Ramprasad Khandelwal Institute of Management & Research · 2020. 10. 8. · Mayuri Rane and Diksha...

Chetana’sRamprasad KhandelwalInstitute of Management & Research

QuestQuestQuestJournal of Management Research

Volume X, Issue II

September 2019

ISSN 0976-2000

EDITORIAL BOARDChief Editor

Dr. Madhumita Patil(CEO, CIMR & CRKIMR)

Editor

Dr. Balaji SadavarteDr. Kavita Khadse


Dr. Jayashree Bhakay

Dr. M. Shivprasad

Dr. Nalini Krishnan

Dr. Hufrish Majra

Dr. Sandeep Nemlekar

Dr. Mrinali Tikare

Members of Editorial Committee

“Quest” Journal of Management Research is a bi-annual publication of

Chetana's Ramprasad Khandelwal Institute of Management and Research to

disseminate knowledge and information in the area of finance, marketing, human

resources, operations, general management practices, business development etc.

The Journal intends to focus on theoretical, applied and interdisciplinary

research in business and management studies. It provides a forum for debate and

deliberations for academicians, industrialist and practitioners in the field of business

and management.

The Views expressed in the articles and other material published in the journal

do not reflect the opinions of the Institute.

From the Editor’s Desk

Greetings!

This issue of “Quest” Research Journal in management brings forth the research articles from thesummer Internship project work done by students and some case solutions have been taken fromKhandelwal Case Competition 2019. The various articles are highlighted on the different specializationsof management viz. Marketing, Finance and Human Resources. The research topics have beenselected by students are very relevant at the current business and management practices applied inthe today’s dynamic market environment. Today’s business environment is very Volatile, Uncertain,Complex and Ambiguous i.e. VUCA business world. The issue highlight on various topics such as‘A Study on “Saving and investment pattern of Indian Household’. It aims to examine the savingsand investment pattern of Indian Households conducting a survey and which finds that the type ofinvestment preferred by male and female do not differ in respect to their term of investment. It alsohad found that single people tended to save more money than those married. It has also beenobserved that the growth of income is not a very effective instrument to influence the savings rate.From the analysis, we conclude that a favourable macro-economic environment supported by strongstructural reforms including liberalization of financial markets should help domestic saving to increasesubstantially.

This issue consists of the ‘Study of Financial Literacy Centres (FLCs) of district central cooperativebanks (DCCBs)) and Regional Rural Banks (RRBs) in Maharashtra revealed that FLCs are locatedat the bank site thus the accessibility and reach to the Financial Literacy Centres (FLCs) is easy andquick. It also found that 80% of the FLCs surveyed are manned by Bank Employee and not by adedicated Independent Counselor and the awareness and usability in the population regarding FLCis very low. The present issue highlights the importance of modern organizations, their work processesare increasingly concerned with the sharing and creation of knowledge rather than the productionand distribution of physical goods. It also emphasises the need of excellence in the design ofphysical spaces for knowledge work. Another study has incorporated in this issue on the AutomotiveCoolant Business Opportunity in India. The booming economy of India and growing automotivemarket roots for growth of automotive coolant market. One of the research article highlights onAircraft Financing. The paper also throws light on evaluation of two options available for financingof any aircraft namely Sale and Leaseback and Outright Purchase.

As far as Human Resources Management is concerned the study brings forth the effectiveness oftraining programs in BPCL. The perception of training effectiveness is a series of many factors onthe situation of the pre-training stage, training stage. An effective training makes an employee moreefficient and productive. Five case solutions from various B-schools on all India have been incorporatedin the issue. The title of the case- ‘enhancing supply chain efficiencies of domestic retail businessin fresh fruit & vegetables category’

All the Best!!

— Dr. Balaji Sadavarte

.

1. A Study on “Saving and Investment Pattern of Indian Households” 1 - 11Dr. Balaji Sadavarte and Ashwin Arora

2. A Study of Financial Literacy Centres (FICs) of District Central Cooperative Banks 12 - 20(DCCBs) and Regional Rural Banks (RRB) in MaharashtraSushil S. Vadnere

3. Literature Survey on Place and Space Strategies Used in Corporates 21 - 34Prashant Shivaji Ghule

4. Automotive Coolant Business Opportunity in India – Market Research & Analysis 35 - 42Vaibhav Dabhade

5. A Study on Aircraft Financing 43 - 47Vaishnavi Khadasane

6. A Study on Effectiveness of Training Programs in BPCL – Mumbai Refinery Limited 48 - 53Dr. Balaji Sadavarte and Vrunda Patel

7. End to end SCM Model for Domestic Retail Business in Fresh Fruit & Vegetables 54 - 60Category of Sahyadri FarmsAnkush Sharma, Gaurav Sharma, Shagun Agarwal & Dr. Aparna Hawaldar

8. A Study on Organised Retail Supply Chain of Sahydri Farms, Nashik 61 - 69Riya Rita and Shreya Hasyagar

9. A Study on End to End SCM Model Covering Farm Harvest to Last Mile 70 - 74Connectivity with respect to Sahyadri Farm, NashikMayuri Rane and Diksha Shetty

10. Enhancing Supply Chain Efficiencies of Domestic Retail Business in Fresh Fruit and 75 - 78VegetablesShubham Mawande, Alice Singh and Pushkar Wakekar

11. A Study on Strategy to Leverage Technology with Respect to Sahydri 79 - 87C. Shiva, Sanchita Gesu and Anubha Tiwari

CONTENTSISSN 0976-2000

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Volume X Issue 2 September 2019 C.R.K.I.M.R. ISSN – 0976-2000 1

A STUDY ON “SAVING AND INVESTMENT PATTERN OF INDIAN HOUSEHOLDS”

1

ISSN – 0976-2000 Vol X Issue 2 : pp 01 – 11

A Study on “Saving and Investment Pattern of Indian Households”

* Dr. Balaji Sadavarte and Ashwin Arora

* Dr. Balaji Sadavarte, Associate Professor, Chetana’s R.K. Institute of Management & Research, Bandra (E),Mumbai - 400050

* Ashwin Arora, Student Chetana’s R. K. Institute of Management & Research, Bandra (E), Mumbai - 400050

AbstractThis paper aims to examine the savings and investment pattern of Indian Households through a survey of80 respondents where data was collected using the structured questionnaire to find the investment andsaving patterns of population in the age group 19 and above in Mumbai. The respondents were asked abouttheir annual income and to what proportion was the savings to earnings ratio. They were asked about thesource information for investment. In addition, what are their objectives while investing. Further, they wereasked what type of investment they prefer, i.e. do they invest for long term or prefer short-term investmentand what rate of return do they receive for their investment. Then this data was analysed and put intabulated form in excel. ANOVA test results shows that the sig value 0.746 is greater than the alpha value0.05 at 95% confidence level, therefore it is concluded that there per cent savings and marital status areIndependent. It means married people save less than unmarried people.

Keywords: Investment, Household Income, Assets, Public Sector, Private Sector

1. INTRODUCTION

Household and Saving PatternsThe Indian economy has grown at an average of7% in the current decade, with per capita incomerising 78% to Rs.29, 642 by 2006-07 in this period.How has this affected the average Indian’s abilityto earn, willingness to spend, and propensity tosave? Insurance company Max New York Lifecommissioned Delhi-based National Council forApplied Economic Research, a think tank, for aFinancial Protection Survey in June 2005.

The agency covered 63,016 households, spread over1,976 villages and 340 towns in 24 states and Unionterritories. The survey results confirm the widedisparity between urban and rural people. Onaverage, the urban Indian earns 85% higher thanhis or her rural counterpart, spends 71% more andsaves nearly double—Rs.26,762 compared withRs.11,613—every year.

According to the survey, a person’s occupation,education, age, location and land holding directlyinfluence his or her income. Households with

Volume X Issue 2 September 2019 C.R.K.I.M.R. ISSN – 0976-20002


graduates earn 3.5 times more than those withilliterate ones, and incomes nearly double betweenthe ages of 25 and 66. Salary earners are the creamof urban India, while agriculturists with land arethe richest in rural areas.

Wage labourers are the poorest, comprising 62% ofthe lowest-income households. In addition, 67% ofthis quintile belongs to the not-so-rich states, withthe poorest among them being Bihar with a percapita income of Rs.6,277. The average Indian savesonly about a quarter of what he or she earns—Rs.16,039, out of an income of Rs.65,041, accordingto the survey. Some 12% is spent on weddings,social ceremonies and unusual medical expenses.Rural, uneducated and poorer households spendmore on food, while expenses on transport, durablesand clothing are still quite similar among both urbanand rural households. Only about a third of ruralhouseholds have colour TVs and blenders, with theshare rising to more than half in the case of urbanIndia. In addition, financial vulnerability affects bothurban and rural India—25% of households spendmore than they manage to earn. While more than80% of Indians save mainly for children’s educationand old age security, the salaried class saves themost, 33%, of its income. Most of that, though, iseventually spent on medical emergencies. Still, evenas Indians like to stock up on cash, they areoptimistic about their financial future, and urbanIndians are more so. Barely 3% of the householdincome goes into small savings instruments, stocksor insurance policies. And of this, Almost two-thirdsgo to insurance policies. The issues dealt with inthis paper relate to the level and composition ofsavings among India households. The intention ofthis study is to supplement that discussion with anassessment of the actual patterns of behaviour.

2. LITERATURE REVIEW

Md. Abdus Salam and Umma Kulsum (1999-00)The analysis showed that the major contribution tothe national savings comes from the households.The contributions accounted to around 75.9% in1980-81 to 82.7% in 1998-99. It was seen that therewas a decline in the saving rate for public sectorbut an increase in the corporate sector. The shareof private corporate sector savings increased from8% in 1980-81 to 17.2% in 1998-99 while the shareof public saving has declined from 16.2 to 0.16 forthe same period. The declining trend of public sectorsaving was attributable to the negative saving ofgovernment administration.

Indians have prerogative with savings and most ofthe Indians do savings either by investing in Goldor by investing in fixed deposits with banks. Theabove-mentioned research is giving us the clearpictures that savings pattern in India is changingand with people are getting more concerned aboutthe inflation and the rate of return, they try to investin the scheme or fund which is giving them higherreturn in order to meet inflation and wealth creation.Moreover the risk taking capacity is increasingdrastically especially in this generation

Norman Loayza (World Bank) and RashmiShankar (U. C. Santa Cruz) (2000) As notedearlier, India’s saving rate has been consistentlyhigher than that of other countries with comparableper capita income. Regarding aggregate nationalsaving as a ratio of GNDI, India has performed aswell as the OECD.

India has also traditionally relied largely on nationalsaving to fuel her investment needs, with relativelyless reliance on foreign saving compared with lessdeveloped countries. Even the 1991 liberalization



that led to an increase in foreign capital inflowshas not significantly changed this scenario. Giventhe ambitious growth targets of the government,and the current global Environment, it is likely thatpolicies oriented towards raising aggregate nationalsavings will play a key role in future Indianeconomic development.

Interest rate remains volatile in every developingcountry but at the same time, it is above par withthe developed countries. India is a very attractivemarket for the foreign investors and delivered verygood opportunity in the past and it is more likelyto attract more foreign investor in coming year withT sec bill rate is 8.81% for 10 years bonds ascompared to US fed rate which is 0.5%

The researchers, Viktoria Hnatkovska & AmartyaLahiri (2010), examined the impact of variousfactors of the backward castes (SCs and STs) onthe saving behaviour. The factors considered wereeducation levels, occupation choices and wages. Itwas found that the savings rate in 2013 exceededthat of non-SC/STs in 1983. This excess savingshad seen a downtrend for the period 1983-2010. Inaddition, it was seen that uncertainty faced by theSC/STs might have contributed to the savingsconvergence between them and non- SC/STs.

The research is in line with our objective and statedsavings pattern of particular category of citizen,which comes under the bracket of ST and SC. Thesaving pattern varies from region to region in Indiaand from category to category.

Suman Chakraborty (2011) conducted a surveyto analyse the investing patterns of the people instate of Orissa for around 200 respondents. Thepaper served the purpose to take the reader throughthe investment patterns, savings objective and

preferences of individual investors for variousinvestment options available in India. Parametricand non-parametric statistical methods wereemployed for the purpose of study. The respondentswere asked to go through a structured questionnaireand respond to the same. The result indicated thatthe objective of saving was significantly influencedby the demographic factors such as age, occupationand the income levels. Also it was seen that womenwere more inclined towards saving as compared tomen were the savings by the women were moredisciplined way.

The research, which Suman Chakraborty conducted,is in line with the objectives of this present paperbut the aforementioned research based on a specificregion, which is Orissa, and present study is relatedto investment pattern of India as a country.

M Sethupati (2012) According to M Sethupathi,comparing savings or borrowing options withdifferent interest rates and term structures can bedifficult for those without financial savvy and evena knowledgeable individual may need to rely oncalculators or spreadsheets to make truly informeddecisions. Yet, many households are not knowledge-able, and often receive little assistance when makingtheir financial decisions; this depicts inadequateprevalence of financial literacy among the house-holds. Financial literacy, the ability to processfinancial information and make informed decisionsabout personal finance, has received growingattention in the developed world especially in Indiawhere the government aims to induce the financialinclusion measures to its non-banking populations,those living in rural areas and below poverty line.In the developing countries, more importance isgiven to the wellbeing of the households.

Financial literacy is the backbone of any emerging



country and if the citizens are aware about howand what makes them beat inflation then thatcountry is on the verge of greatness. Our objectiveand the research of M sethupathi is matching andhelped us in drawing conclusion about the marketand the saving patterns

National University of Singapore

Vimal Balasubramaniam, Tarun Ramadorai(2014) According to report, savings and economicgrowth are closely linked in many prominenteconomic models. Researchers in their paperdescribe and attempt to explain patterns in recentdata on the allocation of Indian household wealth.They compare micro-data of India with othercountries and come to conclusion that, Indianhousehold wealth is dominated by the presence ofnon-financial assets in the household balance sheet,with high relative weight in gold. In addition, cross-household dispersion in the share of non-financialassets on the balance sheet is significantly relatedto the rural-urban divide, as well as to differencesin education, family composition, wealth, and age.They also uncover evidence for a substitution effectbetween gold and real estate holdings

Sector OverviewIn India, domestic savings originate from threeprincipal sectors namely:(i) Household sector,(ii) The private sector and(iii) Public sector.

(i) the household sector comprises of individual,non-corporate business and private collective

Is like temples, educational institutions andcharitable foundations. The saving can be held inthe form of increases in

(a) Liquid assets like currency bank depositsand gold

(b) Financial assets like shares, securities,insurance policies, and physical assets.

(ii) The corporate sector includes joint stockcompanies in the private business sector,industrial credit and Investment Corporationetc., and cooperative institutions. Saving of the

The retained earnings of this sector representcorporate sector.

(iii)Government sector consists of the central andstate government, the local authorities andvarious government and departmentundertakings; hence, the saving of this sectorrelates to the budgetary surplus on currentaccount of the central government, stategovernment, local authorities, the current surplusof various government departments and retainedprojects of government undertakings

Cristian Badarinza (2016)Savings and economic growth are closely linked inmany prominent economic models. This paperdescribes and attempts to explain patterns in recentdata on the allocation of Indian household wealth(accumulated savings). In contrast with micro-datafrom other countries, Indian household wealth isdominated by the presence of non-financial assetsin the household balance sheet, with a particularlyhigh relative weight in gold. The cross-householddispersion in the share of non-financial assets onthe balance sheet is significantly related to the rural-urban divide, as well as to differences in education,family composition, wealth, and age. We alsouncover evidence for a substitution effect betweengold and real estate holdings. Controlling fordemographic variation, there is substantial residualheterogeneity across Indian states in non-financial



asset holdings, which is closely related to state-level variation in historical inflation volatility, andappears to have long-lasting effects through theexperience channel.

The Indian Household Savings Landscape iscongruent with our questionnaire and therequirement and is talking about the long lastingeffects through the experience channel

MANAGEMENT PROBLEMInvestors inclinations with respect to financialinstruments fluctuate on elements, for example,return on various financial instruments varies onthe amount of risk it involves.

RESEARCH PROBLEM STATEMENTChangeability in investor’s pattern and savingsfinancial instruments like Equity, Gold, Debt inIndia and variables affecting the buy choice.

RESEARCH OBJECTIVE1. To study the investors preferences towards

various financial instruments.2. To analyze the household savings and

investment pattern.

3. RESEARCH METHODOLOGY

To accomplish these objectives a survey wasconducted in areas across Mumbai. Respondentswere simple randomly selected to assure arepresentative sample was used as basis of dataanalysis. The respondents were asked to fill aquestionnaire designed to respond to the project’sspecific research objectives. The questionnaire wasthoroughly pretested before being administered toimprove the quality of the measuring instrument.The resulting data were edited, entered intoComputer files and processed by a statistical-

analysts program to provide a comprehensive setof tables and cross tabulations for the study. Thetables included number of respondents andpercentages by response to each question andANOVA analysis of the data by primary financialinstitution to identify differences in responsepatterns to the questions contained in thequestionnaire.

Data for this study are obtained from primarysources and collected by structured questionnaireform. The respondents were selected non-probabilistically as per the ‘quota sampling’. Herequota was made based on age. For data collection,both primary and secondary sources were used. Forcollecting primary data, a structured questionnairewas prepared which was filled by 80 individuals.Random sampling method was used to reach therespondent. In the survey, appropriate data wereobtained from 80 respondents. The collected dataare analysed through descriptive statistical toolssuch as percentage and mean which have been usedto describe the types of investment, gender,proportions of savings and marital status. ANOVAtest has been used to test the association betweenthe two characteristics. In this study authors haveUsed statistical software SPSS (Statistical Packagefor Social Sciences) for the estimation of theANOVA.

The present research is Descriptive in nature andthe following variables were explored:1. Gender2. Marital Status3. Income4. Type of Investment5. Source of information6. Household Savings7. Investment pattern



To explore these variables, 8 questions each wereasked relating to the variables which were scaledon a 5 point (Likert Scale) and whose values wereassigned as strongly agree, agree, neither agree nordisagree, disagree and strongly disagree. In theanalyses, the values were reverse-coded for theconvenience of reading the findings.

Data Collection:The primary data collected in the present researchstudy -the inclination of management studentstowards entrepreneurship through structuredquestionnaire with a sample size of 80 surveyed byapplying simple random sampling and found outmany insights about investment and savingspatterns. The first thing found out that the Singlepeople tended to save more than their marriedcounterparts.

The Secondary data was collected from earlierrecords of journals, magazines, and other sourceslike Shodhganga and various newspaperpublications like economic times and the Hindu.Population and Sampling:

The population under study across different age,gender, income groups across Mumbai based onsimple random sampling. 46 are males and 34females.

Data analysis:The SPSS 16.0 package was used to analyse thevarious aspects of the study, Necessary tools foranalysis where used to test the data collected. Thetable below shows the descriptive statistics of thepopulation.

Sample size – 80Sampling technique- Simple Random samplingSampling Frame and Sampling Location

Sampling frame – people of all age group 19 andabove. Mumbai is selected as a targeted location.

HYPOTHESISHYPOTHESIS (H0): Percent savings done doesnot depend on Marital Status

Q. 1. Gender

Table 1: Source-Primary

Gender No %

Male 46 57.5

Female 34 42.5

Graph No. 1 Gender Source-Primary

Q 2. Marital Status

Table 2: Source-Primary

Marital Status No %

Single 55 68.75

Married 25 31.25

Graph No. 2: Marital Status



Source No

Relatives 26

Friends 15

Consultant 5

News Paper 17

Internet 17

Q 4. What is the proportion of savings and expenditure in your earnings?

Table 4: Source-Survey

Proportion of Savings Number of Respondents Percentage10:90 24 4520:80 24 4730:70 22 550:50 10 3Total 80 100

Q 3. From where do you get investmentinformation?

Table 3: Source-Survey

Graph No. 3: Source: Survey

Q 5. Objective of Investment?

Table 5: Source Primary

Objective %Safety 44Return 10Liquidity 55Reliability 14Low risk 9

Graph No. 5: Objective of Investment

Graph No. 4: Savings



5. FINDINGS

This section presents the application of statistical techniques to the data mentioned in the first section.Statistical techniques used are Correlation and ANOVA.

1) Is their relation between Marital Status and percent of savings?

Solution: ANOVA test applied on marital status and savings.

Graph No. 6: Type of Investment

Table 7

Test of Homogeneity of Variances

Q 4. What is the proportion of savings and expenditure in your earnings

Table 8

Levene Statistic df1 df2 Sig. .105 1 77 .746

Table 6: Source Primary

Term Number of Respondents

Percentage

Long 42 48

Mid term 36 44

Short term 20 27

N Mean Std. Deviation Std. Error 95% Confidence Interval for Mean

Minimum Maximum

Lower Bound Upper Bound Single 75 24.67 11.251 1.299 22.08 27.26 5 40

Married 5 16.25 11.087 5.543 -1.39 33.89 5 30 Total 80 24.06 11.365 1.271 21.53 26.59 5 40



ANOVA

Q5 What is the proportion of savings and expenditure in your earnings

Table 9

Sum of Squares

do Mean Square F Sig.

Between Groups 469.271 2 234.635 1.856 .163 Within Groups 9735.417 77 126.434

Total 10204.687 79

H0: Per cent savings done does not depend on Marital Status

H1: Married people save less than unmarried people.

Here, the statics shows that the sig value .746 is greater than the alpha value 0.05 at 95% confidencelevel, therefore it is concluded that there per cent savings and marital status are Independent. It meansmarried people save less than unmarried people.

2) Is there relation between gender and type of investment?

Q 7. Type of investmentTable 10

N Mean Std. Deviation

Std. Error

95% Confidence Interval for Mean

Minimum Maximum

Lower Bound Upper Bound Female 34 2.36 .549 .096 2.17 2.56 1 3 Male 46 1.50 .658 .097 1.30 1.70 1 3 Total 80 1.88 .753 .084 1.71 2.04 1 3

Test of Homogeneity of VariancesQ 7. Type of investment

Table 11

Q 8. Type of investmentTable 12

Sum of Squares do Mean Square F Sig. Between Groups 15.614 2 7.807 20.631 .000 Within Groups 29.136 77 .378

Total 44.750 79

Levene Statistic df1 df2 Sig. 2.170a 1 77 .145



H0: There is difference in type of investment doneby male and FemaleH1: Type of investment done by male and femaleare similar

Here it is analysed whether there is relation betweenmarital status and amount of savings done by thatindividual. Based on test of homogeneity ofvariances the sig value is 0.145, which is, less thanthe benchmark value of 0.05. This implies that maleand female opt for similar types of investments.

CONCLUSION

From above analysis it is concluded that type ofinvestment preferred by male and female do notdiffer in respect to their term of investment also itwas found that single people tended to save morethan those married. Long-term investment tendedto give better returns as compared to short termand mid-term investment.

The declining trend of public sector saving isattributable to the negative saving of governmentadministration. It has also been observed that thegrowth of income is not a very effective instrumentto influence the savings rate. From the analysis, weconclude that a favourable macro-economicenvironment supported by strong structural reformsincluding liberalization of financial markets shouldhelp domestic saving to increase substantially.

RECOMMENDATIONS

One should invest in Government securities to avoidexposure to market risk and earn healthy returns.However, one can accordingly design his ownportfolio wherein one decides the risk factor as perhis or her appetite.

LIMITATIONS

This study suffers from some limitation, whichcould be avenues for further research.1. This study failed to talk about the

psychographics of the investor. Understandingpsychographics of the investor is an importanttool to understand the inner feelings, and attitudeof the investor. The changing demographicprofile of the population in terms of education,income, size of family and so on, are importantby what will be more substantive in days tocome will be the Psychographics of investorthat is how they feel, think or behave.

2. Another problem in this study wasquestionnaire, most of the questions are closedended it limits the respondents answer.

REFERENCES

1. http://www.tarunramadorai.com/TarunPapers/BBR2016_IndiaSavingsAppendix.pdf

2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2168305

3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1669164

4. http://siteresources.worldbank.org/INTMACRO/Resources/india.pdf

5. http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan019746.pdf

6. www.managejournal.com/download/342/3-1-21-469.pdf

7. Brahmananda, P.R. (1980), Growthless, Inflationby Means of Stockless Money – A New



Classical Treatise on Rising Prices, HimalayaPublishing House, Mumbai.

8. Brahmananca, P.R. (1995), Planning for a WageGoods Economy, Himalaya Publishing House,Mumbai.

9. Chakarvarty (1990): Overall Aspects of Savingin Real Terms, Datta Roy Choudar & Bagchi,(eds.), Vikas Publication, New Delhi, 95-162.

10. Government of India, Economic Survey 1999-2000

11. Gupta S.P. (1999-2000): DevelopmentExperience of the Nineties and Search for aNew Paradigm, the Indian Economic Journal,Vol. 47, No. 3.

12. Joshi, V.H. Saving Behavior in India, IndianEconomic Journal, Vol. 15, 1969-70.

13. Masao Ogaki, Jonathan D. Ostry and CarmenM. Reinhort (1996) Saving Behaviour in Lowand Middle Income Developing Countries, IMFStaff Paper, March, Vol. 48.

14. Panchamukhi, V.R. (1999), Resource Imbalance,Life Style and Economic Crisis, PresidentialAddress delivered on March 11, 1999 at the35th Annual Conference of the IndianEconometric Society held at Jaipur.

15. Parikh Kirit S. (ed.) (1997): India DevelopmentReport – 1997, Oxford University Press, Delhi

16. Said Business School, Oxford & NCAER

17. Said Business School, Oxford & NCAER

A STUDY OF FINANCIAL LITERACY CENTRES (FICS) OF DISTRICT CENTRAL COOPERATIVE BANKS (DCCBS) AND REGIONAL RURAL BANKS (RRB) IN MAHARASHTRA


A Study of Financial Literacy Centres (FICs) of District CentralCooperative Banks (DCCBs) and Regional Rural Banks (RRB)

in Maharashtra

* Sushil S. Vadnere

* Student, Chetana’s R. K. Institute of Management & Research, Mumbai University, India

AbstractThe present research ‘’Study of Financial Literacy Centres (FLCs) of district central cooperative banks(dccbs) and regional rural banks (RRB) in Maharashtra’’ is a step towards gauging the awareness andusability of FLCs as part of the financial inclusion guidelines by RBI deals with understanding the currentscenario and working of Financial Literacy Centres in districts of Aurangabad, Nashik, Pune and Thane.The study focuses on identifying the issues/ gaps (if any) with respect to the FLC guidelines and suggestsways by which the functioning can be further improved. This research attempts to study the awareness andusability of the FLC and the programs undertaken by them among the people in rural area near which theFLC is located. Main objective of the research is to Study the awareness and usability of Financial LiteracyCentres (FLCs) among the people

Keywords: Financial Lteracy Centres, Financial Inclusion, DCCB, RRB

INTRODUCTION

India is a growing economy but still a larger portionof the population lives outside the scope ofconventional financial services and products. Thus,the need of financial education and financial literacyhas always been so relevant and important. Financialliteracy and financial Inclusion are complementaryto each other. For emerging market economies,having adequate access to financial products andservices is extremely important at this stage, but itis financial literacy that creates the demand for theseproducts and services. Financial Literacy speaksmore from the demand perspective. Every individualshould not only have basic access to various

available facilities, services, products and provisionsbut also should be made aware about the importanceand use of these products and services provided byfinancial institutions in the country. There needs tobe active implementation of the promotion offinancial literacy. At the same time, it also requiresparticipation by individuals from all strata of thesociety which results into financial knowledge andawareness that eventually contributes to economicgrowth of the country and financial self-sustainability of individuals. Worldwide, the trinityof Financial Literacy, Financial Inclusion andConsumer Protection has been attributed asconnected threats for overall financial stability(Chakrabarty, Kamalesh Chandra, “Panel

Vol X Issue 2 : pp 12 – 20ISSN – 0976-2000



discussion: Financial literacy and consumerprotection”, Washington DC, 22 April 2012).

Taking into account the need of financial literacy,Reserve Bank of India (RBI), on 4th February 2009had passed a circular recommending banks that theyneed to actively consider opening financial literacyand counselling centres for both credit andtechnology counselling (FLCCs) with the broadobjective of providing free financial literacy/education. This move was also taken keeping inmind the state of distressed farmers. On 6th June,2012, RBI came up with Financial Literacy Centres(FLCs) – Guidelines with an objective of scalingup Financial Literacy efforts manifold and set upfinancial literacy centres across the country and onJanuary 14th 2016 again came up with revisedguidelines for FLCs.

In the NABARD All India Financial InclusionSurvey (NAFIS) 2016-17, 40,327 households across29 states of India were surveyed. According to thestatistics, Overall, 54% respondents reported to haveattended the sessions organized by FinancialLiteracy Centres, with the exposure being higher insemi-urban areas as compared to the rural. 29%reported to have attended the sessions organizedby any community-based organizations or NGOs.Sessions organized by financial institutions likebanks, cooperatives, etc. had formed part for aboutone-fifth of the respondents.

The base for these estimates was itself very small,just 10% of the total who reported to have attendedany sessions. Thus, when viewed in context ofactual reach of these institutions, there is still ahuge scope for improvement especially in the ruralareas

FLCs of Rural Cooperative banks and Regional

Rural banks have been set up with grant supportfrom NABARD. The funding is provided out ofFinancial Inclusion Fund (FIF) under Departmentof Financial Inclusion and Banking technology(DFIBT). According to a circular passed byNABARD, the support under FIF is provided forthe first three years where the capital cost ofinstallation of FLC is provided for the first year.

This research focuses on the evaluation of theseFinancial Literacy Centres in Maharashtra state withthe objective of studying the activities of FLCs, thelevel of awareness of FLCs among the people andincrease in financial inclusion with help of the same.

RESEARCH OBJECTIVES

i. To understand the current status of FinancialLiteracy Centres of Regional Rural Banks andRural Co-operative Banks of Western andMarathwada region of Maharashtra.

ii. To Study the awareness and usability ofFinancial Literacy Centres (FLCs) among thepeople.

iii. To recommend as to how the effectiveness ofFinancial Literacy Centres can be enhanced.

Hypothesis:For the second objective and that part of the surveywherein there are questionnaire to the generalpublic, we would need to state first the hypothesisin order to conclude about the awareness andusability of these Financial Literacy Centres (FLCs).Thus, we need to state the Null and the alternateHypothesis. Assuming that if the percentage ofpeople who are aware about the FLC not even 30%i.e less than 30%, which is very low, that would bestated as low awareness about FLC among people.

H0: At least 30% of the population is aware about



the existence and working of FLCs (Moderate tohigh awareness and usability)

Ha: Less than 30% of the population is aware (Lowawareness)

Hence,H0: Null Hypothesis, µ = 0.3Ha: Alternate Hypothesis, µ ≠ 0.3

RESEARCH METHODOLOGY

The fundamental objective of the study is tounderstand the activities carried out by FinancialLiteracy Centres, challenges faced by these centres,and the awareness among people about the variousfinancial literacy programs carried out by the FLC.Various features and parameters of FLCs are alsotaken into consideration. This study also identifiesthe way parent bank interacts with the FLC centresand what are the views of the branch manager ofthe rural bank towards the need of the financialLiteracy Centres (FLCs), what efforts does the banktake from its side to promote and support thefunctioning of FLCs and activities undertaken bythe FLCs. All this information is obtained throughinteraction with the counselor of FLC, branchmanager of the bank and general public in the talukaarea where the FLC branch is located.

1. Type of Research: Primary ResearchSince the data collected for the survey is obtainedfrom the ground root level and is fresh data, thenature of the research is primary. Secondary data isused only to refer the existing policies and publishedcirculars regarding FLCs.

2. Data Collection Method:a. Qualitative: Most of the questionnaire containsqualitative questions wherein the counsellor, bank

manager and people are asked in depth aboutworking and activities of FLCs, how they perceivethe use of it and how much impact is it having inpropagating financial literacy. So to gauge all thisand more, most questions are qualitative in nature.

b. Quantitative: There are few checklists, ratingsand questions pertaining to FLCs where the numberis an important factor for eg. The no. of campsundertaken, the no. of people attending those camps.Hence, for such type of questions, quantitative datacollection method is used

3. Sampling Method:Simple Random Sampling: Since it is not possibleto study the entire population (every person of thedistrict), simple random sampling is used to acquirea section of the population to perform thisobservational study and research. The group selectedare people from various talukas of each districtwhich is a mix of people visiting the rural branchwhere the FLC is located, people away from thebranch and people who have attended the FLCprograms so that there is no form of bias in thedata collected

4. Targeted Region in Maharashtra:Since the study is related to the FLCs of DistrictCentral Cooperative Banks (DCCBs) and RegionalRural Bank (RRB), each district would have itsown independent DCC bank and any of suchdistricts would suffice for the survey. But the RRB,Maharashtra Gramin Bank, which is a sole RegionalRural Bank (RRB) in the state of Maharashtra hasvery few branches where the FLC is located.

Head office of the Maharashtra Gramin Bank(MGB) is situated in the Aurangabad District ofMaharashtra. So this district was one of the placesof research as maximum information of MGB



branches across Maharashtra is obtained from here.Also, one of its main FLC is located in AurangabadDistrict. Another FLC of MGB is situated in Thanedistrict. Two more districts viz. Nashik and Punedivision have the maximum number of FLCs undertheir respective DCC Banks.

Thus the targeted districts for the research are:1. Aurangabad2. Nashik3. Pune4. Thane

5. Sample Size:Components Sample Size Data collection technique

FLCs of DCCB and RRB – FLC Counsellor 15 Questionnaire + personal Interview Rural Branches of DCCB and RRB- Branch Manager 15 Questionnaire + personal Interview People of the Villages 50 Questionnaire + personal Interview

5. FLC Branches selected for targeted Districts:15 FLCs among the following active FLCs areselected for the research study. The FLC centresfor RRB under the targeted districts are inAurangabad and Thane. The other talukas selectedfor visiting the FLC of DCCBs are as follows:

ANALYSIS OF THE DATA

The data collected across all 15 FLCs by interactionwith the counsellor, branch manager of the bankand the people can be analyzed step by step.Different parameters can be gauged from the dataand classified accordingly for the ease ofinterpretation at the later stage. Every parameter isalso analyzed differently. Now, the first parameteris the accessibility of these Financial LiteracyCentres (FLCs)

1. Z- Test to test the HypothesisFor the this part of the survey where there arequestionnaire to the general public for a sample



size of 50, we would need to state first thehypothesis in order to conclude about the awarenessand usability of these Financial Literacy Centres(FLCs). Thus, we need to state the Null and thealternate Hypothesis. If the percentage of peoplewho are aware about the FLC not even 30% whichis very low, that would be stated as low awarenessabout FLC among people.

We state the Null and the alternate hypothesis asfollows:

H0: At least 30% of the population is aware aboutthe existence and working of FLCs (Moderate tohigh awareness and usability)

Ha: Less than 30% of the population is aware (Lowawareness)Hence,H0: Null Hypothesis, μ = 0.3Ha: Alternate Hypothesis, μ ≠ 0.3

To test the hypothesis, Z test for populationproportion. A z-test is basically used as a statisticaltool and test which analyses whether the twodifferent population means are actually differentwhen their variances are calculated or known andwhen the sample size is large. A z-test is optedwhen the population size n is more than 30 whereasif it is less than 30, then t-test is performed. Thetest data and statistic here is presumed to have basicnormal distribution (the normal distribution curve),and all other nuisance parameters like the standarddeviation must be known so that the accurate z-testcan be performed.

A z-test (one tailed or two tailed) is also thehypothesis test wherein it follows a pure normaldistribution. Which is why its considered for largersample size of more than 30 because the samples

are taken to be in normally distributed format. Whileperforming the z-test, a null and the alternativehypotheses, significance level alpha and table z-score should always be stated. Now whenperforming two tailed z test, the significance levelalpha is symmetrically distributed at the end of anormal distribution curve. Thus if significance levelis 0.05 then 0.025 is located at both the ends thatlooks like a tail.

Then the null hypothesis of the two-tailed test is tobe rejected if z calculated ≤–zα/2 or z calculated≥−zα/2, where zα/2 is the 100(1-α) percentile ofthe standard normal distribution.

Z test for testing of the Hypothesis for PopulationProportionZ = (p - Π) / σWhereStandard Deviationσ = sqrt [Π * ( 1 - Π ) / n]

Π = probability that the sample statistic would occurunder the presumption that the null hypothesis istrue

Now, according to the results of the survey, 7 peopleout of 50 were unaware of the presence of FLC

Standard Deviationσ = sqrt [Π * (1 - Π ) / n ]σ = sqrt [0.3 * (1 – 0.3 ) / 50]σ = 0.06480Z = (0.14 – 0.3) / 0.06480

Z= -2.469 - Calculated Z Value

Z value for 0.05 significance level= -1.96As the calculated Z- Value for Two tailed test– 2.469 < -1.96



We Reject the Null Hypothesis and accept theAlternate Hypothesis.

Thus, We conclude that the awareness and usabilityof the Financial Literacy Centres is very low.

Figure: Normal Distribution for two tailed Z- test

2. Present Level of Banking Services obtained:Majority of the people surveyed had basic savingsbank accounts. Even the farmers at the rural branchhad bank accounts and were actively doing depositsand withdrawal transactions.

Out of 50 people, 15 were women. Some of themhad just accompanied with their husband who wasa farmer and they themselves did not have bankaccount.

Figure: Percentage of women respondents out ofthe total respondents

8 women did not have a bank account out of thesurveyed women.

Figure: Percentage of women with no bank account

Figure: Percentage of respondents with no bankaccount

Out of the total people surveyed, 14 % of them didnot have a bank account and all being women. Thatshows barring few of them most of them have bankaccounts and transact frequently to deposit orwithdraw the money

3. Themes Covered under Financial LiteracyCamps:Each camp is arranged with a different theme toensure a greater coverage. The themes coveredthrough various camps are:1. Digital Financial Literacy- FDLAPS2. Basic Banking Services and Products, KYC etc.



3. Programs on Self Help Groups- SHGS4. Social Security Schemes5. Women Empowerment6. Mahila Bachaat Gaat formation and loan

schemes7. Use of new chip ATM cards8. Crop loan schemes for farmers

Figure: Themes covered during FL camps

KEY FINDINGS & CONCLUSION

FLCs are located at the bank site thus theaccessibility and reach to the Financial LiteracyCentres (FLCs) is easy and quick

Except for the Dugadphata- Bhiwandi FLCunder Thane DCCB and Thane MGB, rest allFLCs have required infrastructure

80% of the FLCs surveyed are manned by BankEmployee and not by a dedicated Independentcounselor

Out of the 50 people surveyed, only 7 of themknew there is an existence of FLC at the branchbank

After analyzing and testing of hypothesis, it isconcluded that the awareness and usability inthe population regarding FLC is very low

No. of camps taken under Nashik DistrictCentral Cooperative Bank FLC was decreasingevery year because of the liquidity crisis the

bank is facing Even people who have attended the programs,

are less aware if the physical presence of FLC 14% of the respondents did not have a bank

account which is very low and is a good signas far as financial inclusion is concerned

No Inspection is done by the bank side as suchwith regards to functioning of FLCs a smost ofthe FLCs are manned by the Bank employee

A separate register is not maintained at the FLCfor taking down the details of the people whovisit the FLC with their queries

The Shirur branch FLC had the maximum noof camps

For Thane DCCB, both the branches Kudus andDugadphata had around 15 camps per yearconsistently

For Aurangabad District, Under ADCCB,Snehnagar head office branch had maximumcamps under them, that was followed by PaithanBranch FLC and the least amongst them wereconducted by Vaijapur

RECOMMENDATIONS AND SUGGESTIONS

1. Increasing the Frequency of Camps:The number of financial literacy camps conductedshould be increased by the FLCs for the followingreasons- It would ensure greater coverage wherein more

and more people will benefit from these campsenabling a financially inclusive environment.

The operational expense of the camps beingreimbursed by NABARD, that can also includethe cost for counselors, key note expert speakers,etc.

More number of camps will also take care ofthe cost of the bank towards a dedicatedcounsellor. Frequent camps will cover up thesalary of the counsellor for every month.



Frequent camps will also ensure that there isgreater degree of awareness about FLCs and itsactivities. People would become aware aboutthe existence of FLC and they can look at it asa solution point for all their basic queries.

Variety of topics can be covered with differentthemes. Some of the topics which are basic canbe repeated multiple times so that people arereiterated over the same thing again which willincrease their awareness.

Special camps for women should be arrangedfrequently. For eg. every alternate month, therecan be an extra camp arranged for women forSHGs or Mahila Bachaat Gaat.

At least 5-6 near by villages should be coveredper month per theme of the camp and everytime new households should be approached.

Higher frequency of camps creates bondingbetween people attending the camps, it will behelpful to track the progress of each other forthe people in terms of opening of savingsaccount, use of ATM cards, frequent withdrawand depositing of money, etc.

2. Appointment of Dedicated FLC Counsellorand not an Existing Bank Employee:According to the guidelines issued by RBI,banks must avoid allotting or appointing bankemployee like its own staff as the FLCcounsellor. This kind of act would result is apoint of conflict. A dedicated independentcounsellor specially looking after FLC shouldbe appointed. An independent counsellor wouldbe able:

Dedicate his/her entire time and efforts inlooking after the Financial Literacy Centre-FLC. In case of bank staff, they would havebank’s day to day work as well which reducestheir time to look after FLC.

He/She would be able to take more number of

camps which will eventually increase thecoverage and inclusion.

Counsellor would not promote bank’s productsand services to people which may happen if thebank employee is hired to look after the FLC.

3. Monthly Meeting of all FLC Counselors underone DCCB Bank:Every month a proper plan of action for the nextmonth’s FLC activities should be made. This canbe done by having a monthly meeting wherecounsellors of all the FLC under the respectiveDistrict Central Cooperative Bank can gather at thehead office and discuss about the same. Also, M.D/CEO of the bank can attend this meeting. Eachcounsellor can give status updates of his/ her FLCand share the plan for next month. This will resultin maintaining uniformity among the branches.

For eg. all FLC counselors of Trimbakeshwar,Dindori, Pimpalgoan, Chandwad, Malegoan, Sinnar,etc. can gather at the head office branch of Dwarkaand discuss the future plan.

4. Provide Training of the Counsellor:The head office branch should actively send theappointed counsellor to BIRD, Lucknow/Mangaloreor CAB, Pune for getting them trained professio-nally on heading charge as the FLC counsellor.

5. Follow Operational Guidelines to conduct theFinancial Literacy Camps:FLCs should actively and sincerely follow thealready set guidelines given by RBI to conduct theprograms. At each of the location, the programscan be taken in three stages to have a spread overperiod of approximately three months comprisingof at least three sessions of two hours for eachsession. Besides which, a visit should be arrangedto ensure timely delivery of all the cards. Appro-



priate premises or open places to conduct variousprograms and all this has to be identified well inadvance. Banks might choose and customize theprograms depending upon the requirement of anyparticular location or in that case any availableresources. In all these situation, the prime objectiveof conducting and organizing the program shouldbe to bring a huge and maximum number of peopleinto the ambit of banking fold.

6. Promotion of FLC by the Bank to Increasethe Awareness among people in the Village:Efforts from the bank side should be put inpromoting and advertising the FL centre. In case ofany query, when a person visits the ban, the bankstaff should also send him/her to FLC so that theperson becomes aware about the existence of FLCcentre.

7. Frequent Assessment/Inspection of FLC fromBank’s Side

8. Maintaining a Record of People Visiting FLC

REFERENCES

Journals:1. Divya Joseph ,Dept. of Commerce K.E College,

Mannanam: “A STUDY ON FINANCIALINCLUSION AND FINANCIAL LITERACY”,ISSN No. 2347 – 856X “NABARD All IndiaFinancial Inclusion Survey”, 2016-2017Chakrabarty, Kamalesh Chandra, “Paneldiscussion: Financial literacy and consumerprotection”, Washington DC, 22 April 2012.

2. Dr. K.V. Deepak, R.P. Prakash, Dept. of MBA,Bangalore Institute of Technology, Bangalore,India.: A CONCEPTUAL STUDY ON THEROLE OF FININCIAL INCLUSION ON

ECOMOMIC & SOCAIL DEVELOPMENT OFINDIA, IJMRR/ December 2014/ Volume 4/Issue 12/Article No-5/1151-1157.

3. April 3, 2008 circular: https://www.rbi.org.in/scripts/Publication Draft Reports. aspx?ID=526Dayson, KT and Vik, PM, University of SalfordManchester: The impact of financial inclusioninterventions on the economy of Calderdale –final technical report, (2011).

4. Abhishek Kumar Sinha, B. Sc. (Agriculture):“A STUDY OF FINANCIAL INCLUSION INRURAL AREAS OF KHAMBHAT REGIONIN GUJARAT”, International AgribusinessManagement Institute Anand AgriculturalUniversity Anand 388 110 (2014).

5. Internet Resources:

6. https://www.bankofmaharashtra.in/slbc-financial-inclusion.asp

7. http://www.slbcmadhyapradesh.in/financial-literacy.aspx

8. https://globalfindex.worldbank.org/

9. https://www.bankofmaharashtra.in/RoadMap.html

10.https://www.nabard.org/auth/writereaddata/tender/1608180417NABARD-Repo-16_Web_P.pdf

11. https://www.bankofmaharashtra.in/downdocs/Press-Release-for-quarter-nine-months-ended-December-31-2018.pdf

12. https://www.census2011.co.in/data/subdistrict/4155-niphad-nashik-maharashtra.html

LITERATURE SURVEY ON PLACE AND SPACE STRATEGIES USED IN CORPORATES


Vol X Issue 2 : pp 21 – 34

Literature Survey on Place and Space Strategies Used in Corporates

* Prashant Shivaji Ghule

* Prashant Shivaji GhuleMaersk Line India Pvt. Ltd., Mumbai-400013, Email: [email protected]

AbstractFor many modern organizations, their work processes are increasingly concerned with the sharing andcreation of knowledge rather than the production and distribution of physical goods. This research-paperis concerned with excellence in the design of physical spaces for such knowledge work. It draws on goodpractices from around the world.

It needs to be emphasized that the concern here is not primarily with architectural design, although architectureand architects clearly perform a crucial role in shaping the effectiveness or otherwise of modern officespace. Concern is much more about ensuring that the design of every aspect of the work space, of whichthe physical building is one important dimension, contributes strongly to successful work processes goingon within that building.

Keywords: Space Strategies, Space Design office, Organization

I. INTRODUCTION

At the start of the 20th century, one single newoffice building provided an inspiration for much ofnew design thinking about offices—the LarkinBuilding in Buffalo, New York. Designed by FrankLloyd Wright, it influenced countless others fordecades. Yet the building itself no longer exists. Itwas gradually run down, the company who ownedit went through hard times, and after a period whereit was used for bring-and-buy sales, it waseventually demolished only half of a century afterbeing built. This demolition was a tragic loss forthe architectural historian and for those of us

concerned with preserving the symbols of themodern era. But it also symbolized the reality thatthe needs of users of office space had moved on,and Frank Lloyd Wright himself was unsentimentalabout the fate of the building given its decline andfall from the originally designed purpose.

For many years, particularly since the end of theWorld War II, there has been a constant stream ofpredictions about what the office of the 21st centurywould look like. In his 1936 film Modern Times,Charlie Chaplain envisaged a steeper form ofhierarchy and control, reinforced by obtrusivecontrol methods, for example, video surveillance.

ISSN – 0976-2000



In 1948, George Orwell similarly envisaged anenvironment of extreme control in 1984. Many ofthese predictions have come true.

There is routine detailed monitoring of call centreworkers, for example, to a degree undreamed of in1948.

The term office is a rather lose one. It has threesomewhat distinct meanings:

1. A place of largely solitary work, like a study,often a room within a domestic house.

2. A location for clerical workers ancillary to aproduction or operational function (e.g., back-office in an investment bank).

3. In a service company, the main place ofbusiness itself.

Since the 1980s a fourth meaning has emerged: avirtual office—although the workers are notphysically collocated, it provides the equivalent ofa physical office through use of outsourced physicalfacilities and intensive application of electronicmedia.

II. SPACE DESIGN

The design of office buildings to win architecturalcompetitions can be done only through successfularchitects and architecture. It is top-down design.But the design of effective office space to supportsuccessful knowledge work can be achieved onlythrough the actions of those who work within thebuilding—it is much more about bottom-up designincluding the accumulation of many small actionsand behaviours by the knowledge workersthemselves.

Successful knowledge work can take place without

any building at all, as when poets, writers, andcomposers are inspired by a walk along a lake, upa mountain or through countryside. Successfulknowledge work spaces can be carved out of themost apparently unpromising physical structures.In one well-known case study, the U.K. Post Officeconverted a condemned temporary building into oneof the most exciting innovation centres in thecountry. Many inventions and artistic inspirationshave taken place in garden sheds.

The topic of office of the 21st century affects awide variety of those involved in design:

Information technology Property development Facilities management Knowledge management Virtual work Architecture Users of the office

So, when it comes to the question of design ofspace for knowledge work, this is a topic not simplyof concern to the professional designer, to theproperty developer or the facilities manager. It is atopic of direct concern to all those of us who do ormay work within those spaces. All workers helpshape the effective knowledge work space by theirdaily actions, and all can contribute to designingeven more effective spaces for the 21st century.

It should be noted that this newly emerging concernwith designing physical space for effectiveknowledge work is a matter of international concern.There are studies taking place all over the worldinto this, not least in the United States, the UnitedKingdom, Germany, France, Italy, and Sweden. Thisentry draws on this leading-edge international goodpractice.



A. Good DesignSome people commissioning new spaces for officework are anxious to spend money on beautifulobjects, furniture, and equipment. But design ofeffective spaces for knowledge work is rarelyconcerned with who makes the physical objectsthat appear within the building or with howexpensive they are. Effective knowledge spaceshave to work for the particular people who areemployed there. Much can be done with imaginativeuse of day-to-day objects as opposed to those fromfamous designers.

Good design is concerned with the question of beingfit for purpose. One of the reasons why there isdissatisfaction of employees with their work spacescan be that too much attention and money has beendevoted to the design of the physical building, andtoo little attention and money has gone into thefitting out and what might be called the exploitationof the physical space.

B. Knowledge WorkWhen Frank Lloyd Wright was putting up the LarkinBuilding a century ago, the work in it was primarilyconcerned with processing mail-order correspon-dence. This type of work can be called informationwork. Millions of people have information work atthe core of their jobs, and almost all workers needto carry out information tasks such as dealing withe-mail as one part of their jobs. But the focus hereis on the parallel type of work: knowledge work.This is where much of the competitive advantageof nations will arise in the 21st century, from itsability in particular to create and share knowledge.

Just as all workers carry out information work forat least part of the day, so too do all workers carryout knowledge work for at least part of the day.One of the major limitations of the decreasingly

used terms blue-collar work and white-collar workwas the very idea that blue-collar workers usedtheir physical skills and capabilities, while white-collar workers by contrast used their mental skills.Today every single worker would be recognized asbeing important sources of knowledge and with thepotential for creativity. In one famous example, theservice engineers of a photocopier company hadfar more knowledge about the company’s productsand customers than did the engineers and the salesforce respectively.

So it is possible to talk about knowledge work andinformation work but be reluctant to talk aboutinformation workers and knowledge workers. Mostworkers carry out a range of types of informationand knowledge work, though of course some aremuch more heavily engaged at one or other end ofthe spectrum.

C. DiversityFrank Lloyd Wright created the Larkin Building atthe very time when scientific management wasbecoming popular in the United States. This wasconcerned with detailed measurement of workactivities and with devising the “one right way” ofwork organization to carry out that work mostefficiently. Wright did consciously or subconsciouslyreinforce standardized approaches to work throughhis design of desks and work spaces. Scientificmanagement may even today be sometimes anappropriate approach for completely routinizedwork. But today this mechanistic approach to workdesign has generally been rejected.

It is particularly inappropriate for work that isprimarily knowledge based. One very clear message,which comes through both from case studies andfrom the wider research carried out into knowledgework, is that workers do have a wide range of



approaches to such work. There is diversity betweenindividuals—one prefers quiet and another prefersnoise. There is even diversity for any individual—he or she may prefer a noisy environment for onetype of work and a quiet environment for anothertype of work.

Any work environment that is completelystandardized runs the risk of being inappropriatefor some workers all of the time and for all of theworkers some of the time.

D. FlexibilityThe nature of work changes over time, and well-designed work spaces may have ensured flexibilityat three levels:

1. Ability to reconfigure a space very fast for short-term purposes

2. Ability to change the fundamental layout in themedium term

3. Ability to change the use of the whole buildingin the long term

E. Specialist Space and FacilitiesThere are inevitable economic and practicalpressures on both property developers and thecorporate occupiers of major office spaces todevelop generic standardized office shells thatpermit internal flexibility. One problem with this isthat the practicalities of the generic can be obstaclesto the achievement of the specific. It is particularlystriking at how meeting rooms, for example, appearto be almost an afterthought in the design of offices,when enormous amounts of time and energy arespent in those rooms. Similar considerations applyto library or resource areas and in someorganizations to storage.

F. Unlocking KnowledgeThe most valuable type of knowledge is that whichis locked up in people’s brains—tacit knowledge.The workplace or office should now become a vitalingredient, in the processing not so much of low-level information but of unlocking and sharing thattacit knowledge. This has been understood withinthe design industry itself, often rather theatricallynow through pinball machines and wacky furniture.But the underlying message that many of theeccentric environments have absolutely understoodis the need for diversity of spaces for knowledgework.

Group creativity needs its own spaces rather thantaking over the whole space. These spaces do notso much need to be comfortable, but they need tobe fit for purpose. One of the most impressiveinnovation centres in the United Kingdom is thatcreated by Royal Mail at their managementdevelopment centre in Rugby. This is aimedspecifically at group work. The overall environment,somewhat along the lines of a museum or even anart gallery, is aimed at unfreezing the conventionalmind-sets that visitors bring with them—it offerschallenging visions of the near future. There arethen a series of specially designed meeting spaces.All of them have wall-to-ceiling whiteboards. Twohave full laptop support including brainstormingsoftware that is geared to anonymous and instantsharing of ideas and preferences within a group.The meeting spaces are oval to symbolize the attackon straight-line thinking. They have impressivelywide, curved doors that can be closed to createfocus and intimacy or opened so that the activitiescan become part of the wider environment.

Some researchers have advocated the primaryschool as one of the key metaphors for spaces for



management learning in the 20th century. One ofthe Royal Mail meeting spaces is set up exactlylike a primary school classroom and is usedparticularly when visitors first arrive as another vitalpart of the unfreezing process. It is a far cry fromthe typical bland and uninspiring corporate meetingroom, which almost seems to be deliberately gearedto ritualistic meetings dominated by one-waypresentations.

G. ControversiesThere is not a universal consensus over the meaningof good design in this area. There are severalcontroversial areas:1. Do 21st-century organizations need cellular

offices?2. Should they have a “clear desk” policy?3. Should they altogether banish smokers from the

office precinct?

There are certainly no absolutes in this area of workspace design—what is right for a health centre maybe wrong for an advertising agency and vice versa,and what is right for one advertising agency maybe wholly inappropriate for another. It is importantthat the work space be designed to support theculture that the organization seeks to achieve,particularly at times of organizational and culturalchange.

It is important to be extremely cautious aboutfashions in workplace design. There is little doubt,for example, that some types of knowledge workare performed much better in enclosed offices thanin open-plan space. So, a strong commitment toremoving enclosed office space can becounterproductive. One of the benefits of diversityis that it can often contribute to flexibility.

The human and political factor is also close to the

surface in the real world, so it is common to findthose who neither need nor can justify an enclosedoffice, demanding one of grounds of status, forexample.

According to environmental psychologist Becker(2007) the control of information is the essence ofprivacy is the control of information flow. In theirseminal review, Stone and Luchetti (1985) calledprivacy versus participation and independenceversus inclusion office design quagmires and arguedthat, while compromise cannot resolve the tensionsbetween these needs, multiple activity settings can.

Instead of an office design that assigns a workplaceto one person, Stone and Luchetti (1985) proposeda workplace that offers a variety of activitysettings—each of which supports a limited rangeof activities rather than trying to meet all of aperson’s privacy needs. These specialized settingsare conceived as spanning the variety of at timescontradictory office worker requirements. Forexample, some tasks people require inclusion andparticipation while others necessitate quiet andsolitude.

Activity settings might include private offices withdoors to serve as “home bases,” bullpen areas withrearrangeable tables for shared work, and quietspaces or library areas where people can reservetables to spread out on, lounge chairs for reading,or secluded corners for concentrated thinking.

Space for “courts” or shared-activity areas couldbe found by limiting the “caves” or “home bases”to very small areas with just enough space to write,make phone calls, and store personal files. Creatingthe full range of settings would require variouscombinations of permanent and movable walls andfreestanding and systems furniture arranged to form



private offices, open-plan environments, andbullpens.

H. Stimulus to CreativityA creative environment, whether outdoors orindoors, will tend to contain a variety of stimuli tothought, whether at a personal level, or to stimulateinteraction between a group. It is also important todesign workplaces where the stimulus is totallyabsent to encourage convergent thinking throughfocus and concentration.

I. The Work Space Is Three DimensionalIt is striking to observe the increasing importancebeing placed on walls as a fundamental asset in themodern office. In Orange’s London Imaginaries,almost every piece of wall space was covered withwhiteboards, TV monitors, and even a pillar thatvisitors are encouraged to sign. At the Royal MailInnovation Lab, the whole of some meeting roomwalls are covered in whiteboard material. Anunexpected role model for wall space is the modernprimary school—packed with information andexamples of student work.

J. Paperless OfficeThe dream of the paperless office has been fuelledby at least two different perspectives. The first is apossibly transitional phase whereby existing paper-based materials are scanned into an electronicformat. This format may be

1. wholly image based, as in a photocopy wherebythe viewer sees a facsimile of the page onscreen; or

2. wholly text based, where the image has beentranslated via optical character recognition intoa text document.

A combination of the two is also possible, which is

the area of document management and a wholevariety of software tools are available to managethe scanned databases.

The second perspective of the paperless office isvery different. In this perspective, paper documentsare never produced in the first place, whetherexternal or internal. Under this perspective, theoffice world is end-to-end, fully digital. Smallamounts of scanning may still be needed for ahandful of external sources, but the emphasis hereis wholesale redesign of business processes to takeadvantage of the digital formats. A very clearexample is in collaborative engineering such as forthe Boeing 777 design whereby work is organizedaround shared design databases and shared designtools.

K. Drivers of Office DesignThe offices of the first half of the 20th centurywere dominated by cellular design. Many officeworkers and particularly managers had individualoffices. With the post-war boom in high-rise offices,open plan became dominant. Outside metropolitancentres, most offices have reverted to low rise, butthe open-plan pattern still dominates, albeit thatthere are now much better designed public areas,cafeterias, atriums, and so forth. The mostsignificant changes in the modern office are in thesupporting and largely invisible technologicalinfrastructure. There will be much more scientificcontrol of temperature and humidity than 50 yearsago. Security devices tend to be more visible andmore effective. There are massive demands fortelephone, computer, and video networkinginfrastructures. One of Professor Parkinson’s lawswas to distrust the prestigious head office, andalthough there remain many ostentatious headoffices, there are fortunately today plenty ofexamples of a more muted approach.



Improvements in physical design can undoubtedlyimprove performance where other elements of thesociotechnical system are in balance. But it isnoteworthy how in the United Kingdom and othercountries, office workers feel subject to greaterstress than ever before, and managers are actuallyworking longer hours than 20 years ago. Theredesign of the physical office, therefore, must beconsidered against the actual problems faced. Ifstress due to the pace of work is a serious problem,and information overload is increasingly prevalent,serious consideration needs to be given toredesigning the office to address these contemporaryproblems. Too often both the specifiers anddesigners of modern offices appear to be addressingvariations on yesterday’s themes such as the needfor flexibility in internal layout when there havealready been very significant changes in structuraland personal flexibility, perhaps to an extent noteven envisaged in the more hierarchical 1950s and1960s.

A senior executive in an ultramodern prestige officewas quoted as saying that it was impossible to doknowledge work in the office, so it must be doneat home. Cases such as this should provoke somerevisiting of the assumptions behind conventionalwisdoms in office design.

There are undoubtedly clear examples where arevised office layout can brilliantly complementprogressive management thinking—for example, theabolition of cellular offices right up to the very toplevel at Oticon in Copenhagen and at Thomas Millerin the city of London. In these cases, the officemoves were the final part of a major systemicchange— flattened organizations.

L. The Office Within a SystemsThe office be a physical entity (a building), as part

of the organizational structure, as an informationprocessing environment or as a congregation ofpeople. It is, ultimately, a system and in fact acomplex system. This makes it appropriate to usea systems approach in analysing the office ofrelevance in the sociotechnical systems approach.This envisages business systems as having fourmain dimensions, summarized by Emery and Trist(1960) as task, technology, structure, and people.These dimensions constantly interact with oneanother. One can rarely be changed without alteringthe other. For the office of the future, the followingneed to be considered:

1. Task. Key business drivers—flexibility, speedof response, management of expertise andknowledge, increasing creativity, and virtuality

2. Technology. The physical building, the informa-tion technology, and the internal furnishings andfittings

3. Structure. The formal and informal organiza-tional structure

4. People. Their individual and collective values,skills, assumptions, and so forth.

In analysing the nonachievement of some of thedreams of the office of the future, a great deal ofthe blame comes down to naive beliefs that thereactually is a direct link between changes in techno-logy and the achievement of task goals. A newoffice format is expected to improve productivityand creativity. But in practice, changes in only thetechnology are unlikely to have any direct impacton task performance. This is because iforganizational structure and people aspects remainunchanged, the main causes of improvement—newbusiness processes—are unlikely to be implemen-ted.

Knowledge of technology throughout history



suggests that simply because an improvement istheoretically possible via technology does not meanthat it will happen effectively or at all. This is verymarked indeed in the office.

III. THE FUTURE

It can be established that the physical office oftoday, despite the imaginative efforts of modernarchitects, is generally based on a model of workthat although post bureaucratic, is essentially pre-office automation. The physical office of todaytechnically integrates leading-edge communicationsand data storage technologies. But it has almostcompletely failed to address the growing bundle ofproblems that are arising from flattenedorganizations, greater number of mobile workers,and the fast-growing nightmares of informationoverload and time-based stress.

There are at least seven core functions of the modernoffice:1. formal meeting place with colleagues and

business associates2. base for mobile and remote workers3. base for static workers4. base for information intensive work processes5. base for knowledge intensive work process6. creating opportunities for serendipitous human-

to-human contact, and hence stimulatingcreativity and innovation

7. a symbol of the organization to both externaland internal worlds

The classic rationale for having offices at all relateto (1), (3), (4), and (7). It can be observed thatconsiderable effort has been taken in the mostprogressive offices to take on board (2) and (6).However, many offices, even ultramodern ones,have still not fully grasped all six of these. Concerns

particularly relate to the lack of awareness of (5)—knowledge intensive tasks—and of the rapidlychanging set of problems surrounding (4)—information intensive tasks.

The most progressive design of the physical officeis literally only a shell. The simple sociotechnicalsystems model that this physical and technologicalshell is entwined with tasks that are often rapidlychanging; with organizational structures, formal andinformal, that are increasingly fluid and involvemany external partners; and with people, whoseneeds are also changing and extending, and manyof whom are increasingly stressed because of theiroffice work.

The 1960s office theory was to create flexibilitythrough physical layout, and this remains a stronginfluence. The very concept of flexibility has greatlyextended since then to include remote working andexternal partners, but office design has often notkept pace with this. Surprisingly little attention hasbeen given to the fundamental and worseningproblem of human stress in the modern office. Itcan be doubted that much modern office design isreducing stress—a suspicion in fact is that suchstress may well be made worse, even by designsthat appear admirable in outward form and intention.

The very idea of the physical office is subject toalmost continual critique by futurists. Many of theseare writers and consultants whose personal style isoften highly mobile and highly individualistic. Soit is perhaps not surprising that they fail to engagewith the needs of typical businesses and the averageinformation/knowledge worker. There remains astrong humanistic need for face-to-face contact onboth a structured and unstructured basis. Thephysical office can score well on both these counts.To adapt Mark Twain, reports of the death of the



physical office are greatly exaggerated. It can beexpected to see much more virtual and remote workover the next 20 years. This may make centraloffices smaller. It will also reinforce the need forsome form of central physical offices, but theconfiguration of these offices may need to havesome very different emphases in this more virtualand fluid world of the 21st century.

IV. ROLE MODEL OF GREAT DESIGN OFWORK SPACE

Although there appear to be new trends in workingpatterns and in their implications for office work,some research has looked at the past as well as thepresent. In a context where so much corporate officespace is unfit for knowledge work, historic examplescan still be used as excellent role models. Thesespaces understood the need for diversity to takeaccount of the many different types of knowledgework. The best role model of all is very far froma glitzy big city office. It is in the medievalmonastery. The monastic orders learned over longperiods how monks worked most effectively asknowledge workers and pretty much perfected thedesign of monasteries to support this.

They may not have had floor-to-ceiling whiteboardsor pinball machines, but the monastery had superband surprisingly democratic meeting facilities intheir research-paper houses. They had designatedareas for reading, writing, listening, and privatereflection. They had open air in the countryside forone reflection. And they had their own invention—the all-weather cloister. Not only did this allow forboth semi-public reflection and study (in the oftennow disappeared study carrels). It was also a placefor conversation and accidental meeting: both stillvital ingredients today in the sharing of knowledge.

Unfortunately, the monastic lifestyle has implica-tions that do not always chime with 21st-centurymind-sets. But it is a powerful metaphor for theoffice of the 21st century. Knowledge work ishuman work and is best carried out in humanesurroundings that enable diversity and in particularboth private reflection and intensive group work.

V. THIRD SPACES

This type of space was first articulated bysociologist Oldenburg (1989). He suggested thatfor a modern complex society the “third space” isvital, in between the first space of home and thesecond space of work. The subtitle—Cafes, CoffeeShops, Community Centres, Beauty Parlours,General Stores, Bars, Hangouts, and How They GetYou Through the Day—of his book is a clearindicator of what he means by a third space. Inpractice, this idea has been most strongly drawnupon for rethinking the workplace, so it has turnedout to be as important for business as much as forsocial purposes.

One building that has been conceived around thirdspace and knowledge management is the BritishAirways Headquarters, Waterside. Almost every-where has an informal corner for the accidental oreven deliberate informal meeting.

One of the best-known modern offices is that ofOticon, the Copenhagen-based hearing aid manufac-turer. Its headquarters, located in a refurbishedTuborg brewery building, welcomes employees witha marble pillar engraved with the company slogan“Think the Unthinkable.” The Oticon office is amonument to creativity, as well as to team workingand flexibility. Every detail has been designed tofurther these aims. There are no desks, just standar-dized PCs on tables. Once again, staff have caddies



but tend to work in project groups for severalmonths at a time, not hot-desking. Immense carehas gone into designing the coffee areas toencourage conversation—even the staircases areextra-wide to encourage people to stop and chatthere. Despite the ruthless elimination of paper andtotal electronic storage of documents, there is alsoa fundamental belief in talking to people—e-mailis discouraged, for example, in favour of oraldiscussion.

In the United States, advertising agency Chiat Daycreated a famous experiment in Venice, Californiawith an extremely technology driven approach tothe Creative Office. However, in 1998, Chiat Dayannounced that they were, in the light of experience,reining back on their extreme design.

VI. COMPANIES WITHOUT OFFICES?

There are some excellent examples of companiesthat now exist without any of their own centraloffices at all. Catalyst 400 is a U.K. reseller ofIBM midrange computers. When it was set up inthe early 1990s, a conscious decision was made tostart without an office. This helped significantlyreduce overheads. It gave greater flexibility. It hasalso proved to be a symbol and a marketing tool.

This is only possible through use of exceptionallywell thought through modern technology. It isperhaps not an accident that Catalyst uses theservices of an innovative serviced office provider,the Virtual Office Company. Founder RichardNissen has been driven by a vision of how his ownphysical services based in an extremely tangiblelocation— 211 Piccadilly—can support trulyremote, mobile, and flexible working. Nissen’scompany not only enables firms like Catalyst toappear to have their own switchboard and secretarial

services but also has sophisticated methods ofredirecting faxes, voice mails, and so forth to theirintended recipients.

Catalyst, as with many sales organizations, wantsits sales force to spend time mostly with customersand these staff would in any case be very mobile.When there is a need for internal meetings, theseare held at centrally located rented hotel meetingrooms. Where a client wants to visit, the meetingis held at an IBM office. The rest of the time staffwill work from home or in their cars.

What is noticeable here is that although Catalystdoes not have offices of its own, it remainsdependent on other people having offices—itsservice provider, its customers, its hotels, its mainsupplier, and, its staff’s home offices. Even thecompany without offices of its own still dependson offices—it is just that these are of a much greatervariety than under the conventional head officemodel.

VII. THE DESIGN PROCESS

In reviewing the design process, several points needto be emphasized. First, there needs to be concernwith how spaces for knowledge work are designedrather than with the physical architecture of thebuilding itself. It is naturally also important to beconcerned with how effectively those spaces supportknowledge work including the design of the interiorlayout, furniture, and work processes; again, issuesthat go far beyond the formal building architecture.There are many examples of modern offices thatare striking, beautiful buildings. This visual aspectof design may well contribute to the success of thework that goes on inside those spaces, but this doesnot emphasize the need for world-class architecture.Excellence in design of work spaces can take place



even in the most unpromising physicalenvironments. The first version of the Royal Mail’sInnovation Laboratory was constructed inside acondemned portable building. The HHCL adverti-sing agency offices are inside an unprepossessing,pre-war London office building and Circus Spacelearning centre is in a converted Victorian electricityworks.

What clearly comes through is that the mosteffective buildings for knowledge work do not endthat way by accident. They tend to be veryconsciously designed, and the most crucial influenceon that design is not, perhaps surprisingly, thearchitect. The key influence comes from the clientcommissioning the work, who turns out to have aconcept of some special factor that is needed in thework space to unlock the creation and sharing ofknowledge. Of course, architects place an equallyvital role in converting that concept into viablephysical space, but in each case, one or more seniormanagers provided the leadership from the clientside necessary to unlock the design puzzle ofcreating space for effective knowledge work.

The spaces studied in literature of successful officesall arose out of a context—of business drivers, ofcurrent building assets, and of financial and humanresources. Their excellence in terms of design relatesto meeting the needs of an organization forknowledge work within such a context.

Writings on great architecture may well make littleor no reference as to whether the building was fitfor purpose. One famous building that has wonarchitectural awards and acclaim is said by a seniorexecutive to have never really been suitable for theknowledge work that was supposed to go on insideit. The executive argued that this was because thearchitect took almost no interest in the underlying

work processes, and he and the sponsors were moreconcerned with using the building as a vehicle formaking a statement.

A. Fit for PurposeWhen writing about great design, it is important tobe crucially concerned with fitness for purpose. Butit does not mean that the actual physical designscould or should be replicated in other organizations.Many of the individual components in excellentwork spaces can and possibly should be replicated,but the important thing is not the visual look of thework space, but rather the design process thatensures that what is implemented meets the needsof that context.

It may be that a successful design for a organizationdoes have some longevity, but this is more a featureof how it continues to meet the changing contextrather than because it is in some permanent sensea good design.

A key issue in being fit for purpose is that thedesign is achievable within the finances available.The first version of the Royal Mail Innovation Labwas a pilot project on very limited resources. TheBromley-by-Bow centre is a public/voluntary projectwhere resources were never easy to find, and CircusSpace was for some time an idea in search ofresources. So, what is impressive about suchexamples and what makes them good design isprecisely their ability to achieve a great deal withinvery finite resources. It can sometimes be queried,when looking at extremely expensive work spacesconstructed by large corporations, whether there wasin fact too much money spent on the structure andexpensive internal ornament (perhaps as a symbolof success) when greater value and more effectivedesign could have been achieved internally throughmore thoughtful ways of leveraging the knowledge



of the workforce inside those symbols.

The lessons of a good design process are mucheasier and, indeed, necessary to replicate. For thisreason, it is important to pay attention to the designprocess. Some factors constantly recur. The well-informed client, already mentioned, is particularlycrucial. The willingness constantly to questionunderlying assumptions throughout the designprocess is also important, and in this regard, therole of consultation is vital. A signature architectmay well be completely uninterested in the viewsof the people who are going to have to work insidethe building. A designer of work spaces cannotafford to be so aloof. This does not mean that thedesign process is simply one large focus groupbecause there are often key trade-offs to be madedue to resource constraints, and particularly wherepart of the aim of a new work space is as one partof a change in organizational culture. But even inthe latter case, it still makes sense to consult withthose who are going to work in the work space, notleast because they know far more about howknowledge is created and shared in theirorganization than any external designer.

Consultation means allowing the central client anddesigner assumptions to be challenged in the lightof actual experiences on the ground. It also enablessome of the more difficult aspects of changemanagement to be articulated from the client pointof view. If an organization has been, for example,insufficiently creative, it is not enough to decidefrom on high to move to new ways of working andthen suddenly impose them through the vehicle ofa new building. This tactic is particularly unlikelyto work in areas where most knowledge is directlycreated through the employees. The move to thenew building can be only one part of a widerprogram of cultural change, and the consultation

process needs to involve management being willingto address their concerns and objectives as managersdirectly with staff.

From examining numerous case studies of thedesign of work spaces for knowledge work, it isclear that all too often the distinct needs ofknowledge work are not actually taken into accountat all in the planning of work space. It is possibleto caricature a dysfunctional work space designprocess as follows:1. An organization outgrows its existing work

space or is forced to move for some otherreason.

2. The senior management decides on a new orrefurbished building and prepares a businessplan for the move including statistics on likelyfuture office space requirements and on othertypes of space need in the building. There is nosignificant staff input into the business plan.

3. They hire an architect to develop the plans, whoeventually produces a master plan for thebuilding. This striking building exactly meetsthe quantitative requirements as laid down inthe business plan. It is a little more expensivethan the business plan but clearly prestigious.The master plan is approved with no detailedconsultation with staff.

4. Construction is nearing completion. A spaceplanning exercise is carried out to allocatedepartments and individuals to specific spaces.A furniture procurement exercise is carried out.There is virtually no consultation.

5. Budget overruns on the building mean that keyaspects of internal fitting out are eliminated,creating a more Spartan internal work spacethan ever envisaged with significant defects, forexample, in meeting spaces.

6. On moving into the new building, knowledgeworkers discover that they are less efficient and



less effective due to a continuous stream ofarbitrary decisions made and imposed on them.

This nightmare caricature, by no means, is unusual.In the case of public buildings, the lack ofconsultation may well extend to the public users ofthe building as well. Fortunately, such a pathologicalapproach to work space design is not inevitable.

B. Buildings and It as Linked Systems:Implications for Roles

When the first computer systems were introduced,they were very accurately described as “dataprocessing systems.” But even these early systemshad impacts—often dramatic— on the workforce,on the business structure and processes, and on thephysical configuration of the office. Too littleattention has been paid to the interplay betweenevolving computer systems and the physical office.Clearly, there are direct, legally constrained impactsrelating to detailed ergonomics of desks, chairs,lighting, and so on. But at the present time, thereare even more profound impacts caused by theimpact of technologies that uproot “the office,” forexample, via teleworking, or which like electronicmeeting systems make quite different demands onthe physical offices that still remain.

It is not so much that IT is directly leading toreconfiguration of the physical office. The continualchanges in organizational structures and businessprocesses cause the reconfiguration. This does leadon to a need to consider who then designs thephysical office. Where IT was a low-level operatio-nal tool such as with telephones and typewriters,offices simply had to make space for them. ITsystems and physical systems did not have particu-larly significant interactions. As IT, albeit indirectly,is leading to potentially radical changes physical

offices, it may no longer be possible to rely whollyon the physical architect to design the physicaloffice, simply feeding in inputs and specificationsfrom the information or knowledge systems archi-tect. It is now possible to conceive of a situationwhere a business that is reengineering around (a)new organizational structures and networks, (b)revised business processes, and

(c) new climate and culture should seriouslyconsider taking on workplace “systems designers”who take responsibility for all the key levels ofchange including the design of the physical office.In leading examples where office change andstrategic change were closely linked (e.g., Oticon),the specification of the new offices took place underthe close attention of the CEO. At Wellington FundManagers in Boston, one of the senior partners hadbeen an architect and this unquestionably enabledsome radical physical designs to be implemented.

However, we cannot always assume that the CEOor top team will personally have the insights ordesign flair that were clearly present at Oticon. Forthese organizations, it is possible see much moreholistic “business architects” who would includebuilding architects in their team but where thebuilding architect would be one of several parallelsystem component designers.

To summarize, the office building is no longeressential to a business for purposes of efficiency inlow-level data and information processing. Its roleis shifting to knowledge processing and to creatinga physical environment that ensures effectivenessin that knowledge processing.

VIII. SUMMARY

Each decade since World War II has involved a



technology-driven dream about the office of the21st century. Not one of these dreams has comefully true. Although each dream exists fully in afew organizations, what is most remarkable is justhow resilient white-collar workers are to change.Even the heralded growth of the PC and of e-mailhas often only automated what was manually orsemi manually done before. E-mail and the WorldWide Web potentially offer radical new models,but organizations are currently in an intermediatephase where problems with them could actually beoutweighing benefits in many organizations.

There will always be pioneering companies activelyseeking to reengineer the office. But the vastmajority will move perhaps too cautiously and tooincrementally. A common vision of the office ofthe 21st century would not involve use of thetechnology for the sake of it, but rather a focus onwhat are the information processing tasks mostcritical to —1. operations processing—information work, and2. creation and accelerated sharing of knowledge.

It is necessary to develop packages of solutionsincluding not just IT but also working practices,climate and culture, skills development, and learningmethods. There is no single silver bullet to makethe office of the 21st century significantly moreefficient and effective. But there are undoubtedlypackages of poor practice as well as the proposedpackages of solutions.

REFERENCES

1. Apgar, M. (1998). The alternative workplace:Changing where and how people work. HarvardBusiness Review, 76(3), 121-136.

2. Baldry, C. (1997). The social construction of

office space. International Labour Review,136(3), 365-378.

3. Becker, F. (2004). Offices at work: Uncommonworkspace strategies that add value and improveperformance. San Francisco: Jossey-Bass.

4. Becker, F. (2007). Organizational ecology andknowledge networks. California ManagementReview, 49(2), 42-61.

5. Becker, F., & Steele, F. (1995). Workplace bydesign: Mapping high performance workscape.San Francisco: Jossey-Bass.

6. Commission for Architecture and the BuiltEnvironment. (2005). The impact of officedesign on business performance. London:Author.

7. Dale, K., & Burrell, G. (2007). Organisation,space and architecture: Building a socialmateriality. London: Palgrave Macmillan.

8. Duffy, F. (1997). The new office. London:Conran Octopus Limited.

9. Eley, J., & Marmot, A. (1995). Understandingoffices: What every manager needs to knowabout office buildings. London: Penguin.

10. Emery, F. E., & Trist, E. L. (1960). Socio-technical systems. In C. W. Churchman & M.Verhulst (Eds.), Management science, modelsand techniques (Vol. 2, pp. 83-97). Oxford, UK:Pergamon.

AUTOMOTIVE COOLANT BUSINESS OPPORTUNITY IN INDIA – MARKET RESEARCH & ANALYSIS



Automotive Coolant Business Opportunity in India –Market Research & Analysis

* Vaibhav Dabhade

* Vaibhav J. Dabhade, Student, Chetana’s R. K. Institute of Management & Research, Mumbai University, India.Email: [email protected]

AbstractThis report includes survey and market analysis of automotive coolant market. The research was conductedfor Gulf Oil Lubricants India Limited between May and June of 2019 in Mumbai region. The objective ofthe research was to study dynamics and potential of secondary automotive coolant market through primaryand secondary research. The study included retailers, influencers and consumers with sample size of 195in total in Mumbai region. The primary research was conducted using questionnaires designed separatelyfor each target group. The study shows that the Mumbai regional market is dominated by brands which areinternationally recognized with presence of few local brands operating at regional level. The boomingeconomy of India and growing automotive market roots for growth of automotive coolant market. Increasingawareness about automobiles in consumers which is supported with increasing consumer base within thecountry indicates increasing potential for new products in automotive coolant segment. The study concludesthat there is a growth pocket for a product with better performance combined with optimum balance of priceand margins.

Keywords: Market Research, Automotive Coolant, Potential Market.

INTRODUCTION

The Indian coolant market is a market with multipleinternationally recognized brands with presence ofa few local coolant brands. The aim of the studywas to understand trends in secondary market ofautomotive coolants. The study included primaryresearch which aimed at three touch points(influencers, retailers and consumers) in secondarymarket which had association with purchasedecision. The study was aimed to understand how

purchases are made and influenced by variousfactors through each touch points. The Automotivelubricant market is naturally dependent on growthof automotive market and crude oil market. Thecoolant market while is dependent upon quality andcontent of Glycol in antifreeze. The growingAutomotive market in sub-continent and Asia-Pacific region projects growth of coolant andlubricants market in the region. The Indianautomotive lubricants market stood at INR 33,640Crore in 2017 and is projected to reach INR 70,716

ISSN – 0976-2000



Crore by 2027. The automotive market growthdrivers are preference for vehicles for personalmobility and easy finance options, which in turnincreases demand for automotive lubricants. Also,low price of crude oil is helping automotivelubricants to earn stronger margins. The conti-nuously growing awareness among consumers isanticipated to propel the demand automobile coolantin India.

PROBLEM STATEMENT

The automotive industry is looking at major shiftfrom internal combustion engine vehicles to electricvehicles. The shift will result in the eradication ofinternal combustion engine from the automobilesand hence will result in the extinction of enginelubricants market. The organizations which areoperating in engine lubricants sector are henceadopting this shift. The major automotive lubricantthat will be present in electric vehicles will becoolant. In electric vehicles, coolant will be usedto maintain the operating temperature of variouscomponents like battery, converters & solenoids.Hence, the automotive lubricant companies areshifting their focus towards coolants. This studywill help the organization to strategize the entryinto the coolant product line. The secondary marketfor internal combustion engine vehicles’ coolantmarket will also shift to declining stage as we seeshift from IC engine vehicles to electric vehicles.While coolant as a product might see growth overthe time but for IC engine vehicles, the segmentmarket will see decline. Hence, this study may alsobe helpful towards strategizing marketing approachin the product decline stage for this segment.

RESEARCH OBJECTIVES

Based on inputs from 100 retailers, 65 influencers

and 30 consumers, this study providescomprehensive information on factors affectingpurchase decisions in secondary market, consumerbuying behavior and market trends in automotivecoolant segment. Additionally, information wascollected, including awareness and estimated usagedata on competitors. In this way, this report provideshelpful market information for new product line ofautomotive coolants.

The following objectives will be met through theresearch:i. To study consumer buying process and roles

played by influencers and retailersii. To estimate the market size for engine coolant

aftermarket in Indiaiii. To understand the market trends within the

automotive coolant segment

LITERATURE REVIEW

The engine cooling system is responsible tomaintain the temperature of the engine within theoperating range. The cooling system consists ofCoolant (mixed in proportion with water), radiator,electric fan and other components. In internalcombustion engine only approximately 30% of theenergy released is converted in useful work while70% is removed from the engine to prevent itsparts from melting through the cooling system(Review of Engine Cooling system, S. R. DuraiRaju, International Journal of Advanced Scientificand Technical Research, December 2015).

In internal combustion engine, in majority cases,liquid cooling system is used as it provides moreuniform temperature around the combustionchamber as compared to air cooled engines. But inthe case of liquid cooled engines, the higher limitof operating temperature range depends upon quality



of the coolant or antifreeze used (Internalcombustion engine cooling system with elevatedcoolant temperature research, Rafal Krakowski,2013).

With global automotive sector turning towardsElectric vehicles, it is important to think about howthis shift will affect the products that related toautomotive industry. The coolant or antifreeze willstill be very essential when it comes to electricvehicles as battery temperature is very critical forperformance and safety. When a battery’s tempera-ture is too low it may not provide adequate power.Too high and undesirable reactions will degrade itand may even result in fire. The greatest challengesare to adopt batteries for use with cooling fluidsand to optimize the cooling cycle (Tobias Kapples,Fraunhofer Institute for Environmental, Safety andEnergy Technology, Germany, Royal Society ofChemistry, July 2012)

The engine coolant will play an important role inElectric vehicles in near future as the shift frominternal combustion engine to electric motors runby battery will eliminate other major lubricantsrelated to internal combustion engine and hencefor any lubricant manufacturer the shift of focusfrom other lubricants to engine coolants orantifreeze will be inevitable.

METHODOLOGY

The research was intended to target 100 retailerswhich included exclusive lubricant shops and spareparts shops, 50 Independent workshops, 15Authorized workshops and 30 consumers. Theserespondents were selected from Mumbai and sub-urban region in systematic manner. The sample sizechosen for the research was suggested by theorganization. The primary research was conducted

using unique questionnaires designed for each targetgroup. The questionnaire intended to understandfactors related to purchase decisions, estimatemarket size and understanding market trends.

The questionnaire had following inquiry funnel: Personal Information Coolant Brand Used/Sold Coolant Brand Preferred Coolant Usage Awareness Type of Coolant Stored/Sold Pricing and Margins Highest Selling Pack Sales and Contribution Selection or Recommendation Criteria

DATA ANALYSIS AND FINDINGS

Respondent Base

The primary research was aimed to study three touchpoints in the secondary market. The compositionof respondents was 100 retailers (exclusive lubricantshops and spare parts shops), 65 influencers(Authorized and Independent workshops) and 30consumers (mix of passenger and commercialvehicle owners). The 100 retailers that participatedin the study consisted of 82 Spare parts retailersand 18 Exclusive lubricants retailers. The targetgroup of 65 influencers consisted of 50 Independentworkshops (IWS) and 15 Authorized workshops(AWS). Within consumer target group there weretwo types as following:1. Professionals: Consumer that has automobiles

as part of their profession. (Taxi Drivers, TruckDrivers)

2. Generals: Common people who own automo-biles but are not related to automobiles throughtheir profession



The consumer target group that was studied included8 professional consumers and 22 general consumers.

Market Insights

The Indian passenger vehicle sales recorded growthof 5.32% at 3.4 million units in CY2018. This salesamounted to INR 1600 crore of potential coolantmarket in India for the same year. The automotivemarket of Asia-pacific region is estimated to growat 6% CAGR which indicates that coolant marketfor India region will also grow with expandingregional automotive market.

The after-sale service market of India is dividedinto two parts of service providers viz. Authorizedworkshops (AWS) and Independent workshops(IWS). Authorized workshops are service stationswhich are authorized by Original EquipmentManufacturer (OEM) and provides serviceexclusively only to the vehicles of that brand. TheIndependent workshops are service stations ownedand regulated by private entities or individuals,which provide services to all types of vehicles orsome type of vehicle segments in which theyspecialize.

The AWS serviced vehicle contributes to OEMcoolant market while IWS serviced vehiclecontributes to the Secondary market. The OEMcoolant market of India is estimated to be INR 560crore of which Mumbai region hold INR 25 croreof potential OEM market in a year. The secondarymarket of India for coolants is estimated to be INR1040 crore of which Mumbai region holds INR 45crore worth of the secondary market.

Major findings

Purchase preferences of consumers in total indicated

that majority of consumers would prefer to buyOEM brand coolant as they perceived it to beauthentic. The majority of the coolant sold insecondary market was in concentrate form eventhough retailers recommended Pre-mixed typebecause of convenience to consumer. 100% ofretailers under study had availability of coolant inconcentrate form.

Consumer Awareness

The study revealed that 72% of the consumersindicated lack of knowledge or awareness aboutthe coolant as a product. Rest 28% possessedknowledge about functions of the product of whichvast majority belonged to age group less than 30years. The consumers which showed lack ofawareness about products, while making purchases,relied on OEM brands for their vehicles. Awarenessabout coolant functions saw a decrease above age30 in consumers.

Consumer Decision Making

Major purchase decisions observed, in the study,for consumers are quality, brand, price andrecommendations from influencer and retailer.

Retailers

There were two types of retailers that were understudy in this research. The retail target group for



the study consisted of 18% Exclusive lubricantshops and 72% of the sample studied were spareparts retailers which also sell coolants. Exclusivelubricant shops were observed to be maintainingavailability of 5 to 7 brands of coolants while spareparts retailers maintained 1 to 3 brands of coolantsin stock. The exclusive lubricant retailers had 16%of their revenue from coolant sales while spare partsretailers observed 5% of their revenue from coolantsales. The spare parts retailers showed less coolantrevenue was because spare parts shops have majorcontribution from spare parts sale because their mainbusiness proposition is spares and hence coolantremained a minority contributor to the revenue. Thestudy also reveals that all of the retailers storedmost of their coolant stock in 1 liter packs. Formajority of retailers, inventory SKU periodremained 2 to 4 weeks.

Retailer Product Recommendation

The product recommendation criterions fromretailers to consumers were majorly quality, priceand brand.

Influencers

There were two types of influencers, authorizedworkshops (AWS) and independent workshops(IWS). The Authorized workshops provide servicesto 35% (approximate) of the passenger vehicles.

The major brands in the passenger market areMaruti Suzuki (Maruti genuine coolant), Hyundai(Hyundai Antifreeze), Mahindra & Mahindra(Mahindra Ultracool), Honda (Honda co. coolant),Toyota (Toyota Supercoolant), Ford (Ford coolant),Nissan (Nissan antifreeze), Skoda (Skoda V30),Isuzu (Isuzu coolant), Renault (Renault ELF), Jeep(Jeep Petronas Paraflu), BMW (BMW antifreeze),Volkswagen (VW coolant G13), Audi (Audi G12,G13). Majority of these OEM coolants used in AWSare packed and used in Pre-mix form, onlyVolkswagen, Maruti Suzuki and Audi coolants areprovided in Concentrate form. IndependentInfluencers at IWS are individuals which provideservices to all types of vehicles or specializedvehicle type regardless of vehicle manufacturer. TheIWS either provide services to all passenger andcommercial vehicles or they specialize in a certaintype of vehicle and provide services to them only.22% of the Independent Workshops under the studystocked coolants. Stocking of coolants at IWSdepends upon the space available at the workshop.The space available in majority of cases under studywas very limited. The influencer at IWS often usestrusted quality brand of coolant which in most casesis the same. Most of the consumers at IWS areregular customers and hence they trust opinions ofinfluencers at such workshops.

Influencer Product Recommendation

As per survey, the influencer or mechanic at IWSconsiders a lot of factors which brings mutualbenefit to consumer as well as the influencer. Interms of influencer the factors considered are qualityand margin while in terms of consumer, the factorsconsidered are performance, vehicle type, price andquality of the coolant that would be suitable to thevehicle type.



Packaging

The antifreeze is available in secondary market intwo types of packs viz. Pack and Pouch. As per thesurvey majority of the coolants available for saleare stored and sold in the pack form. The studytried to understand the packaging preferences ofconsumers as well as retailers and found thatmajority of the participants preferred pack form.

Technology

At basic level, coolant or antifreeze maintains theengine in operating temperature range, but thistechnology has roots from 100 years ago and yetthis product is used in many advanced automotiveengines. The technological advancement calls formore advanced coolant which increases service lifeof all cooling system components, eliminates top-off, eradicates cylinder liner cavitation, avoidselectrolysis, improves power and fuel economy bylowering combustion chamber temperatures.

The future of the coolants will see waterlessantifreeze which will eliminate many problems thatcome with water like corrosion. The technologicaladvancements will give rise to coolants with lowersurface tension and higher heat absorbing capacitieswill enhance the functions of automotive engines.Also to coolants that will provide not only heatremoval from engine but also will act as heat carrier

fluid to support add-on system like EGR and WHRin high performance vehicles. The future coolantswill be focused on long life, optimal heat transferand oxidation stability, avoiding sludge formations,material protection, cavitation & electrolysisprotection.

CONCLUSIONS

Objective: To study automotive coolant market The Indian coolant market is dominated by

brands having International presence andrecognition.

The automotive coolant market is majorlyconstituted by passenger cars. The Indianautomotive coolant market potential is estimatedto be INR 1600 Crore.

The automotive coolant market is divided intwo segments viz. OEM market and Secondarymarket. The OEM coolant market is dominatedby Golden Cruiser by S-CCI India Pvt. Ltd.while secondary coolant market is majorlydominated by Castrol.

Objective: To estimate the market size for enginecoolant aftermarket in India

The potential Indian automotive coolant marketis estimated to be INR 1600 Crore.

This market is divided into two types with OEMmarket of approximate 35% market share andSecondary market with 65% market share.

The OEM coolant market is estimated to beINR 560 Crore in a year while Secondary marketis estimated to be potential worth of INR 1040Crore.

Objective: To understand the market trends withinthe automotive coolant segment

The automotive coolant market is heavily influ-enced by influencers and retailers. This is due



to lack of awareness in the consumers aboutthe product function.

All of the coolant sold in the market is inconcentrate form.

The local coolant brands follow instant-rewardssystem by providing higher margins to retailersby compromising on quality. The brandsoperating at national level provide long-termtarget based rewards to retailers and distributorsbut with lower margins per unit sale.

The increasing R&D in product segment isproviding longer life to coolants and somevehicle brands like Volkswagen, BMW, Jeep,Audi are already providing lifetime coolantswhich are top-up or refill free and by doing soare creating greater value to consumers.

RECOMMENDATIONS

i. The new coolant brand coming into the marketshould be able to provide good quality productat optimum price. The coolant brand shouldprovide retailer with greater margins as for anyretailer margin is a driving force and greatermargin provides retailer greater room fornegotiations.

ii. The coolant brand should seek to partner upwith OEMs as most of the consumers haveinclination towards OEM branded coolants. Theupcoming brand should direct itself towardszero-maintenance, life-long coolants partneringup with OEMs which in near future eventuallywill be aiming for the same.

iii. Increasing the awareness about the product andits functions through advertisements will benefitthe whole product segment as lack of knowledgeon consumer’s part helps survival of localsubstandard quality products.

iv. Also, the online market for automotive productsstill remains unexplored where various discountsand loyalty schemes can be conducted to capturethe market.

v. Lastly, various types of coolants matching thedemands of respective geographies of thecountry rather than having one product forwhole country could be profitable.

REFERENCES

1. Anonymous (2017). Applying modern techno-logy to engine coolant [On-line]. Available:https://www.evanscoolant.com/news/applying-modern-technology-to-engine-coolant /[Accessed: 02 May 2019].

2. P. Kotler, K.Keller (2009). MarketingManagement (13th Edition). “Conducting marketresearch and forecasting demand” [Accessed:02 may 2019].

3. Anonymous (2015). Understanding Coolants[On-line]. Available: https://www.penriteoil.com.au/assets/pdf/tech/Nov2015/Coolants.pdf[Accessed: 02 May 2019].

4. Motor India Magazine (2018). Technologicalinnovation from antifreeze to coolant and on tothermal management fluids [On-line]. Available:http://www.motorindiaonline.in/component/technological-innovation-from-antifreeze-to-coolant-and-on-to-thermal-management-fluids/[Accessed: 20 May 2019].

5. Anonymous (2014). India Automobile CoolantMarket [On-line]. Available: https://www.techsciresearch.com/news/221-india-automobile-coolant-market-to-grow-at-6-till-



2019.html [Accessed: 25 May 2019].

6. Modor Intelligence Research Report (2018).Automotive coolant market – Growth, trendsand forecast (2019-2024) [Sample report].Available: https://www.mordorintelligence.com/industry-reports/automotive-coolant-market[Accessed: 28 May 2019].

7. Anonymous (2019). Automotive coolant markettrends (2019-2025) [On-line]. Available: https://www.gminsights.com/industry-analysis/automotive-coolant-market [Accessed: 01 June2019].

8. Anonymous (2019). Antifreeze market-Globalforecast to 2021 [On-line]. Available: https://www.marketsandmarkets.com/Market-Reports/automotive-antifreeze-market-241952403.html[Accessed: 10 June 2019].

A STUDY ON AIRCRAFT FINANCING



A Study on Aircraft Financing

* Vaishnavi Khadasane

* Vaishnavi KhadasaneStudent, Chetana’s R. K. Institute of Management & Research, Mumbai University, India.Email: [email protected]

AbstractThe paper aims to provide broad explanation of Aircraft Financing. This paper gives us the informationabout the Financing patterns of any aircraft of any airline company. Unlike other financing Aircraft financingis a concept involving a long process to follow. It implies the detail steps involved in Aircraft Financing suchas Selection and Approval, Arrangement of Loans and the Structure of Loans. The paper also throws lighton evaluation of two options available for financing of any aircraft namely Sale and Leaseback and OutrightPurchase.

Keywords: Aircraft Finance, Aviation Industry, Export Credit Agency (ECA)

I. INTRODUCTION

Aircraft finance is defined as “the processof financing for the purchase and operationof aircraft”. Purchase of aircrafts is not equivalentto that of any other vehicle. It requires huge amountof investments. Aircraft financing basicallycomprises of the process of acquiring an aircraftright from the approval of the Ministry of CivilAviation, arrangements of funds, selection of themost appropriate or inexpensive loan offers to therepayments of these loans. It also explains aboutthe loans obtained by the company, the options offinancing, costs and revenues involved in the entireprocess. There are several ways through an aircraftcan be financed or purchased. They are Leasing,

Export Credit Agencies, Commercial Banks, CapitalMarkets, Private Equity and Hedge funds etc. Thereare other financing structures which are hybrids ofthe above Japanese Leverage Leasing, Asset BasedFinancing.

II. LITERATURE REVIEW

Bhattacharya (1987)

“Profitability and Capital Structure of CentralSector”

The study focuses on the expansion of the Equityplatform of the Public Enterprises. It also statesthat due to liberalization, huge interests’ burden is

ISSN – 0976-2000



survived by the public enterprises. It also impliesthat over investment and incorrect decisions aredamaging the public sectors.

M. Radha (2003)

“Capital Structure and Profitability”

The study proposes that both the companies shouldopt for such mandates of loans which have cheaperinterest rates. Debt/Equity ratio is associated withthe liquidity, profitability and capital bearing interestratios. The high fuel and oil prices were also aleading cause of increasing debts. Almost for allaspects, aviation industry obtains loans such asWorking capital loans, Fuel and oil loans etc. Ituses facilities such as Buyers credit, LCs etc whichincreases the burden of interest and harms the ratios.

Bisignani, Giovanni (2006)

“Global Aviation Industry”

The global commercial aviation industry isdegrading, due to bankruptcies, huge debts,terrorism and high oil prices. The study aims onthe fact that global economy cannot function withoutair transport and travel. It is observed and studiedthat a complicated blend of factors has led to theindustry’s present state of financial crisis, but thatthe crisis can be remedied. Major Economic changesare affecting the crisis.

III. OBJECTIVES OF PROJECT/STUDY

To study and analyze aircraft financing process. To analyze the best option between outright

purchase or Sale & leaseback.

Methodology

The methodology used here is Descriptive ResearchMethodology. Descriptive research is defined asa research method that explains the characteristics,properties, processes of the population orphenomenon that is being studied. This methodo-logy focuses more on the “what” of the research.Core traits of descriptive studies can be explainedas describing, explaining and validating researchfindings. As, in this case, a study is conducted thatconsists of processes of aircraft financing, descrip-tion of products i.e. loans, and some analysis ofcapital budgeting methods are applied.

IV. EXPORT CREDIT AGENCIES

Most used method of financing any aircraft isExport Credit Agencies (ECA). ECA forms the basisof any Aircraft financing. ECA financing remainthe cheapest mode of aircraft financing as ECAguarantees are generally considered to be AAAguarantees backed by governments of the aircraftmanufacturers countries. ECA financing is availablefor up to 85% of the cost of aircraft and the balance15% is to be arranged through either Commercialborrowings or the airlines own equity. This finan-cing has two tranches as follows:

1. An export credit agency guaranteed tranche upto 85% of the aircraft cost. This tranchenormally carries a lower spread over LIBOR(London Interbank Offered Rate) since thistranche is guaranteed by the ’Export CreditAgencies’ of the country of the aircraftmanufacturer. The lending banks accept a lowerspread over LIBOR under this tranche sincethere is no risk exposure to either AirlineCompany or to the Government of the respectiveAirline Company defaulting in the transaction.



2. A Commercial Loan tranche for the remaining15% of the aircraft cost. In addition, this trancheis also available for financing the cost ofacquisition of spares, workshop equipment andramp equipment included in the aircraft projectcost. The spread over LIBOR of this tranche iscomparatively higher than the export creditagencies guaranteed tranche at the above.

Both tranches together make the total aircraftfinancing package. The tenure of both thetranches is normally for a period of 12 years asregards ECA guaranteed loan and 5 years forCommercial loans. The repayment of the loanprinciple is in quarterly instalments. The entirefinancing package was guaranteed by theGovernment of respective Airline Company.

ECA Bank supports Asset-based finance leasestructure. Under this financing structure, aSpecial Purpose Company the “SPC” acts as:

The borrower under the ECA Bank supportedfinancing.

The owner of the aircraft.

The lessor of the financed aircraft to the end-user Airline Company.

The SPC borrows funds from the ECA Bankguaranteed lender (when a guaranteed loanobtained), or from ECA Bank (when direct loanobtained), to purchase the U.S. manufactured air-craft. The amount borrowed under the ECA Banksupported loan cannot exceed 85% of the netinvoice price of the aircraft according to OECDArrangement guidelines.

The balance 15% of the aircraft purchase price isobtained either from a commercial financial institu-tion (through the proceeds of a non-ECA Bankguaranteed commercial loan) or the Airline (througha non-refundable advance payment of rent underthe lease).

SPC now will be the owner of aircraft. The SPC isa tax neutral jurisdiction acceptable to ECA Bankand the Airline. First priority is given to the ECABanks trustee by the SPC owner. The ECA Banksupported loan in relation to an ECA Bank financedaircraft will be secured by this aircraft and will becross-collateralized with any past or future ECABank financed aircraft.

V. AIRCRAFT FINANCING BLUEPRINT

Unlike other financing sectors, aviation financingis a long procedure to follow. It includes contribu-tion of all the departments such as engineering,finance, strategic and planning, market demand etc.To finance a fully-fledged aircraft is a big deal todo. There are various rules, regulations and normsby the government and other parties to follow.

1. Aircraft Selection & Approval

Analysis of current market demand is conducted.Data on airline niche market is collected based onmarket analysis, market research and the future



requirements. The airline’s market analysis helpsto determine the type of aircraft to be inducted intothe fleet – particularly with reference to the size,range of aircraft, forecasting, revenues, yields, andload factors, routes to be operated and also cost ofoperating the aircraft. Aircraft manufacturers arecontacted for the technical and commercial offerswhich they can provide for our shortlisted aircraft.Acomplete technical, commercial and economicanalysis of the shortlisted aircraft is prepared bythe company. Appropriate aircraft is selected basedon the final analysis of revenue, cost and profit.The aircraft suitable for each particular market ischosen for induction into the fleet and the PurchaseAgreement with the aircraft manufacturer is signed.

2. Arrangements of Funds

The bids are invited from international banks orfinancial institutions for a suitable financing packageincluding any innovative financing proposals foracquisition of aircraft. The term sheets submittedby the banks or financial institutions are scrutinizedand detailed discussions are held with the shortlistedbanks or financial institutions wherein clarificationson their term sheets are sought. The parties arerequested to resubmit their best possible offers.Selection of most suitable Project is done usingCapital Budgeting techniques such as NPV, XIRRetc.

3. Structure of Loans

The loan structure is divided into three parts andaccordingly loan is obtained as follows. Firstly,signing amount is to be given to the provider whichis given from previous profits. PDP loans areobtained for giving the Pre Delivery Payment.Bridge loans are obtained on the invoice and thenet payment of the aircraft is cleared. They are 12

months tenure loans. Long term loans are thenobtained to fulfill the previous loans. They are 12years tenure loans. These loans are taken fromECAs.

VI. OPTIONS OF FINANCING

There are basically two models through which wecan do the financing of Aircrafts with the help ofthe loan received. Those models are as follows:Sale and Leaseback and Outright purchase.

1. Sale and Leaseback

Sale and Leaseback is a model of financialtransaction in which the seller (airline) of the leaseaircraft sells the product to the lessor. The aircraftwill be leased back from the lessor to the lessee(seller) and the aircraft will no longer be owned bythe seller. Although these type transactions arestructured as operating leases, the prospectivelessee’s purpose and implicit benefit is often toraise capital by refinancing owned assets.

Under a sale-leaseback arrangement, the aircraftowner sells the aircraft to the lender or lessor whothen immediately leases the aircraft back to theoriginal owner. There will be no interruption ordisruption of aircraft operations, but the transactionshould give the company some extra cash. There



also may be changes concerning taxes and the wayin which the aircraft is accounted for on thecompany’s balance sheet. When company is in theneed of funds, the aircraft can be used as collateralfor the loan via this model. The rentals will act asexpenses while liability side of the balance sheetwill not have any debt and asset side will not showaircraft as asset. Leasing does not generate tax.

2. Outright Purchase

Outright Purchase is an option in which the assetcan be purchased straight away after its paymentsof rentals. The aircraft will be treated as an asset inthis option. As an owner, a nominal fee or the scrapvalue of the asset (aircraft) need to be paid. Thus,the aircraft is now an asset, the Balance Sheet ishighly affected showing increased amount of Debtsand Liabilities. Huge Debt in the Balance Sheet isoften criticized as it affects the Debt Equity ratioand other Capital Gearing ratios. High Debt toEquity ratio signifies that the company has hugeinterests burden which the company need to pay toresolve the Debts as it may become riskier further.This ratio also implies the company’s FinancialLeverage. Capital gearing ratio is a useful tool toanalyze the capital structure of a company and iscomputed by dividing the common stockholders’equity by fixed interest or dividend bearing funds.

VII. CONCLUSION

Aircraft deliveries over the next three-five yearswill need to be financed at a time when liquidity isscarcer and risk is being reprised. The most vitalchallenge for airlines, which have record orders inplace, is to obtain financing at lower interest ratesin such changing economic environment.

Aviation finance could provide an attractive oppor-

tunity to deploy large amounts of capital efficientlyin ‘hard assets’. The new and smaller airlines mustpurchase the Second Hand Aircrafts from those whoalready have a new aircraft delivered instead ofgoing for a brand new fleet and taking advantageof ECA Financing. It will create a natural financeflow in the economy. Otherwise, it will create con-cerns of oversupply of some aircraft types, particu-larly narrow body, could put aircraft values andlease rates under pressure. After learning about thecapital budgeting we can conclude that when takingcapital budgeting decisions whichever method amanager uses to evaluate project he must prefer toreceive returns sooner than later choose the properdiscounting rate in commensurate with the riskinvolved & along with the cash flows also considerhow the particular project if implemented willchange things.

VIII. REFERENCES

1. h t tps : / /www. ibef .o rg / indus t ry / ind ian-aviation.aspx

2. http://www.airindia.in/

3. https://en.wikipedia.org/wiki/Air_India

4. http://www.camstvm.org/CAMS_Journal.pdf

A STUDY ON EFFECTIVENESS OF TRAINING PROGRAMS IN BPCL – MUMBAI REFINERY LIMITED



A Study on Effectiveness of Training Programs in BPCL –Mumbai Refinery Limited

* Dr. Balaji Sadarvarte and Vrunda Patel

* Dr. Balaji SadavarteVrunda Patel, Student - CRKIMR, Email: [email protected]

AbstractTraining effectiveness is fundamentally an evaluation that inspects the level to which training enhanced theemployee’s skill, knowledge, and behaviour inside the association. The perception of training effectivenessis a series of many factors on the situation of the pre-training stage, training stag An effective training makesan employee more efficient and productive. It is crucial for enhancing the skills, capabilities and knowledgeof the employee. The value of the training lies in what it achieves. Assessment of training effectiveness isan essential activity because it examines to what extent the gained knowledge is actually transferred to theworkplace. e, post-training stage and personal factors.

Keywords: Training, Effectiveness, Kirkpatrick Model, Learning’s

INTRODUCTION

From Burma Shell to Bharat Petroleum:Bharat petroleum was incorporated in the year1951m Burma Shell Corporation to set up a refineryin Bombay. It was an agreement betweenGovernment of India and the Burma Shell Company.It was established as a private company, But On24th January 1976 it was taken over by theGovernment of India to form the Bharat RefineriesLimited. Later it was rechristened as BharatPetroleum Corporation Limited on 1st August 1977.After nationalization BPCL changed gears and hastried to achieve growth opportunity by diversifyinginto various petroleum products ranging frompetroleum, petrochemicals, gas, refining retailing.

ATF and many more. Customer satisfaction is theprime most objective for BPCL It has tried toachieve this by continuously embarking uponinnovation and improvement in its products to suitthe customer’s requirement. For this it has set up aworld class R&D Centre at Sewri Mumbai. Thishas helped the company to maintain the customersatisfaction level and in turn loyalty. The projectentitled ‘A STUDY ON EFFECTIVENESS OFTRAINING PROGRAMS IN BPCL – MUMBAIREFINERY LIMITED’ is an attempt to understandthe opinion and attitudes of the various categoriesof employees of the BPCL MUMBAI REFINERY,towards the training programs provided by theCompany. The data was collected through well-structured questionnaires which contains closed end

ISSN – 0976-2000



and open end question. This survey was carried outin the organization itself. In the course of study, itwas found that the training programs analysed wereprovided to the employees of BPCL (MR). In thestudy the Kirkpatrick training model level3(Behaviour) was used. With this level of modelwe can assess the effectiveness of the training. Didthe participant were able apply the learning’s ontheir jobs. To find out the result whether the traineesdid anything different after the training was give.To measure the effectiveness of training Iinterviewed the trainees, their line managers andpeers.

LITERATURE REVIEW

Harshit Topo in his research ¯Evaluation of Trainingand Development: An Analysis of Various Modelsanalysed training evaluation is the most importantaspect of training and development. It is a subjectwhich has been much discussed but superficiallycarried out. There are various reasons for that, oneof the main reasons is that all models are descriptiveand subjective in nature, its indicators for evaluatingtraining and development is not clearly given andexplained. Kirkpatrick model is widely used modelat reaction level but in this case also what shouldbe the main indicators at reaction level and otherlevels is not explained properly.

Perhaps the best known evaluation methodologyfor judging learning processes is DonaldKirkpatrick’s Four Level Evaluation Model that wasfirst published in a series of articles in 1959 inthe Journal of American Society of TrainingDirectors (now known as T+D Magazine). Theseries was later compiled and published as anarticle, Techniques for Evaluating TrainingPrograms, in a book Kirkpatrick edited, EvaluatingTraining Programs (1975).

As indicated by Chris (1996)- Training andimprovement target creating skills, for example,specialized, human, theoretical and administrativefor assistance of individual and hierarchicaldevelopment.

As indicated by Yoder (1970) – Training anddevelopment in the present work setting isundeniably more fitting than preparing alone sinceHR can apply their full possibilities just when thelearning procedure goes a long ways past the basiceveryday practice.

METHODOLOGY

ApproachThis analysis is exploratory in nature. Within theproject the information is collected from bothprimary and secondary source. The project hasfollowed all the formal procedure to gathersecondary information a lot more relevant andcreated an in depth form for the survey. Analysisfollowing a quantitative approach is exploratory andseeks to clarify ‘how’ and ‘why’ a selecteddevelopment, or behaviour, operates because it willbe in a very specific context.

Sources of DataBoth primary and secondary data are used for thestudy. The primary data was collected by surveymethod.. Secondary data was collected from books,company manuals, company website, companymagazines and informal talk with the employees.

METHOD OF DATA COLLECTION

Data Collection through Survey:This technique of knowledge assortment is sort ofstandard, significantly just in case of massiveenquiries. It’s being adopted by personal people,



analysis staff, private and public organisations andalso governments.

OBJECTIVES OF THE STUDY

To measure participants reaction to theprogramme, their satisfaction with theprogramme.

To measure competencies. To measure change in behaviour on the job and

specific application of the training material.

ANALYSIS & FINDINGS

PRESENTATION OF DATA

For Trainees1) The trainer’s contribution to the training processwas valuable.

Fig. 1(Source: Primary Data)

Fig.: 2

(Source: Primary Data)

When trainers were asked trainer’s contribution tothe training process was valuable 63% agreed 31%strongly agreed and 6% disagreed. To measure the understanding of the content

provided in the training, functional knowledgeplanning, problem solving & time management.

Strongly Agree Neutral Disagree StronglyAgree Disagree

5 10 0 1 0

Strongly Agree Neutral Disagree StronglyAgree Disagree

3 13 0 0 0

2) Has the training acted as a motivator towardsfurther learning?

Among the total respondents 13 agreed trainingacted as motivator 3 of them strongly agreed

3) To what extent were knowledge and skillsacquired through training programme used in theworkplace?


1 2 3 4 5 Extremely not useful 0 0 4 6 6

Extremely useful



Among the 16 respondent 6 of them felt knowledgeand skills acquired through training programmewere extremely useful 6 felt useful and 4 wereneutral.

4) Was functional knowledge providedduring the training session effective to solveproblems on job?


effective very slightly neither slightly very ineffective 7 6 1 2 0

When the respondent were asked was functionalknowledge provided during the training sessioneffective to solve problems on the job 7 of themresponded very effectively 6 of them said slightlyeffective 2 of them said slightly ineffective 1 saidneither.

For Line Managers

1) Keeps control of their emotions and behaviour,even when involved in high pressure situations.


When respondent were asked did their managerkeeps control on their emotions and behaviour underhigh pressure situation 69.2% agreed to question

asked 11.5% strongly agreed but 3.1% stronglydisagreed 9.9% neither agree nor disagree and 6.3%disagree.

2) Exercises good judgment by making logical,sound and informed decisions


Among the 26 responses 61.5% agreed that theirmanager exercises good judgement by makinglogical, sound and informed decision30.8% strongly agreed 3.1% strongly disagreed.

3) How much trust do you have in your manager’sability to make the right decisions?




Amongst the 26 respondents considered for researchthe majority of the respondents that is 61.5% ofthem have lot of trust on their mangers ability tomake right decision. 30.8% have a great deal oftrust. While 7.7% have moderate amount of trust

For Peer

1) Does the employee exhibit leadership qualitiesin the roles he or she plays in the company?


All the 16 respondents feel that their peer exhibitleadership qualities in the roles he or she plays inthe company.

2) Works across organizational lines and boundariesto attain goals.


When asked do their co-worker works acrossorganizational lines and boundaries to attain goals

58.8% agreed 11.8% strongly agreed while 29.4%were neutral.

3) Are the employee’s work methods and approachto accomplishing his job effective, efficient, andcontinuously improving?


The responded were asked do they find employeeswork method and approach to accomplish jobeffectively and efficiently 100% respondent saidyes.

CONCLUSIONS

1) It is recommended by the trainees that thetraining programs are very helpful to theemployees, maximum trainees feel that thetrainers contribution to the training process wasvaluable & their teaching methods wereeffective.

2) Regular training programs acted as motivatortowards further learning’s. These trainingprograms helped them to achieve SMART goals.Change in performance and skills werenoticeable by their superiors and peers.

3) The participants were given out the hand-outsor the presentations of the training program sothat it can be useful for them for future



references that will help them to continue withthe same efficiency that is built up afterattending the training programs.

4) Functional mandatory training programsprovided to the trainees during the sessions wereeffective to solve the problems on the job.

5) Functional mandatory training program must beincluded for all the job group employees astraining is very important every level with thefast growing working environment.

6) Specific programs related to domain knowledgeis demanded for the employees as well the linemanagers.

7) More participative sessions are highly recomm-ended which helps the employees to gain aswell as share their insights during the trainingprograms.

8) Increase in the duration of the training programsthat are set up by RLC for better effects on thedaily activities and also the technical knowledgeof the employees.

9) Feedback about the training program to be takenimmediately after training programs as it givesout better recommendations.

REFERENCES

1) http://blueoceanuniversity.com/frontpage/pestelcoanalysis/10610-bharat-petroleum

2) https://www.researchgate.net/publication/281857611_A_STUDY_ON_JOB_SATISFACTION_OF_EMPLOYEES_IN_BPCL__KOCHI_REFINERY_

LIMITED_AMBALAMUGAL3) http://www.ijoart.org/docs/Evaluation-of-the-

effectiveness-of-training-programmes-in-BPCL-and-ONGC-Mumbai.pdf

4) h t tps : / /www.resea rchga te .ne t /p ro f i l e /Col in_Baskin/publ icat ion/228393339_U s i n g _ K i r k p a t r i c k ’ s _ f o u r - l e v e l -evaluation_Model_to_explore_the_effectiveness_of_collaborative_online_group_work/links/0 c 9 6 0 5 1 c 0 f d 6 3 1 a d c 0 0 0 0 0 0 0 / U s i n g -Kirkpatricks-four-level-evaluation-Model-to-explore-the-effectiveness-of-collaborative-online-group-work.pdf

5) https://www.bharatpetroleum.com/images/files/Sustainability%20Report%202017-2018.pdf

6) https://www.bharatpetroleum.com/index.aspx

7) https://www.ibef.org/industry/oil-gas-india.aspx

END TO END SCM MODEL FOR DOMESTIC RETAIL BUSINESS IN FRESH FRUIT & VEGETABLESCATEGORY OF SAHYADRI FARMS



End to End SCM Model for Domestic Retail Business in Fresh Fruit &Vegetables Category of Sahyadri Farms

* Ankush Sharma, Gaurav Sharma, Shagun Agarwal and Dr. Aparna Hawaldar

* Ankush Sharma [email protected]* Gaurav Sharma [email protected]* Shagun Agarwal [email protected]* Dr. Aparna Hawaldar Institute of Management Christ University (Deemed to be University) Bengaluru

AbstractS.F.P.C. Ltd., one of the largest exporter of grapes, incorporated S.A.R. Ltd. as subsidiary for domesticgrowth, is now facing issues in field of SCM model as business is highly dependent on SCM efficiencies.Such challenges are both external as well as internal, but such challenging dairy model run by cooperativelike GCMMF proves to be establishing an efficient system.

Keywords: CSR, SCM System, Packaging, QR Code

S.W.O.T. ANALYSIS

Strengths• India’s largest exporter of Grapes in entire Asia• Leaders in F&V categories internationally• 13 retail outlets selling fresh and processed

varieties of F&V• Good international and domestic reputation in

Processed Food category.• Incorporated Corporate Social Responsibility in

primary functions of business.• 7000+ farmers with 15000 acers under

cultivation

Weakness• Business associated with Perishable commodity.• Competitors with thriving efficient SCM system.

Opportunities• Market size of around Rupees 5 lakh Crores

annually.• Backed by huge agricultural economical

background contributing 15.87% in total GDP.

Threats• Wide geographical expanse of the country,

amounting to huge logistics cost.• Lack of modern warehouses & cold storage

facilities leading to wastage of about 45% oftotal productions

• Many intermediaries and limited reach tomandis.

• Expensive cold chain management and non-refrigerated transportations reducing margins.

ISSN – 0976-2000

END TO END SCM MODEL FOR DOMESTIC RETAIL BUSINESS IN FRESH FRUIT &VEGETABLES CATEGORY OF SAHYADRI FARMS


CHALLENGES INVOLVED IN FRESH F&VRETAIL & DISTRIBUTIONS LOGISTICS

Seasons & ClimateSeason and climate play a vital role in producing ayield. Most vegetables can be grown at any time ofseason but fruits depend on season like mangoes,strawberries, watermelon etc., are grown in summer.Under changing climatic circumstances cropdisappointments, lack of yields, decrease in qualityand increasing pest and disease problems are normaland they render the vegetable creation unfruitful.The same number of physiological procedures andenzymatic exercises are temperature subordinate,they will be to a great extent affected. Theaccentuation ought to be on the advancement ofcreating frameworks for improved water utilizedproductivity adaptable to the hot and dry condition.The crop management practices like mulching withharvest buildups and plastic mulches help inmoderating soil dampness.

PerishabilityThe countdown for the produce starts as soon asthe vegetation is plucked from the plant or ground.The vegetation starts decaying after 2-3 days andthus the shelf life is very less for any fresh fruit orvegetables. The cells start decomposing and theproduct can get rotten or decayed.

Cold StorageTo increase the shelf life the products are usuallyfrozen to avoid decaying. Thus, they are stored incold storage units. The freezing up of producescauses making up of large ice crystals which whenpresent long term can cause the cell membrane ofthe vegetation to swell up. This decreases the qualityof the product. Hence, Individual Quick Freezingmust be used to avoid making of large ice crystalsand increase shelf life.

Gas Exchange RatePhotosynthesis is the important process of makingcarbohydrates by the plant. It largely depends onthe exchange of gas that take place betweenatmosphere and plant. The atmosphere where plantsare grown must be controlled in order to maintainthe acid concentration of the produce.

Chemical Fertilizers and PesticidesThe chemical concentration of the soil must beoptimum in order to provide the required nutritionto the plant. Now-a-days due to use of chemicalfertilizers and pesticides the soil chemicalconcentration gets changed and this affects thequality of the produce. Thus, the farmers must beeducated about the adverse impact cause by thesechemicals and promote use of natural fertilizers.

PackagingThe way the fruits and vegetables are packagedplays a vital role in maintaining the quality of theproduct. Usually they are transported without anytemperature control, no steady maintenance ofinternal condition and usage of gunny bags. Ifimproper packaging is done then it can causeimbalance in gas exchange, deterioration in outerlayer of fruit or vegetable and cause damage,infiltration of microbes and other harmful bacteria.Thus, these were some product physiological factorswhich provide huge challenge in fresh fruit andvegetable industry.

Proposed End to End SCM ModelTechnology is growing at an exponential rate andthanks to technology like blockchain, supply chainmanagement can be benefitted by over comingproblems faced in the existing model. It reducesthe discrepancies caused by intermediaries likebrokers and agents and help farmers earn the pricethey deserve, decrease transportation cost as less



participants are involved, less manual exchange, fast transaction and transparency between stakeholders(DHL Customer Solutions & Innovation, 2018).

Figure 2.1: Proposed Model

FarmersThe farmers are the primary source of raw material required to make the products. The farmers producethe various fruits and vegetables based on the requirements of SARL. The produce is sorted into 4categories of grade as A+, A-, B+ & B-.

A+ EXPORT A- STATE TO STATE AND OFF-SEASON SUPPLY FOR PROCESSED FOOD AND SALES B+ LOCAL SUPPLY AND PROCESSED FOOD B- LOCAL SUPPLY

Buying CentersThe buying center is a warehouse facility equippedwith grading machine, cold storage and processingunits for collecting the produce from local farms.The produce from the farmers are collected herewhich arrives at the facility using temperature-controlled trucks or mini trucks. The produce issegregated based on grades and processedaccordingly. The produce is then identified basedon which farm it was produced in for trackingpurpose by using QR codes. The goods are thensupplied to distribution centers.

Distribution CentersThe distribution centers are large storage facilityused to collect the goods from various local buyingcenters to provide goods to the market. 70% of A-goods are exported to other Indian states away fromthe local region like East, North and South, the rest30% are stored in cold storage to provide off seasonsupply of products to maintain the steady demand.The B+ are canned or processed food to make jams,pulps or juices are supplied locally or to neighboringstates. Only 25% of B+ is used for export to otherstates. The B- is supplied to local market andretailing shops. The distributor then enters in systemwhere goods are transported and how much time



the good is stored in inventory or whether it isdispatched. This information can be both used bycustomers and customers for trackability (Deloitte,n.d.).

StoresThe distributors then supplies the goods to storesbased on their requirement and demand in themarket. The store can be a retail shop or whole-seller. The stores can then scan the QR codes andcheck for the authenticity and quality of food. Since

a feedforward control system is used the waste isreduced at the initial phase itself.

CustomersThe customers are usually bothered if the productis fresh, brand is genuine or not, and the taste ofthe product. They can get information like where itwas produced, how it was transported and qualitymeasures taken by scanning the QR code with anapplication software. This connects the farm withthe customer.

Figure 2.2 Stakeholders and their benefits from block chain.

SHORT TERM AND LONG TERMSTRATEGIES

Short Term StrategiesAs business is highly effected by cold chain logistic(N. VISWANADHAM, 2016) hence it is importantto forecast demand of the customers, as excesssupply brings additional cost therefore they shouldimplement Efficient Consumer Response strategiesthat aim to get companies across a supply chain towork closely to serve customer better at lower costand improved quality. This can be implemented byrecording the consumer preference of variousproduct offered throughout season and drive demand

strategies from analysing the same.

RFID provide a throughout supply chain visibility,by implementing such technique good can betracked and any irregularities within the goods underlogistics must be reported.

Long Term StrategiesHubs and Spoke Model as described in Figure 1.Should be adapted as only few players are involvedin this type of supply chain model. Farmers,organized retailers, wholesalers and customers arethe partners who involved in this chain. In this typeof model, buying centres, hub and stores (retail



outlets) are operational units of the organized retailers. Small farmers and Contract farmers are the mainsource of supply of F&V in this model.

Figure 1. Supply Chain of Hub and Spoke Model (Haldar, Piali and Pati, 2011)

The organized retailers collect the F&V directlyfrom the farmers to their buying centres and thentransport to their hub which is served by one ormore buying centre and then the F&V are furtherdistributed to their retail outlets. Hub infrequentlybuys small volume of vegetables from the localwholesale market to balance demand supply gap. Aretail store is served by only one hub. Store sellsF&V in retail quantity to the customers as per thedemand. In this model, F&V travel in four phases,namely farmers to buying centres of organizedretailers, buying centre to hubs, from hub to theorganized retail stores and then finally retail outletto the end consumer.

In an effort to solve cold chain challenges Inventorypre-cooling has proven successful in reducing thewear and tear on refrigeration equipment and helpsto guarantee temperature consistency from the timeit is loaded until it is unloaded. Many cold chain

businesses have also installed trailer conditionmonitoring systems that monitor temperatureconditions in real time and send alerts if anyunacceptable temperature variations areencountered. Packaging optimization has alsoproven useful in extending shelf life and improvingproduct condition.

SUGGESTION INVOLVING A SECURE &COST EFFECTIVE REFRIGERATED CHAINDESIGN

To secure a cost effective refrigerated design latesttechnologies should be applied to decrease variablecost, and eliminating the fluctuations in the costtremendously such technologies can be closelyrelated to the process we are trying to implement,technologies suggested my not be applied directlybut closely related technologies can be used.



Milk Chilling Solution by Promethean PowerSystemsPromethean Power Systems designs andmanufactures refrigeration systems for cold-storageand milk chilling applications in off-grid andpartially electrified areas of developing countries.They are based in the United States with atechnology research centre in Boston, and

manufacturing and testing facilities in Pune, India.There products enable customers to reliably storeand preserve perishable food items without requiringthe back-up of a Diesel Generator through “ThermalStorage System “ which converts the Electrical orSolar Energy whenever it is available into ColdEnergy.

Figure 2: How Promethean Power Systems works

REEFER TRANSPORTATION BY CARRIERTRANSICOLD

Carrier Transicold is the division of CarrierCorporation, which specializes in transportrefrigeration. The company started operations inIndia in the year 1994 and are today the leader intransport refrigeration offering the latest technologyproducts to the customers backed by a strong PanIndia service and parts support network. Inresponding to the growing demand in India forreliable and cost-effective cooling units that alsodeliver efficient cold chain protection, Carrier Indialaunched the Citimax™ range of light commercialvehicle and truck refrigeration units at the India

Cold Chain Show 2013 in Mumbai. The Citimaxunits are ideal for LCVs and trucks carrying loadsup to 30 cubic meters.

Advantages• Reduction in contamination/spoilage of the

product.• Increase in product shelf-life• Distributors/dealers and customer receiving the

quality product, as the phase and temperatureof the product are maintained

• Higher airflow (2,220 m3/hr) allows usage withlonger containers

• Designed for high ambient conditions• Compact microprocessor based controller



IMPLEMENTING INFORMATION SYSTEMMODEL

Information which is generated through billing andlogistics performed from framer to consumer shouldbe stored and must be shared under a dataintegration model which will make variousstatistical assumptions on the bases of machinelearning assisting in various decisions regardingFinancial Flow of management, Supply-DemandMatching, Collaborative forecasting throughinformation sharing. As Walmart practices theInformation Science making changes to the retailstore according to various factors which are bothinternal as well as external.

BIBLIOGRAPHY

1. Haldar, Piali and Pati, S. (2011). A Need ForParadigm Shift to Improve Supply ChainManagement of Fruits & Vegetables in India.Asian Journal of Agriculture and RuralDevelopment, 1, 1–20.

2. N.VISWANADHAM. (2016). CAN INDIA BETHE FOOD BASKET FOR THE WORLD?Retrieved from http://coolchain.org/Websites/cca/Blog/1758586/Can_India_be_the_Food_Basket_for_the_World.pdf

3. Deloitte. (n.d.). Continuous interconnectedsupply chain Using Blockchain & Internet-of-Things in supply chain traceability.

4. DHL Customer Solutions & Innovation. (2018).Blockchain in logistics.

A STUDY ON ORGANISED RETAIL SUPPLY CHAIN OF SAHYDRI FARMS, NASHIK



A Study on Organised Retail Supply Chain of Sahydri Farms, Nashik

* Riya Rita and Shreya Hasyagar

* Riya Rita, Email: [email protected]/[email protected]* Shreya Hasyagar, Email : [email protected]. Dalmia Institute of Management Studies and Research, Mumbai

Abstract The present study analyzes the challenges faced by Sahydri Farms Nashik so as to enhance the efficienciesof supply chain of F & V. It strategically compare the traditional and modern SCM model. It also studiesthe practices being followed in other markets. The study identifies the Increased Infrastructure, encouraginglarge scale operations, formation of cooperative groups of farmers and educating farmers about goodfarming practices. It provides a good SCM model to Sahyadri Farms, Nashik.

Keywords: SCM, Fruit & Vegetables, Farmers and Growers, Food Processors, Customers, Hypercity etc.

1. INTRODUCTION

India produces 146 million tons of vegetables (NHBreport, 2011) and the total area under vegetablecultivation is around 8.5 million ha. Potato, tomato,onion, cabbage and brinjal account for around 60%of the total vegetable production in terms ofquantity. India’s annual fruit production is 75 milliontons (NHB report, 2011) and the total area underfruit cultivation is around 6.3 million ha. The majorIndian fruits are mango, banana, citrus fruits, apple,guava, papaya, pineapple and grapes.

Fresh fruits and vegetables play a vital role in Indiancontext and their marketing works as an influencingforce in the economy. Though retailing of freshfruit and vegetables is a low margin business, the

market potential is very large in a country like India.This factor has attracted many corporates into thissector.

Marketing of agricultural produce is different andmore challenging than many industrial productsbecause of the perishability, seasonality andbulkiness. The very nature of small size of landholdings by the farmers, varied climatic conditions,production spread over wide geographical area,mainly in remote villages, diversified consumptionpatterns/habits of the Indian consumers and poorSupply Chain (SC) infrastructure makes marketingfor fruits and vegetables more complicated. At thesame time, Indian consumers demand fresh fruitsand vegetables. Thus SCM plays a crucial role inmarketing fruits and vegetables. Supply Chain

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efficiency not only helps in increased productionand per capita consumption, but also contributes toeconomic development of the country. As a result,SCM throws both challenges and opportunities inmarketing of fruits and vegetables. Efficient SCMin marketing, not only increases the profitabilityand efficiency of retailers, but also adds value todifferent stakeholders like cultivators (farmers),consolidators and consumers.

This study attempts to identify various issuesinvolved in managing supply chain in fruits andvegetables and identify and analyze differentstrategies that can be applied to optimize supplychain in fruits and vegetables. This paper aims toanalyze the business models of vegetable retailersin organized retailing.

2. RESEARCH METHODOLOGY

Entry of organized retail into vegetable marketingin India has impacted the entire spectrum of supplychain practices. Issues like perishability, seasonalityand bulkiness has been the constant problems facedin this supply chain. The business models followedin Indian organized retailing for fruits andvegetables are studied and comparisons are madewith the practices followed in other markets in orderto suggest scope for improvements.

This paper uses case based approach where instead

of relying solely on the knowledge of problemdomain or making association with generalizedrelationships between problem descriptor andconclusion, we will make use of previouslyexperienced knowledge and concrete problemsituations or cases. The problem in one market canbe solved by looking for its solution in anothermarket where similar situation was faced earlier.This methodology will also help in incremental andsustained learning which can again act as solutionif future problem arises.

This research is exploratory and includes researchinstruments like in depth interviews with players inthe organised retailing. Approach will be to findout issues faced in this business, its logisticalprocesses and what instruments they use to tacklethem.

3. LITERATURE REVIEW

Fruits and vegetables supply chain in IndiaTraditional Retail Model (shown in Figure-1) offruit and vegetables is predominantly followed inunorganized retail sector. Players involved in thismodel are commission agents, auctioneers, whole-salers, traditional retailer of all type of formatsfamily run ‘mom and pop’ stores, roadside shops,pavement shops and cart vendors apart from farmersand customers. (Rajkumar, 2010)

Figure 1: Traditional Retail Model of fruits and vegetables retailing



This model carries a number of inefficiencies withit. Cane baskets and jute or gunny bags are used inhandling vegetables. Loading and unloading arecarried out manually. Vegetables are not cleanedand washed of dirt and soil. No sorting, gradingand packaging of any kind is being done. Notemperature controlled storage or warehousing isused across the chain. Information technology andadvanced management techniques are not deployed.Also the distribution of selected commodities inthe traditional market channel involves multipleintermediaries and high cycle times (Reddy, 2009).A large chunk of fresh fruits and vegetables is lost

because of inadequate post-harvest handling andlack of cold storage, processing facilities andconvenient marketing channels (Reddy, 2010). Allthese factors also contribute to quality degradationand higher cost (Veena, 2011).

Though vast majority of urban markets as well asrural markets are being served by traditional groceryretailers, many organized players have also forayedinto fruits and vegetable retailing due to its highpotential. Through this study an attempt has beenmade to understand the practices used by suchorganized players.

Practices being followed in other markets

Figure 2: Supply Chain Model of Developed Economies; Source: Sukvinder Jassi, 2011

The supply chain model followed in most of thedeveloped nations for fruits and vegetables produceis presented in Figure 2. Just after the produce isproduced, it is processed in order to increase itslife. Then it is further transported in the supplychain. Wholesalers or agents buy the produce andsell them either to hospitality or catering service orto retailers. These retailers or hospitality servicescan also buy directly after the processing is done(Sukvinder Jassi, 2011).

Some factors which play a major role in supply

chain in these markets are given below:

1. There is a contractual agreement betweenfarmers and buyers which enable farmers toenter the supply chain network. In absence ofthis agreement, farmers will not haveinformation about the prevalent market demand,price and other conditions. This agreementenables proper flow of market information tofarmers, they receive the right price, consistencyof supply and quality is maintained.



Some challenges faced by different constituents in this sector are presented below:

2. Immediately after the harvest, fruits andvegetables are processed which is termed aspre-cooling. This is done in order to increaselife of fruits and vegetables. In the absence ofcontract agreement this is not possible, as smallfarmers do not have capacity to do theprocessing.

3. The backbone of this supply chain is theavailability of excellent cold transport system.This enables wastage free transportation of fruitsand vegetables to long distances.

4. Packaging is done in such a way that there isless pressure on fruits and vegetables whichagain ensures long life.

5. Large capacities of cold storage is available ateach stage where-ever storage is required.

6. It is also observed that small farmers actcollectively by forming groups which enablesthem to enter the supply chain network. Smallfarmers acting individually will not be able tocater the huge demand.

Above observations are made after looking tomodels followed in developed nations. Thesemodels are prevalent in many western countries aswell as European countries (Viorica Gavrila, 2009).The food consumption pattern followed by peoplestaying in these regions is altogether different fromwhat is followed in India. People in India want toconsume fresh food whereas in western region,people mainly consume frozen food. This is mainlydue to climatic conditions prevalent in thosecountries. Hence the supply chain followed in thosecountries changes as per the consumer demand,consumption pattern and climatic conditions.



If we consider countries like China and Japan (FreshFood in Japan and China; Euromonitor Inter-national, 2011), people mainly consume sea foodand meat and consumption of green fresh vegetablesis comparatively less and consequently, the supplychain model is different. Thailand has similarclimatic condition as India and food consumptionpattern is also similar. The supply chain in fruitsand vegetables is better developed in Thailand ascompared to India. Thus we analyzed the fresh fruitsand vegetables supply chain in Thailand and triedto analyze its functioning (Srimanee & Routray,2012).

Three Case StudiesThe authors visited three modern retail outletssituated at Banneghatta Road, Bangalore and haddiscussion with their managers in order tounderstand and analyze various aspects ofprocurement of fresh vegetables and entire supplychain. Following section provide the summary ofthose discussions.

Benison IndiaBenison India is a Hyper-Store format retailing storein Bangalore. It is similar format as Reliance Mart.Benison store has separate section for their Fruits& Vegetables customers. Benison has outsourcedtheir fruits and vegetables section to third partywho handles this section entirely. Benison only takesrent from this third party for using their space.

Third party procures fruits and vegetables from thenearby market (K R market in Bangalore). Thisactivity is done on daily basis. Quantity to beprocured is decided keeping various factors suchas Day of week (Saturday and Sunday has

maximum sale) Season of the year (Winter season sales are

higher as compared to summer) Festivals (During festivals, like Diwali, Dushera,

sale volumes are higher)

There is no particular vendor associated in this andfruits and vegetables are directly procured from themandi by the third party middlemen on a dailybasis. The purchases are made from whosoeveroffers better prices on that day while meeting thequality standards.

Since the third party middlemen purchase fruitsand vegetables directly, quality is checked duringpurchase and no quality check is again done insidethe store. There is no storage facility for these fruitsand vegetables and fresh vegetables are directlyplaced on the shelves. There are no chillers andrefrigerators inside the store, so there is lot ofwastage. There is no visible effort inside the storeto reduce the waste.

HypercityHypercity is the Hyper-Store format retail chain inIndia. It was found that it procures fruit andvegetables from three different vendors. Sourcingis done internationally for some exotic fruits. Orderswith vendors are placed daily and received early inthe morning to ensure freshness. These vendorsprocure vegetables from local mandi every morningand supply them to the other Hypercity store situatedin Bangalore. They have their fixed suppliers forspecific type of vegetables. Sometimes they buyfrom the agents as well those who bring vegetablesfrom villages to the mandi.

These vendors have small storage facilities whicharen’t refrigerated and thus wastage rates are high.The wastage further increases during heavy rains,especially in the case of leafy vegetables. Hypercitystore has its own refrigerated storage but its capacity



is rather limited. Transportation cost is borne byvendors while packaging cost and other costs (ifany) are borne by the store.

Reliance Fresh Reliance uses various methods forsourcing of fresh fruits and vegetables: local farmers(direct sourcing, Mandi), Inter-state movement,national sourcing and international sourcing.

In its direct sourcing route, farmers transportvegetables from farming location to the buyingcenters (also known as collection centers). Smallfarmers and contract farmers are the primary sourceof supply of vegetables and constitute 80% of thesourcing volume.

Vegetables are transported from buying centers todistribution center (or City processing centers) inboth temperature-conditioned and unconditionedtrucks. A distribution centre is served by one ormore buying centre and a buying centre serves oneor more distribution centre. Vegetables are cleanedand then sorting and grading is done at thedistribution centre. Distribution centre also buyssmall volume of vegetables from the local wholesalemarket (mandi) to balance demand supply gapwhich constitute 20% of the entire sourcing volume.Some exotic fruits are sourced internationally andconstitute the rest 20%.

Fresh vegetables are then transported fromdistribution centre to stores in small trucks. A storeis served by only one distribution centre.

To tackle the issues of perishability and seasonalityof fruits and vegetables, Reliance has adopted avery different approach. They work closely withthe farmers and help them in crop planning. Forexample, if Reliance estimates that there will be ademand of 3000 tonnes for cauliflower in Karnataka

in the month of May, they would inform the farmersabout this opportunity. They will help farmers byproviding information about fertilizers, pesticidesand irrigation techniques. They will also helpfarmers in getting good quality seeds which can besown even in summer months. Reliance maintainsclose contact with various seed/fertilizers compa-nies.

Other waste reduction measures adopted byReliance include pre-cooling of harvest, better post-harvest handling (less number of human touches/contacts), and special type of packaging for softproducts. Reliance has its own patented packagingprocess which ensures less wastage during handlingand transport. They also focus on training of staffand use cold-chain for interstate movement of fruitsand vegetables.

With the help of above measures, they have beenable to reduce the wastage levels significantly.Wastage levels were in the range of 25-30% in thechain from collection centre to retail stores whenReliance-Fresh started operations. The currentwastage levels in the entire chain i.e. from farm toretail stores are in the range of 7-8%. Most of thewastage occurs in the farming stage itself. SinceReliance has stringent quality standards forprocurement, wastage at later stages is very low(maximum 2-3%).

Above figures are comparable to many developedeconomies where better infrastructure facilities likemechanical grading of vegetables, sophisticated coldchains etc. are in place. So what makes thisachievement even more important is the fact thatReliance has done this without spending much ininfrastructure. This has helped Reliance in achievinghigher net margins and increased profitability.



According to Reliance manager, the reason behindthis success is Reliance’s continuous quest formarginal improvement. They keep on devising newand innovative ways of wastage reduction. Currentlysome of top management personnel are directlyinvolved in an exercise where they are continuously

trying to achieve better wastage reduction resultsthrough better post-harvest handling of ripemangoes.

Figure 4 presents a summarized representation ofthe entire supply chain of fruits and vegetablesadopted by the above three retailers.

Figure 4: Organised Retail Supply Chain in India



4. ANALYSIS AND COMPARISON

The Benison store offers same benefit as other hyperstores, but the model for fruits and vegetables whichis being currently followed does not seem to bescalable to larger levels. The store is able to caterto the needs of the customers and is runningsuccessfully for past 38 months. There is no effortto enhance the capability and capacity of the thirdparty who is running the store and there is noprogress in terms of offerings in this store in fruitsand vegetables section. No exotic fruits are kept. Itoffers marginally better quality than that oftraditional retailers because vegetables are kept atlower temperature inside store.

There is no vendor /seller base from where fruitsand vegetables are procured and so constant supplywith same quality is always an issue. This can beone of the hindrances for expansion. There is nointeraction with farmers/producers and consequentlythe rate at which fruits and vegetables are boughtis same as the market rate. Similar to the traditionalmodel, it is highly dependent on wholesale marketfor the supply. If tie-ups with farmers can be done,there are chances that they might improve on themargins.

The model used by Hypercity is similar to that ofBenison except that instead of directly sourcingfrom wholesale market they source from vendors.Absence of cold storage facilities, lack of goodtransportation/packaging and poor handling ofvegetables by vendors limit the shelf life ofproducts. It is difficult for retailers like Hypercityto adopt a model involving direct sourcing fromfarmers because of their smaller number of stores.While Reliance has multiple stores, Hypercity hasonly two stores operating in Bangalore.

At present, several other organized retailersincluding Spencer’s Retail and Food Bazaar arealso using a model similar to the one used byReliance-Fresh (Rajkumar, 2010). But whatdifferentiates Reliance from these retailers is itssignificantly high share of direct sourcing, lessdependency on wholesale market and supply linkbetween distribution centres. This model is basedon its core growth strategy of backward integrationand progressing towards building an entire valuechain starting from the farmers to the endconsumers.

5. CONCLUSIONS

Based on the analysis, we observed a definite scopeof improvement in Indian practices of SCM of freshfruit and vegetables. In India, infrastructure facilitiessuch as roads are not developed in all regions ofthe country. Hence the transportation industry isnot very efficient. The country has diverse climaticconditions and hence during transportation, majorityof fruits and vegetables gets deteriorated due todifference in temperatures. Hence there is utmostneed of cold transport system which will maintainthe temperature of fruits and vegetables at constanttemperature. Small scale farmers are still exploitedby middlemen and farmers do not get correct pictureof the market and consumer demand. Farmers cancome together and form co-operative societies/associations so that even a small farmer will beable to sell his produce and get protection fromexploitation by middlemen. These associations cantie up with big retailers ensuring good margins.

Contractual agreement will help both the parties;farmers will get correct market information, retailerscan train the farmers in their farming techniques inorder to increase productivity, retailers will get



consistent supply of good quality fruits andvegetables and they don’t have to go in for huntingin mandis for their supply (Aiying Rong, 2011).The retailers can afford to have good cold storagefacilities thus reducing the wastage.

Based on the analysis, the following recommenda-tions are made for modern retailers operating inIndia as well as government.

• Increased Infrastructure: Retailers need to focuson better transport and cold-chain systems to makemovement of vegetables across distribution centreslocated in different states possible. It would thusreduce dependency on wholesale markets.

• Encouraging large scale operations: Morenumber of stores in a city makes it economicallyviable to have a distribution centre catering to them.This in turn would encourage direct sourcing fromfarmers and eliminate unnecessary intermediaries.

• Formation of cooperative groups of farmers:This would provide farmers a higher bargainingpower due to increased collective volume. Thisprocess should be initiated by the government.Retailers could form contractual agreements withcooperatives groups. This would ensure a disruptionless supply for retailers and higher prices forfarmers.

• Educating farmers about good farmingpractices: Highest amount of waste in fruits andvegetables supply chain occurs at farming stages.Traditional cropping patterns are prevalent in mostparts of India. For example, bottle guard is grownon the ground in many parts. If instead it is grownon Pandals, it would increase the productivity aswell as quality of the product and farmers wouldget better prices for it.

A STUDY ON END TO END SCM MODEL COVERING FARM HARVEST TO LAST MILE CONNECTIVITYWITH RESPECT TO SAHYADRI FARM, NASHIK



A Study on End to End SCM Model Covering Farm Harvest toLast Mile Connectivity with Respect to Sahyadri Farm, Nashik

* Mayuri Rane and Diksha Shetty

* Mayuri Rane and Diksha Shetty, Thakur Institute of Management Studies and Research, MumbaiEmail: [email protected]; [email protected]

AbstractThe present case solutions highlights the practical challenges involved in Fresh F&V retail & distributionlogistics, considering distinct product physiologies. It study unorganized trade of business, less attention topost-harvest and marketing initiatives, the art of inventory management also focuses on horizontal expansionrather than vertical. It provides the solution as Agro Smart-Sahyadri Wholesale Market Platform, CropStage Monitoring, Sahyadri ONLINE Farmer’s Academy- Resource. It Suggests solutions involving a secure& cost effective refrigerated chain design that can help bring down the costs by 4-5% from current 12-15%as experienced by SARL.

Keywords: F & V, SCM, Logistics, Crop Stage Monitoring, SARL.

Q1. Study & analyse the practical challengesinvolved in Fresh F&V retail & distributionlogistics, considering distinct productphysiologies.

Solution:

1. Unorganised Trade of Business:The fruits & vegetable (F&V) supply chain istypically complex and complicated. More thanthe transportation and logistics, there are otherfactors which influences the volatility in supplychain management. The industry comprises oflargely unorganised trade to an extent of 99%.The obvious question is why organised playersshy away from this industry. The main reason

for this could be consumer preference. Now ina country like India, price variability is a criticalfactor and frozen fruits and vegetables are onlypreferred when the prices of fresh vegetablesare high; as long as the fresh is available, frozenhas little scope of preference. Individuals mightcut the quantity to adjust the budget but stillthey will not replace it with frozen. Also, theconsumers here are more habituated in buyingF & V from local vendor rather than a grocerystore.

2. Less attention to Post-harvest and MarketingInitiatives:Farmers are usually concerned with thecultivation and harvesting of crops and do not

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understand the right value of their produce asthey do a very little on post-harvest managementof sorting, grading & packing. There is alsomatter of standardisation of packing which isprevailing across the country inclusive of themajor fruits and vegetables. Most of thegovernment initiatives are directed towardscreating production efficient technology andvery little on post-harvest and marketinginitiatives. Govt. needs to direct more amountof investments on the marketing of the goodsproduced similar to Washington apples. It alsohas to regulate on cropping area for betteravailability of fresh produce for the consumersand better price realisation for farmers.

3. Lacking in Mastering the Art of InventoryManagement:India lacks behind in providing infrastructurefor the inventory management. Having aninventory led model has obvious advantages likegetting absolute authority over the products inthe warehouses and their movement, howeverrent of such storage warehouses with coldstorage facility and maintenance of the excessinventory can be very cumbersome.

4. More Focus on Horizontal Expansion ratherthan Vertical:F &V business focus more on expanding theirbusinesses in as many cities as possible and notmuch on expanding their business model thatis by integrating backward and forward businesswhich also acts as major roadblock fordevelopment of this industry.



Broken Links in Agricultural Supply Chain in India

Indian Average Cold Chain Per Warehouse Capacity Way Lower Compared to Global Average

Q2. Propose an End to end SCM model covering farm harvest to last mile connectivity.

Solution:



Q3. Draw a short term & long term strategy onhow SARL can leverage technology & latest costeconomizing models in SCM to bring financialviability to the entire exercise & support scalingup of operations, eventually to secure a pan Indiapresence.

Solution:1) Agro Smart: -Sahyadri Wholesale Market

Platform: Registration of different stakeholders like

farmers, traders, traders licensing andmarketplace configuration

Online SMS Gateway Integration Module -Market place web portal, inward/outward andmeetings and scheduling

IN Gate entry - Weighment process and onlineauction process

Price Declaration - Cess assessment, farmerreceipt, out gate entry and rate publishing

Card Management Software – online paymentmodule.

2) Crop Stage Monitoring:The initiative facilitates independent cropmonitoring and field visits during thedevelopment stage with pre-harvest measure-ments and harvest monitoring. Crop stagemonitoring service embraces field visits andqualitative and quantitative assessment. Thesystem helps in undertaking initial survey toevaluate the factors that may influenceproductivity, creating clear and conclusive finalreports to facilitate decision-making, monitorcrop development and also track the activitiesrelating to harvest and the receipt of the cropinto the storage and/or processing units.

3) Sahyadri ONLINE Farmer’s Academy-Resource:The “Sahyadri Online Farmers Academy” canbe securely accessed through the mobile deviceby the farmer & other stakeholders to haveaccess to information made available throughthe platform. Videos of inputs from Sahyadriteam of experts and International Experts willbe made available to the farmers through theplatform at their own convenience, place andtime.

4) Farm to Fork Traceability:The initiative helps in tracking the productsduring the delivery of the crop to the firststorage/processing point, as follows:

Confirmation of receipt of the products at thestorage and/or processing units

Comparison between received and estimatedproduction output

Verification of possible product deviations Creation of reports containing a total receipt of

products from the areas being monitored

Q4. Suggest solutions involving a secure & costeffective refrigerated chain design that can helpbring down the costs by 4-5% from current 12-15% as experienced by SARL.

Solution:

In food science, we know that the main factors inquality degradation of food are time andtemperature, which are without doubt linked toproduction and distribution part of the supply chain.Therefore, understanding a way to successfullyintegrate food quality upgradation in production anddistribution planning is very important.



Source: http://ccm.ytally.com/fileadmin/user_upload/downloads/4_Akkerman_CCM2008_01.pdf

REFERENCES

1. https://www.alphainvesco.com/blog/4458-2/

2. http://ccm.ytally.com/fileadmin/user_upload/downloads/4_Akkerman_CCM2008_01.pdf

3. https://in.thehackerstreet.com/challenges-online-grocery-startups/

4. https://www.oceasoft.com/blog/5-biggest-challenges-of-food-cold-chain-management

ENHANCING SUPPLY CHAIN EFFICIENCIES OF DOMESTIC RETAIL BUSINESS IN FRESH FRUITAND VEGETABLES



Enhancing Supply Chain Efficiencies of Domestic Retail Business inFresh Fruit and Vegetables

* Shubham Mawande, Alice Singh and Pushkar Wakekar

* Shubham Mawande [email protected]* Alice Singh [email protected]* Pushkar Wakekar [email protected] Education Society’s Institute of Management Studies and Research, Mumbai

AbstractThe present case examines the to study and analyse the practical challenges involved in Fresh Fruit andVegetables retail & distribution, logistics considering product physiologies. It also proposes an End to endSCM model covering farm harvest to last mile connectivity. It sheds lights on short term & long termstrategy on how SARL can leverage technology & latest cost economizing models in SCM to bring financialviability to the entire exercise & support scaling up of operations, eventually to secure a pan India presence.

Keywords: SCM, Strategy, SARL, Financial viability

Q1. Study & analyse the practical challengesinvolved in Fresh F&V retail & distributionlogistics, considering distinct productphysiologies

Answer:

Cold Storage IssuesLack of cold chain facilities, capacity of cold chainis very limited. It has become difficult for thefarmers and businessman to do their business inan effective manner and the returns which theyshould actually receive. There is less of Fruit andvegetables that causes loss of revenue for farmers,distributors, retailers.

Fragmentation IssuesThe income which is supposed to be received byfarmers are all taken by large no. Of localdistributors/ retailers/intermediaries on differentlevel. The farmers get negligible amount of moneywhich is a kind of loss making proposition forfarmers.

Integration IssuesThere are various gaps between the farmers,distributors, retailers. Also, there are gaps betweenindustries, government and marketing channels.There are also no processing units where farmerscan connect. In short, there is lack of backwardand forward integration.

ISSN – 0976-2000



Infrastructure IssuesInfrastructure is the main factor in the supply chainof agricultural products which leads to high amountof losses. For example: roads, inefficient, incapableand unaffordable warehousing,

Packaging IssuesPackaging plays a major role to supply the freshproduce to the end users. Transportation fromwarehouses to buyers takes more time because ofinfrastructures. Taking care of packaging keepingin mind about the cost plus environment friendlypackaging is the major challenge.

Technological IssuesTechnological issues like old processing machineriesusing pesticides to preserve Fruit and vegetables iscostlier and slow. Also the new technology issomething which all the farmers or distributors can’tafford advancement is quiet a big challenge.

Awareness amongst FarmersIndian farmers are not equipped with adequateknowledge to enhance the productivity and usestraditional methods. Lack of knowledge andawareness amongst the farmers the supply chain ofF&V cannot be efficient, because farmers are themain source of the fresh produce.

Quality IssuesProper supply chain can be maintained by goodquality of Fruit and vegetable as the quality ofproduce prevents the shelf life of produce and itprevents from deteriorating the quality. There is alack of quality standards, proper hygiene and safetystandards, which becomes a big challenge again.

Financial IssuesFarmers get only 25 % of the total consumer price.There are lack of transparencies in pricing at allMandis in India due to which farmer don’t getproper returns.

Q 2. Propose an End to end SCM model covering farm harvest to last mile connectivity.

Fig. 1: End to End Supply Chain model



Answer:In this model, we can have group of farmers comingtogether, considering village or taluka level. AQuality check will happen at the source and thenthe material can be dispatched to a nearby Sahyadrifacility in crates with partitions. At the Sahyadrifacility cleaning and packing operations will beperformed. If the F&V’s is not to be dispatcheddirectly then it can be kept in Cold Storage facility.From the facility fresh fruits and vegetables can bedispatched via speed delivery courier consideringthe perishability. Bulk orders can be dispatched tonearest railway junction (nearest Railway Stationto Mohadi facility is Nashik Road). Transferringgoods through rail network can help reduce thecost of transportation. Once the goods reachdestination it can be dispatched to retail outletsusing cold storage trucks. The Cold Storage truckcan use Phase Change materials and Solar Energyfor reduced consumption of resources (electricalenergy and cost). The fruits and vegetable can bemade available to customer from the retail outlets.

Features of the Model:• Minimum touch to fruits and vegetable thus

minimizing the spoilage due to human touch.First touch, at farmer’s location, second it willbe touched at Sahyadri’s facility when they arepacked, final touch is by the customer whenhe/she opens the package.

• Less damage while transportation as maximumdistance is covered by railways. Reduced costs

• Reduced cost of transportation when transferredin large amount by railways as compared toroadways.

Q3. Draw a short term & long term strategy onhow SARL can leverage technology & latest costeconomizing models in SCM to bring financialviability to the entire exercise & support scaling

up of operations, eventually to secure a pan Indiapresence.

Answer:

Short Term Strategy:Focusing on a familiar region at the start SARLcan start its expansion of business in Maharashtrafor supplying the F & V to shops/ Franchise.

Having a cold storage unit in Mumbai (within ayear) will be beneficial as it is connected to everypart of Maharashtra and we can supply the F&V tothe outlets via trains. This unit built can accommo-date wide range of fruits and vegetables and canmanage them at different temperature as and whenrequired. Maharashtra has 3 main divisionsVidarbha, Marathwada & Western Maharashtrawithin 3 years considering parameters like climaticconditions, connectivity, F&V grown in that areawe can thus design the facility with latest technologyby using the solar energy and PHASE CHANGINGMATERIAL which are cost effective, durable andpollution free. This will establish a network andhelp farmers in that region by forming a group orsociety to contribute and grow phenomenally.

Long Term Strategy:After developing facilities in Maharashtra, we needto focus on adjoining states. Using the model wefollowed in Maharashtra, we can have tie-up’s withother state and supply there as well fromMaharashtra in the beginning and then expandingnetwork in the states we can start our own coldstorage and build a farmers network for supply ofF&V to it. Starting the franchise in the main citiesand supplying them with the PAN India model willhelp farmers from other states to come together. Atstart, we can provide a group of farmers with smallcold storage which can be transferred via trucks



and trains to the facility unit located in that state.Dividing the state into 3 to 4 divisions andunderstanding the geography there we can establishour centres in upcoming 5 to 10 years with a targetof 2 states per year thus increasing our network toPan India locations.

Q 4. Suggest solutions involving a secure & costeffective refrigerated chain design that can helpbring down the costs by 4-5% from current12-15% as experienced by SARL.

Answer:• Use of Phase Change Material based cooling

storage trucks.

At present, Refrigerated Containers (REEFER)are used for transporting fruits and vegetableswhich consume energy from fossil fuel in thevehicles. This increases the cost associated withtransportation as considerable amount of fuel isconsumed for the process of cooling.

The Use of Phase Change Material based coldstorage trucks avoids the use of fossil fuel andconsumes energy from compressors operated byelectricity. Once the PCM molecules are chargedthey help to maintain the temperature of thestorage area around permissible levels for 7-8hours in case of multiple drop location and 11-12 hours in case of one drop location.

Plying these trucks from Sahyadri facilitylocation to nearest railway junction and fromdestination railway station to retailer outlet. Ifthe distance between Farmer group and Sahyadrifacility is less normal closed trucks can be pliedbut if the distance is more PCM based Coldstorage trucks can be used.

Thus there can be good amount of reduction incosts due to use of PCM based cold storagecontainers.

• A small unit of cold storage to be setup invillages where the group of farmers can storetheir F & V. The farmers should directly receivethe orders which are in small quantities say upto 2-3 metric tonne. An expert should go andcheck the quality at the farms. They should beprovided with trainings of how to pack safely,label them according to the demands from theshops. This will reduce the transportation costtill the centres, sorting out according to therequired quantities and then load them on truckswhich will directly go to the local shops orfranchise as and when required.

• Tie ups with the cold storage facilities of ice-cream suppliers, Milk producing units so thatwe can transport F & V to long range. Someice-creams companies can use fruit pulp or juiceas a raw material to produce ice-creams andstore the pulp for long time. Milk industriescan convert fruit pulp into milkshakes and otherproducts. This will have two benefits there willbe cost reduction in the storage unit and SARLwill sell their products to companies.

A STUDY ON STRATEGY TO LEVERAGE TECHNOLOGY WITH RESPECT TO SAHYDRI



A Study on Strategy to Leverage Technology with Respect to Sahydri

* C. Shiva, Sanchita Gesu and Anubha Tiwari

* C. Shiva, Email: [email protected]* Sanchita Gesu, Email: [email protected]* Anubha Tiwari, Email: [email protected] Institute of Management Research and Development, Mumbai

AbstractThe case study gave insights into F&V Industry of India from the backdrop of Sahyadri Farmer ProducerCompany Ltd (SFPCL), its business model transiting from Agriculture export based model internationallyto Agri-retail model domestically with a range of products from Fruits and Vegetables to Processed andSemi-Processed FMCG products. As the company diversified, the need for an associated farmer communitybecame more prominent to ensure continuous supply of raw materials to processing units keeping cost andquality as key differentiators from the global competitors. Sahyadri prudently worked with community oflocal farmers creating a state of art infrastructure facilities and assisted them with technical skills, financialsupport, employment opportunities and many other value services. This led to formation of Sahyadri AgroRetail Limited (SARL), with sole objective to tap the potential of F&V domestic market. The nature ofbusiness involving perishable goods demands an effective SCM which would reduce the wastage of producefrom 45% to industry standards and reduce the overall cost of transportation and logistics by 4-5%. In lightof this, we started with primary and secondary research, where we focused to gather challenges faced atfirst mile, during the transit and last mile journey of a farm product. We interviewed farmers and retailersto understand their pain points, researched about the supply chain operations from fork to farm and usingthe findings, we have built a cost effective technology enabled SCM model that will transform the Agrobusiness into a circular economy. This SCM model will enable farmers manage the vital parameters of soilat micronutrient level and retailers with quality assurance through IOT, Crop advisory to farmers andforecasting of market demands to retailers through Artificial Intelligence and transparency of revenueinformation among all the shareholders through Blockchain. We also understood from our findings thatincreased output of perishable food will need a parallel deployment of cold-chain infrastructure to minimizethe wastage of produce. Using Design Thinking approach, we have ideated a clean energy cold chain systemwhich not only maintains the food quality but keeps a check on environment. Along with this, we have alsolisted few suggestions in the business model which will make the adoption of technology seamless therebyallowing paradigm shift from Unit-level approach to System-level approach.

Keywords: FMCG, IOT, SCM, Agro Business, Design Thinking Appraoch

ISSN – 0976-2000



Q1. Study & analyse the practical challengesinvolved in Fresh F&V retail &distributionlogistics, considering distinct productphysiologies

Barriers in the in fresh F&V retail & distributionlogistics considering distinct product physiologieswere identified throughout the perishable produce

food supply chain, from first step (the flow ofproduce from the farm to a local aggregator) to laststep (final haulage of produce from the wholesalemarkets closer to the centres of food demand intowns and cities – to retail chains). In addition,individual challenges of farmers, distributors,retailers and wholesalers were found throughextensive primary and secondary research.

First Step Challenges• There is limited availability of infrastructure andtechnology suitable for first step processes,including:• Limited capacity for storage at farms;• Lack of adequate power supply;• Inadequate knowledge & skills to carry out

processes efficiently

• For many farmers operating at small-scale, theuse of existing warehouses facilities incurs high

costs. Despite some government activity, thereis an overall lack of policy support to facilitatefirst these processes.

• Lack of understanding of businesses Market datadoes not reach farmers, preventing them frommaximizing the profit from their produce. Iffarmers could access timely information ofmarket demand and pricing they could insteadstagger harvesting and release produce to themarket at stabilized/assured pricing



Second Step Challenges:• There is a poor understanding among farmers

and policy makers of the techno-economics ofthe supply-chain, from farm to fork, and thebenefits it can bring, in terms of reducing foodproduce losses and maximizing income tofarmers

• Lack of appropriate infrastructure to transport.Furthermore, transportation is dependent onfarm vehicles such as tractor trailers, which areinadequate in maintaining freshness ofhorticultural produce and lead to losses.Conventional refrigerated reefer vehicles arefinancially unaffordable

• Some of the challenges such variabletemperature, poor infrastructure, insufficientstorage, overall cost and quality maintenancealso affect this second step of the supply chain

Final Step Challenges:A lack of appropriate infrastructure and utilizationof tools and also the failure to take full advantageof the potential of new technologies is resulting inbarriers in the last step agriculture supply chains inIndia.• Many businesses which provide logistical

support from warehouses to retail shops are notorganized businesses, which results in haphazardnetwork management

• Even with the advent of e-commerce in India,the logistics process is not fully developed tooptimize supply and demand in the food producevalue-chain

• There is low use, if at all, of IT techniques tooptimize haulage using a hub-and-spoke model

• The equipment used in the transfer of producefrom physical to mobile infrastructure is not

always best suited to handling perishable foodproduce

• There is a lack of space and infrastructure withinretail stores leading to sub-optimal managementand storing of produce.

Q2. Propose an End to end SCM model coveringfarm harvest to last mile connectivity.

After going through the challenges and findings,we analysed that the agriculture sector is in direneed of technological support. With the increasedpenetration of internet and use of smartphones inrural areas, we could leverage the potential andleap frog into a model which uses technology suchas IOT, Artificial Intelligence and Blockchain. WithIndustrial 4.0, we saw these technologies emerginginto agri-sector but with proper dissemination ofsupply chain operations through targeted planningcould fetch the results as desired. Given below arestrategies that we need to adapt during pre-production, production and post-productionwhichfocuses on producers and retailer’s journey fromfirst mile to the last mile.

At ground-0 level, using Internet of things, thefarmers would get the knowledge about soil health,the moisture content, the micronutrient landscapeand basis of that, they could ensure to grow theright crop at the right soil. On the other hand, theretailers could benefit with good quality cropproduce.

At ground-1 level, using Artificial Intelligence, datapatterns of the market supply and demand dynamicswill help in providing crop advisory to the farmersand this will ensure to grow the right crop at theright time. The retailer’s uncertainties related tosurplus inventory could be minimised.



Fig. 2: Strategy to leverage technology

Producer Retailer

IOT

AI

BLOCKCHAIN

TRANSPARENCY

INFORMATION

RELIABILITY

Fig. 1: Proposed SCM Model



At ground-2 level, using Blockchain, we coulddeploy a managed traceability solution whichprovides transparency of revenue, location ofproduce in the supply chain and real time alertsagainst mishaps which will ensure the right profitdistribution amongst the stakeholders. The retailerscould be assured of the quality of crops.

The proposed SCM model is an IT enabled networkmodel in which information about the product isaccessible to all via RFID tags. The tag will havethe crucial information such as product type, dateof manufacturing, date of expiry, ambient tempera-ture and other precautionary data. The produce withRFID tags are then sent from factory to “cold chainservice partners” where they use alternative sourceof energy such as Thermal/Solar energy therebyreducing the electricity consumed as well as GHGemissions. We have proposed the use of PhaseChange Materials (PCM) for storage of producefrom farm factory till pack house. The produce isthen received by the retailers thus creating a circulareconomy of trust and transparency between theproducers and retailers.

Q 3. Draw a short term & long term strategy onhow SARL can leverage technology & latest costeconomizing models in SCM to bring financialviability to the entire exercise & support scalingup of operations, eventually to secure a pan Indiapresence.

Short Term Strategy:1. Assessment of Agriculture’s Impact on

Sustainability in Emerging Markets

This phase involves identification of sustainabilityrisks and social risks experienced by agriculturalstakeholders in emerging markets. For this it isessential to conduct primary research by interview-

ing stakeholders in agricultural market andsecondary research using online sources.

The primary goal is to understand the agriculturerelated sustainability challenges that existed inemerging market and identifying opportunities forwhy they can be addressed.

2. Primary and Secondary Research onEmerging Technologies in Agriculture

This phase involves identifying the ongoingtechnological solutions to the insights received fromstep1 and identify current practices that are botheffective and ineffective from a sustainability anda value creation perspective. Intention is to isolatetechnologies that would produce value for bothcompanies and small farm holders. Also focus is toroll out technologies that has the best chance to getimplemented. We conducted this research throughboth primary and secondary sources and evaluatedthe impact on emerging markets through additionalsecondary research.

3. Analysing Business Model

This phase involves understanding the businessmodel of Sahyadri Agro Retail Limited (SARL).We can analyse the business model with the helpof Business Model canvas (BMC). It will allow thecompact visualization of the nine basic areas of acompany on just one page. Only through thisintegrative approach. All areas of the company can be identified at a

glance, The boundaries between the individual silos in

a company dissolve, A comprehensive understanding of the main

drivers of entrepreneurial activity is created, The interrelationships, cause-effect relationships



and weak points of the company’s own businessmodel become clear and understandable.

Long Rerm Strategy:

1. Gemba Approach:

In the practice of Lean and Six Sigma, it meanstaking the time to watch how a process is done andtalking with those who do the job. This includesoftware engineering, marketing operations andcustomer service centers – wherever the actualaction that is the focus of a project is taking place.With this approach we can identify the bottle necksteps and identify the process that needs automationand involve technological interventions.

2. Recommendations for Improved Implemen-tation of Technologies that Improve Sustaina-bility in Agricultural Supply Chains:

This phase of the project involved combininginsights from the different phases discussed earlierto produce recommendations for agriculturalstakeholders in emerging markets. We attempted toleverage our multidisciplinary perspective to offerrecommendations that will ideally drive positivechange and help multi-nationals, NGOs, smallholderfarmers, local governments and others to findcommon goals and invest in technologies that willdrive sustainability in the global agriculture industry

3. Pilot Testing:

This testing verifies a component of the system orthe entire system under a real-time operatingcondition. It verifies the major functionality of thesystem before going into production.

Pilot testing is concerned with installing a systemon a customer site (or a user simulated environment)for testing against continuous and regular use. Afterpilot test capture the results and see if the resultsare good enough to go ahead with the changes.

4. Implementing the New Tech-Model:

This phase involves rolling out the changes afterthe pilot testing. And then involving maintenanceteam to support for a month so as the ease ofimplementation is of utmost priority.

Q 4. Suggest solutions involving a secure & costeffective refrigerated chain design that can helpbring down the costs by 4-5% from current 12-15% as experienced by SARL.

An efficient cold chain design should be integrative,transparent and sustainable but on the same hand,should meet the economies of scale. The currentrefrigerated chain designs, especially the larger ones,are running on fossil fuel generated electricity anddiesel both having high operational and maintenancecost. They not only affect the balance sheet of thecompany but also are greater risks to environment.With the current rise in price of oil, this 12-15% isexpected to grow in coming years even if thecompany decides not to expand. Also, it has beennoticed that major chunk of waste is generatedduring the transit process because of the inefficacyof the pack houses and cold storage. From oursecondary research, we got to know that Indiabenefits only 4% from the cold chain as comparedto 70% in UK. Hence, there is a wide scope ofimprovement just by making few changes as listedbelow: Phase Change Materials based solar/thermal

powered pack houses, reefer trucks and otherequipment.



The heat produced from the refrigerators couldbe stored and used for cleaning and washingpurposes.

Using electric trucks which runs on clean energyand produces zero GHG. Studies have shownthat electric trucks are more economical thanICE vehicles in longer run.

Using Cold chain as a service as opposed toconsidering it a part of operations. Many newcompanies are coming up with end to end coldchain platform which will take the produce fromthe farm market to the retail house using theirown technologically enabled pack houses, coldrooms, reefer trucks and other equipment.

Changes in architectural designs such as shadingfor insulation can be used in cold rooms.

Energy services companies, equipment leasingcompanies and aggregators based on the pay asper use model and the cost will incur for thenumber of hours of operations and kilometrestravelled during the transit phase.

Cross selling the hot water and cooling toancillary industries.

Collecting the waste produce and converting itinto compost and fertilisers.

Ammonia based VCC systems can be used asopposed to CFCs as ammonia is a naturalrefrigerant and they have zero global warmingpotential.

PRIMARY RESEARCH FOR FARMERS

Objective: To understand the level of satisfactionof the farmers with the current supply chain scenarioin agriculture business and understanding their painpoints.

Mode of research: Questionnaire and Interview

Respondents: Farmers in Jharkhand, Bihar,

Maharashtra and Madhya Pradesh

Number of responses: 18



PRIMARY RESEARCH FOR RETAILERS:

Objective: To understand the perspective of SCMin retailer’s side of agri business and issues facedby them due to current SCM model.

Mode of research: InterviewsRespondents: Retailers in and around MumbaiNumber of responses: 5




Volume X Issue 2 September 2019 C.R.K.I.M.R. ISSN – 0976-200088 .

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