/retro trends in?
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 78
This was closely Iollowed by music suggested by 73.9 oI the Iemale respondents. For 77.3 oI
the male respondents, the areas were topped by movies, closely Iollowed music and Iashion at
72.7. The male choices were supported by more examples oI how old-school music was
resurIacing amidst the younger male population in India (with reIerences to disco beats, classic
rock, lyrics, rhythm etc.) The Iigures are suggestive oI the Iact that more young Indian Iemales are
likely to adopt old-school trends in Iashion and movies. Similarly, more young Indian males are
likely to adopt old-school styles showcased in movies.
The objective oI this study was also to Iind out about the inspiration and reasons among the urban
Indian youth to bring back old-school styles in Iashion or music Ior instance. According to prior
studies with boomers and generation Xers, it was Iound that it was mostly nostalgia Ior the past
that spurred the above junta into Iollowing retro trends and making old-school purchases. Since
this study Iocused on the urban Indian youth (16-39), a majority oI the responses (51.1 )
indicated that the prime reason to adopt or Iollowold-school trends was that 'it Ielt hip and stylish'
(reIer to table 1.5).
1able 1.5
Why the urban Indian youth adopts old-school trends
According to chart 1.5, (52.2) oI the Iemale respondents suggested that they Iollowed/adopted
old-school trends since 'it Ielt hip and stylish'. Nostalgia ranked at 30.4 among the Iemale
respondents. 50.0 oI the male respondents attributed the same reason oI old-school 'Ieeling hip
and stylish' as their inspiration behind adopting these trends. On the nostalgia Iront, male
respondents rankeda little higher than their Iemale counterparts at 36.4.
Chart 1.5
Why the urban Indian youth adopts old-school trends (gender-wise)
What in spires you to adopt/Iollowan old-school trend?
Gender
Answer Options Male Female Response Percent Response Count
Doesn,t inspire me at all 4 4 17.8 8
Nostalgia 8 7 33.3 15
It Ieels hip and stylisht 11 12 51.1 23
My Iriends do it 2 2 8.9 4
answered question 45
skipped question 0
What inspires you to adopt/follow an old-school trend?
9.1
0
20
40
My friends do it Doesn't inspire
me at all
No stalgia It feels hip and
stylish
60
8.7
18.2
17.4
36.4
30.4
50.0
52.2
Male
Female
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
79
It could be inIerred Irom the same that by adopting old-school trends, the younger Indian
generation can discover the 'era oI bygones' Ior itselI, which is well tweaked with the present
requirements. These trends are almost like a repository oI mix and match styles that have a lot oI
novelty in them and hence appeal to the urban Indian youth. It is not so much a sentimental
longing Ior the past as it is a treasure hunt to see what the past can oIIer.
Along with deducing possible reasons Ior old-school revival among the Indian youth, it was also
important to understand the perception oI the same target group toward a style that was rejected in
the past as being too hackneyed and then later serenaded as a must have once it got tagged as
vintage or old-school. To this end, 62.2 oI the respondents in the survey (majority) indicated
that an old artiIact touted as anold-school product or style 'was really cool' (reIer to table 1.6).
1able 1.
Perceptual associations with old-school styles
65.2 oI the Iemale respondents gave credence to the 'old-school being really cool' notion as
opposed to 59.1 by their male counterparts (reIer to chart 1.6). This is suggestive oI the Iact
that even iI those styles that phase out a certain point in time, have a lucrative chance at making a
comeback among a diIIerent age group oI consumers. The reasons are the shiIts in the perceptual
value oI the styles to the new target consumers and how well this value gels in with the modern
requirements.
Chart 1.
Perceptual associations with old-school styles
Although there was greater inclination in Iemale respondents oI the study to sport a style or look oI
thepast as opposedtothemalerespondents, yet thedesiretoadopt comebackstyles was witnessedin
products that could be easily accommodated by both genders. These gender neutral styles or 'a guy-
girl thing' as designated in the survey ranged Iromgeek glasses, ConverseAll star sneakers, tapered
denim, video games and some expressions in language (reIer to table 1.7). OI course, the examples
mentioned below do not exhaust the universal set oI such trends, but attempts have been made to
extrapolate on Iindings Irom very common examples oI gender neutral old-school styles, to what
might constituteageneral senseoI old-school adoptionamongtheurbanIndianyouth.
Astyle that got outdatedin the 90s is in vogue nowas old-school. Howdo you react?
Gender
Answer Options Male Female Response Percent Response Count
IndiIIerent toward it 9 5 31.1 14
Old-school is really cool 13 15 62.2 28
I don't like it at all 0 1 2.2 1
I only support new things 0 2 4.4 2
answered question 45
skipped question 0
Astyle that got outdated in the 90s is in vogue now as old-school.
How do you react?
100
80
60
40
20
Male Female
59.1
65.2
21.7
40.9
8.7
4.3
0
Old-school is
really cool
Indifferent toward it
I only support
new things
I don't like it at all
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 80
1able 1.7
Prevalence of gender neutral old-school trends
While the younger Indian generation is keen on embracing the trends oI the past, it doesn't seem
too keen to compromise on the Iunctional modernity oI the same styles (reIer to table 1.8). That is
to say, that a majority oI the respondents (84.4 ) suggested that in adopting a certain style or
product oI the past, while they would love Ior it to retain its old-school style in built or
architecture, they would want it to be technologically in tune with the times. 91.3 oI the Iemale
respondents corroborated that the above mentioned was 'the best combination'. 77.3 oI the
male respondents had a similar view(reIer to chart 1.8).
1able 1.8
1he ideal old-school product
Chart 1.8
1he ideal old-school product (gender-wise preference)
Waht's your experience withold-School trends?
Take you pick on these Iive old-school trends
I call it
Aguy thing Agirl thing Aguy-girl Response Count
Geek Glasses (big and bold Irames 22.7 18.2 59.1(26) 44
Ior casual purposes)
Converse All star sneakers 20.9(9) 7.0(3) 72.1(31) 43
Tapered Denim 25.0(11) 13.6(6) 61.4(27) 44
Mario Brothers 42.9(18) 2.4(1) 54.6(23) 42
Boo Ya! (Expression) 26.2(11) 19.0(8) 54.8(23) 42
answered question 45
skipped question 0
Do you like an old-school product that has yesterday's style quotient and today's technology and
convenience?
Gender
Answer Options Male Female Response Percent Response Count
This is the best combination 17 21 84.4 38
No. I like it old in every way 1 1 4.4 2
What's old-school
without old technology 4 1 11.1 5
answered question 45
skipped question 0
100
80
60
40
20
0
Male
Female
No. I like it old
in every way
What's old-school
without old technology
This is the best
combination
Do you like an old-school product that has yesterday's style quotient and
today's technology and convenience?
4.5
4.3
18.2
4.3
77.3
91.3
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
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Conclusion
Based on the Iindings Irom the survey and the sub-sequential analysis, the null hypothesis that the
younger urban Indian consumers are not keen on reviving Old-school trends is rejected. The data
presented and analyzed in the research corroborate the inclination oI the target segment to relive
the old-school era by styles and trends oI the past. Moreover, the second hypothesis that old-
school trends are propagated more by young urban Indian Iemales as opposed to their male
counterparts stands to good reason and is accepted. The data presented and analyzed in the
research bolster the same. As was deduced in the previous sections, there is greater prevalence oI
gender neutral old-school styles among the target segment.
The prime inspiration oI the younger generation oI consumers and the urban Indian youth
speciIically in reviving old-school trends is more exploratory in nature as opposed to nostalgia.
Styles oI the past present a wonderIul opportunity to the youth to experiment with the styles oI the
older era. But this rendezvous with the past and the usage oI these products is highly
contemporary andlacedwithmodernity.
References:
Brown, Stephen, Robert V. Kozinets, and John F. Sherry, Jr. (2003) 'Sell Me the Old, Old
Story: Retromarketing Management and the Art oI Brand Revival, Journal oI Customer
Behavior, 2(June), 85-98.
Barrager, D. (1993). RetroPower. Brandweek, Vol 34, 11, March, 15.
Loveland, Smeestars, and Mandel. (2010). Still preoccupied with 1995: The Need to Belong
and PreIerence Ior Nostalgic Products. Journal oI Consumer Research, Vol 37, 3, April, 15.
Silverman, I. (1995). Status loses Stature among Japanese. Advertising Age, Vol 66, 13,
March, 27.
Rousseau, G.G., Venter, D.J.L. (1999). The InIluence oI Nostalgia on Consumer PreIerence.
Journal oI Industrial Psychology, 25(2), 36-42.
Web resources
Trends with nine lives (n.d.). Retrieved on September 13, 2010, Irom
http://www.synovate.com/changeagent/index.php/site/Iullstory/trendswithninelives/
Newschool takes onold-school Iashion (n.d.) Retrieved on September 14, 2010, Irom
http://www.examiner.com/generation-x-in-dallas/new-school-takes-on-old-school-Iashion
Language oI the 90s (n.d.). Retrieved on September 14, 2010 Irom
http://www.inthe90s.com/generated/terms.shtml
Survey resources andgraphs
http://www.surveymonkey.com
Old-School for the New Youth Why is today's urban youth bringing Old-School trends back? An Indian Perspective
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 82
Human Resource Efficiency Indicators of Public Sector Banks-
Acase study of State Bank of India in Uttarakhand
R. Datta`
Prof. R.R. Nautiyal ``
* Guest Lecturer, Department oI Economics, HNBGarhwal University,Srinagar.
e-mail: lakshmi23vishnurediIImail.com
** ProIessor & Head, Department oI Economics, HNBGarhwal University, Srinagar
e-mail: rrnautiyalyahoo.in
Abstract
Human resources oI a bank play one oI the most pivotal
roles in determining the eIIiciency oI the bank. Banks
have to understand that the capital and technology-
considered to be the most important pillars oI banking
are replicable, but not human capital. ThereIore human
capital oI a bank should be seen as a valuable resource
Ior the achievement oI competitive advantage. In this
paper an attempt has been made to Iind whether the
geographical variations oI the branches have any impact
on the Human Resource eIIiciency indicators and assess
the impact oI geographical variations on work load oI
managers and direct communication oI the branch
managers with the public.The paper is a case study
based on 102 branches oI State Bank oI India in
Uttarakhand. Empirical results suggest that proper
planning and communication at the branch level is the
major Iactor determining their HR eIIiciency. A
signiIicant relationship was Iound to exist between
indicator oI HR eIIiciency and type oI branches. Also
type oI branches based on rural, semi urban, urban
segregation was Iound to have a signiIicant association
with the hours oI direct public dealing by the managers.
Introduction
The core Iunction oI human resource development in the banking industry is to Iacilitate
perIormance improvement, measured not only in terms oI certain Iinancial indicators oI
operational eIIiciency but also in terms oI quality oI Iinancial services provided. The skill level,
attitude and knowledge oI the personnel play an important role in determining the
competitiveness oI a bank. Banks have to understand that the capital and technology-considered
to be the most important pillars oI banking are replicable, but not human capital, which needs to
be viewed as a valuable resource Ior the achievement oI competitive advantage. The primary
concern oI the bank should be to bring in proper integration oI human resource management
strategies with the business strategies. It should Iaster cohesive team work and create
commitment to improve the eIIiciency oI its human capital. More than operational skills, today's
banking call Ior certain `soIt skills' to attend the needs and requirement oI the customers at the
1
counter.
2
In the context oI Indian Public Sector banks, E. D' Souza (2002) observes that with the implicit
insurance by government oI support in times oI Iinancial diIIiculty the public sector banks
sensitivity to eIIiciency has been reduced which has resulted in a growth in establishment costs at
the expense oI provisioning and expenditures on technological upgradation. It is only when
public sector banks perceive that the government will not be underwriting their decisions and that
they Iace a hard budget constraint, will they have an incentive to tackle the problem oI
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
83
Human Resource Efficiency Indicators of Public Sector Banks- Acase study of State Bank of India in Uttarakhand
establishment costs and be able to upgrade technologies, provide better quality services, and
become more eIIicient. The motivation Ior employees in an eIIiciently run organization cannot be
solely based on rewards such as power and prestige as these are not linked to the perIormance oI
an organization. The challenge Ior public sector banks accordingly is to upgrade technology,
downsize, shiIt the composition oI the employees towards oIIicers, introduce multitasking, and a
stronger linkbetweenpay and perIormance.
3
Berger and Mester (1997) utilized data Irom 6000 U.S. commercial banks to estimate the impact
oI bank size, organizational Iorm and governance, age oI the bank, market characteristics, and
state geographic restrictions on competition on three perIormance measures: total cost divided by
gross assets, net income divided by gross assets, and net income divided by equity. They Iound
that most oI the variance in measured eIIiciency remained unexplained and attributed this to
unmeasured Iactors such as differences in managerial ability. They concluded that the sources oI
the variationinbank eIIiciency remain a 'black box.
Banking by its nature is an inIormation (intensive) and human capital intensive industry. And the
eIIiciency oI Public Sector Banks is one oI the most talked about issues in today's banking
industry. ThereIore in this paper we have tried to examine whether type oI branches based on the
geographical segregation oI public sector banks have any eIIect on certain parameters oI human
resource eIIiciency.
4
In a study conducted in Madhya Pradesh (Jones, Williams, Nilsson & Thorat, 2007), it was Iound
that attitudes oI branch managers shape the branch lending behaviour. It is shown that training
can bring about attitudinal change, which in turn is reIlected in behaviour and social impact.
5
Berger and Mester's (1997) Iindings suggest that managerial ability may play an important role
in explaining bank perIormance. While the ability oI the bank's managers at the Iirm or
headquarters level can certainly impact the bank's perIormance, much oI a bank's activities occur
at the branchlevel.
Hence the paper attempts to analyse the perIormance oI the bank based on the managerial ability
oI the branch managers in the branches oI SBI in the state oI Uttarakhand. In this paper our
endeavor is to assess the human resource eIIiciency oI State bank oI India branches in the state oI
Uttarakhandbased on geographical segregation.
Objectives
The main objectives oI the paper are
(i) To Iind whether the geographical variations oI the branches have any impact on the HR
eIIiciency indicators.
(ii) To assess the impact oI geographical variations on work load oI managers and direct
communication oI the branch managers with the public.
Methodology
The study is based on primary data. Out oI 22 Nationalised banks, 3 Regional Rural Banks, 2
Cooperative Banks and 12 Private Sector Banks in Uttarakhand , only SBI has been selected Irom
the 22 Nationalised Banks Ior the purpose oI the study. The main justiIication behind choosing
SBI Ior this study is that SBI works as 'lead bank' in 9 out oI 13 districts oI Uttarakhand namely
Almora, Bageswar, Chamoli, Champawat, Pithoragarh, Pauri, Rudraprayag, Tehri Garhwal and
Uttarkashi. Moreover, out oI all the commercial banks- nationalised and non nationalized, it has a
maximum network oI 321 ( as on March 2009) branches spread over all the 13 districts. Though
SBI is the 'lead bank' in 9 districts but in the other Iour districts namely Dehradun, Haridwar,
Nainital and Udham Singh Nagar it has a very good networking oI branches . It is thereIore quite
evident that SBI has a major role to play in the economy oI Uttarakhand and so SBI was chosen as
a representative oI commercial banks Ior the purpose oI this study. Primary data was collected
through a survey Irom all the 13 districts oI the state through a Iramed interviewschedule. Out oI
321 branches oI SBI in the state, 102 branches oI SBI was selected covering all the districts using
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 84
stratiIied sampling method. The survey was carried out in 2008 and 2009 and covered 64(62.7 )
rural, 26 (25.5) semi urban and 12(11.8) urban branches. Figure 1.1 presents the distribution
oI branches oI SBI inthe sample andin the state Ior 2008.
Figure 1: Distribution of types of branches of SBI in the sample and population(state).
Comparing the bars in Figure 1 it is clearly understood that the sample has been a good
representative oI the population Ior the study as Iar as types oI branches in terms oI geographical
location is concerned. However rural branches have been some more in the sample compared to
semi urban branches to get the eIIect oI the interior branches located in high altitudes, remote
areas oI the state.
ThesamplingdesignbasedonthedistributionoI branches across districts is shownthroughTable1
Table 1: Districtwise population branches of SBI and sample-the sample design
Source: The data regarding the population branches was obtained Irom . *Number
oI sample in each district is almost 35 percent oI the population, chosen based on geographical
representationi.e., urban, semi urban and rural.
In this paper the variable used to measure the work load oI managers is number oI signatures done
by the manager per day. Hours oI public dealing per day by the manager tries to capture the
communication oI managers with the public directly. Empirical results were obtained using SPSS
(version 15).
Districts Population branches Number oI Samples*
(as on September 2007)
Almora 29 10
Bageswar 9 4
Chamoli 20 8
Champawat 8 3
Dehradun 37 13
Haridwar 21 7
Nainital 14 5
Pauri 36 13
Pithoragarh 26 9
Rudraprayag 13 5
Tehri 29 10
Udham SinghNagar 26 9
Uttarkashi 15 6
Total 283 102
www.rbi.org.in
Human Resource Efficiency Indicators of Public Sector Banks- Acase study of State Bank of India in Uttarakhand
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158
85
Human Resource Efficiency Indicators of Public Sector Banks- Acase study of State Bank of India in Uttarakhand
Analysis
In this section certain parameters oI human resource eIIiciency have been examined to
understand howIar the branches oI SBI in the state are perIorming eIIiciently. The data regarding
indicator oI Human Resource (HR) eIIiciency and the responses oI branch managers is presented
in table 2.
Table 2 : Indicatorof HRefficiency-analysis of the sample.
Source: Based on primary data
From table 2 it is observed that 38 (37.3 percent) respondents said that proper planning and
communication at the branch level was the major Iactor determining their HReIIiciency while 20
(19.6 percent) respondents were oI the view that proper distribution oI load oI work helps
increase the eIIiciency. Only 9 (8.8 percent) managers were oI the opinion that proper
inIrastructural Iacilities helps to increase the HReIIiciency at the branch level. 15 managers said
that proper appraisal oI the services and incentives Ior employees can improve the HReIIiciency
while other 15 (14.7 percent) said that transIer procedure is an important Iactor in HReIIiciency.
Only 5 (4.9 percent) respondents had other opinions. We thereIore carried a chi-square test (since
these are categorical variables) to Iind iI there exists any association between the type oI branches
based on geographical regions (urban, semi urban and rural) and HReIIiciency indicator. In order
to IulIill the basic assumption oI chi square test that the expected count is not less than 5 in any cell
we reduced the degrees oI Ireedom by transIorming the categories oI HR eIIiciency indicator as
Iollows.
Table: 3 Types of branch and indicatorof HRefficiency a crosstabulation
H : Type of branch does not have significant effect on indicatorof HRefficiency
0
Degrees oI Ireedom 2. Table value at 1 percent level oI signiIicance 9.21
Table 3 shows that a significant association exists between indicator of HR efficiency and
2
type of branches. The calculated _ (Chi square) value is 9.948 which is higher than the table
value at 1 percent level oI signiIicance (9.21) Ior 2 degrees oI Ireedom. ThereIore the null
HReIIiciency indicator Frequency Percent
Proper planning and Coordination 38 37.3
Proper DistributionoI Work load 20 19.6
InIrastructural Iacilities 9 8.8
Appraisal oI services 15 14.7
TransIer Policy 15 14.7
Others 5 4.9
Total 102 100.0
Type oI Branch Proper planning, Others(InIrastructural Total
communication Iacilities, Appraisal oI
and distribution oI services, TransIers
work and others)
Rural Count 43 21
Expected Count 36 28 64
Semi Urban Count 12 14
Expected Count 15 11 26
Urban Count 3 9
Expected Count 7 5 12
Total Count 58 44 102
Calculated chi square( ?2 )value 9.948
Gumbad Business Review, Vol-6, No.1 (1uly-December 2010), ISSN: 0973-6158 86
hypothesis (H ) is rejected and it is concluded that a signiIicant relationship exists between
0
indicator oI HReIIiciency and type oI branches. This implies that the location oI the branch is an
important Iactor indetermining the indicator oI HReIIiciency in the SBI branches in the state.
In order to assess the work load oI managers, the number oI signatures done by the manager each
day was chosen as a variable. The Irequency is presented in table 4
Table 4 Frequency of numberof signatures done by the managerperday in the sample
Source: Basedon primary data
It was Iound Irom the sample that out oI 102 branch managers, 21 (20.6 percent) had to do
signatures below 50 signatures per day while 39 (38.2 percent) managers did in the range 51 to
100. 34 (33.3 percent) managers said that they had to sign between 100 to 200 documents per day
on an average and only 8 (7.8 percent) managers said their average signatures per day was above
200.In order to assess the work load oI managers based on type oI branches the chi-square test was
undertaken. To reduce the degrees oI Ireedom, the category oI signatures was divided as Iollows:
Table: 5 Types of branch and work load -crosstabulation.
H : Type of branch does not have significant effect on work load
0