MSRF RIMS journal2 July-Dec 2016

ISSN 2455–1449 Vol.2(1I), July - December 2016

RIMS JOURNAL OF MANAGEMENT NEW COMPANIES ACT-2013: ISSUES AND IMPLICATIONS Dr. P. Paramashivaiah

PROBLEMS AND PROSPECTS OF E-BANKING SERVICES - AN EMPIRICAL STUDY IN MYSORE DISTRICT Dr. Ashoka M L and Vinay S

SYNERGIZING FUNCTIONAL EFFECTIVENESS AND ORGANIZATIONAL PERFORMANCE FOR ECONOMIC GROWTH – THE ROLE OF THE LEADER Mr. Prasad. L and Dr. Noor Firdoos Jahan

FUTURE OF DIGITAL MARKETING AND ITS ROLE IN E-COMMERCE Ankur Chauhan

A

GOLDEN AGE FOR WOMEN ENTREPRENEURS HAS BEGUN...

Ranjitha S N

M S RAMAIAH FOUNDATION RAMAIAH INSTITUTE OF MANAGEMENT STUDIES RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES Evolving Leaders

RIMS Journal of Management Vol.2(1I), July - December 2016

Chief Patron Dr.M.R.Pattabhiram Director, RIMS Editor-in-Chief Prof. Arun Chandra Mudhol Dean, RIMS Editorial Advisory Board Dr. Ramesh, Dean, Mount Carmel College,Bangalore

Dr.Y.Rajaram Chief Advisor, RIMS, Bangalore.

Dr. U. N. Lakshman, Adjunct Faculty, RIMS, Bangalore

Dr. Rejimon Thomas Registrar, RIMS, Bangalore.

Mr. Anil B. Gowda, Professor, RIMS, Bangalore

Prof. Balaji T V, Adjunct Faculty , RIMS, Bangalore Editor

Dr. M. Swapna, Assistant Professor, RIMS, Bangalore RIMS JOURNAL OF MANAGEMENT RIMS Journal of Management is an ofďŹ cial publication of Ramaiah Institute of Management Studies / Sciences. It is a bi-annual journal published in January and July every year. The journal is committed to rapidly delivering high-quality research ďŹ ndings and results to the world. All manuscripts are subject to a double blind peer review by the members of the editorial board who are noted experts in the appropriate subject area. The accountability of the ideas, information, data and analysis presented by the authors rests on the authors.

RIMS Journal of Management Vol.2(1I), July - December 2016

RAMAIAH INSTITUTE OF MANAGEMENT STUDIES / SCIENCES (RIMS) RAMAIAH INSTITUTE OF MANAGEMENT STUDIES/SCIENCES (RIMS) is an institution of higher education dedicated to the cause of business education. The institution is a part of the M S RAMAIAH Foundation, a charitable trust that has the avowed objective of providing exemplary service in all of its offerings.

Dr M S RAMAIAH, the founder of the MSR Group of institutions, was a pioneer in the educational sector in South India. A visionary leader who rose from humble beginnings to being one of the most respected figures in the field of higher education, he saw education as a noble way to serve society. M S RAMAIAH Institute of Technology was founded in 1962 and is today considered to be one of the best technology institutions in the country that attracts students from different parts of the world. Over the years, the legendary founder forayed into medicine, pharmacy, law, science, arts and dentistry. Today, the group is one of the largest of its kind in the country, with most of its programs having been given the autonomy to design and deliver the best because of their excellent track record.

Dr. M R PATTABHIRAM, the Managing Trustee of M S RAMAIAH FOUNDATION and Founding Director of RIMS is a chip off the old block. A deeply spiritual and ethical leader, he is well-known for his impeccable integrity and the ability to achieve results without cutting corners. Not surprisingly, besides his many qualifications at the graduate level, he has devoted his doctoral studies to an analysis of Mahatma Gandhi's ideas and ideals in terms of their profound relevance to the current world. Ever anxious to look beyond the ordinary and the local, he had an abiding passion for creating a management institution that would one day be counted among the best in the world. Thus was born RAMAIAH INSTITUTE OF MANAGEMENT STUDIES/SCIENCES (RIMS).

Within a short span of time, RIMS has established itself as an innovative B-School with a deep and uncompromising attitude towards quality as can be gauged from the following:  The FIRST and ONLY B-School in India to have earned two CHEA (Council for Higher

Education Accreditation, USA) recognized Accreditations for its PGPM and MBA Programs – the accreditations have been granted with commendations by the Accreditation Council for Business Schools and Programs (ACBSP), USA and the International Assembly for Collegiate Business Education (IACBE), USA.  The only B-School to have been awarded the highest STAR AWARD at the National Quality

RIMS Journal of Management Vol.2(1I), July - December 2016

 Education Conference of the American Society for Quality (November 2012) and also the

only B-School in India to have won two Awards of Distinction at the National Quality Education Conference of the American Society for Quality (2010 and 2011)  The only B-School in India to have reached the finals of the International Team Excellence

Awards of the American Society for Quality in two successive years – 2011 and 2012. In 2011, RIMS received the Attendee's Choice Award for “Complex Project” and in 2012 for “Creative Solution / Action”  The youngest B-School in the country to be accorded the highest A++ grading by Business

India, the pioneer in B-School ratings, which has been grading B-Schools since 1982 (October 2011 and November 2012)  The youngest B-School in the country to be ranked by BUSINESS TODAY (October 2012) –

No. 33 in Learning Experience, No. 36 in Future Orientation, and No. 69 Overall.  Ranked No. 70 by MBAUniverse.com (December 2012)  The only B-School in India to have partnered with ASQ India Chapter to conduct innovative

programs on quality in different sectors (IT, Manufacturing, Health Care, Financial Services, and Pharmaceuticals).  The only B-School to have been featured in two Case Studies of the American Society for

Quality Our Value Perspectives Are:  Leadership that has a long-term perspective  Respect for the Individual  Service Orientation  Collaboration and Teamwork  Empowerment  Innovation  Accountability  Inclusive Growth and Progress  Global Outlook  Uncompromising Commitment to Quality and Continuous Improvement  Performance Orientation

New Companies Act-2013: Issues And Implications _______________________________________________________ Dr. P. Paramashivaiah Professor, Chairman & Dean, Department of Studies and Research in Commerce Tumkur University.

Abstract The existing Companies Act, 1956 was enacted by the Indian Legislature over half-acentury ago. In the ensuing years, much has changed in the nature of businesses and the manner in which they are conducted both domestically and internationally. The Act of 2013 intends to promote self-regulation and has also introduced some progressive concepts like One- Person Company, Small Company, Dormant Company, Egovernance, etc. The concept of Corporate Social Responsibility has also been introduced to encourage a socially, environmentally and ethically responsible behavior by companies. Therefore it is pertinent to understand the key challenges and its implications in the corporate and related arena. This paper is conceptual in nature and highlights the key features and implications of new companies Act 2013. In this paper an attempt has been made to deliberate some of the important thoughts on the newly designed companies legislation.

Keywords: New companies Act, challenges, implications

Introduction The existing Companies Act, 1956 was enacted by the Indian Legislature over half-acentury ago. In the ensuing years, much has changed in the nature of businesses and the manner in which they are conducted both domestically and internationally. The resultant growth and expansion of the Indian economy has led to the development of a complex, diverse and dynamic business environment.

Hence there is a requirement to develop a legislation that is compact, amenable to clear

interpretation, and able to adequately respond to the needs of the ever evolving economic activities and business models of India Inc. – all the while nurturing a positive environment conducive to investment and growth.

During the existence of Companies Act 1956 over the past 57 years, the corporate and business environment has significantly grown and changed. Hence there was a need to revamp the legislation governing companies.

The Companies Act, 2013 (“Act of 2013�)

_______________________________________________________ 1

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ was enacted on 29th August 2013 after President's assent; however, it will come into effect upon the notification by the Central Government. The exposure draft of the rules pertaining to the Act of 2013 is out for public comments very soon. Therefore it is pertinent to understand the key challenges and its implications in the corporate and related arena. This paper is conceptual in nature and highlights the key features and implications of new companies Act 2013. In this paper an attempt has been made to deliberate some of the important thoughts on the newly designed companies legislation.

An Overview: The Act of 2013 is more of a rule-based legislation containing only 470 sections, 7 schedules as against 658 sections and 14 schedules in the companies Act 1956. In 470 sections the word “as may be prescribed” has been used in 336 places. The bill was widely accepted and welcomed by stakeholders, industry bodies, political leaders and consultants. The existing companies Act of 1956 has been amended in not less than 25 times in 57 years with many of its provisions were found to be outdated and inadequate.

The Act of 2013 intends to promote selfregulation and has also introduced some progressive concepts like One- Person Company, Small Company, Dormant Company, E-governance, etc. The concept of Corporate Social Responsibility has also been

i n t r o d u c e d t o e n c o u r a g e a s o c i a l l y, environmentally and ethically responsible behavior by companies.

Further, the Act of 2013 aims at investor protection & transparency by introducing terms like Insider Trading, Price Sensitive Information, Class Action Suits and other additional disclosures, And also is aimed at building a smooth and easy corporate environment along with the new and improved measures of strong investor protection norms and presents a model for other economies with similar characteristics to emulate. It also intends to give greater responsibility to the auditors and to widen their role. A National Company Law Tribunal will also be a reality now and therefore the matters which used to linger in courts for years will be swiftly handled by this dedicated tribunal. Taking cognizance of rapid globalization, provisions for cross-border mergers have been introduced. Merger between small companies, holding – subsidiaries and specified entities can now be done on a fast-track route. So, according to experts' view the intent is towards simplification, which is critical for India to become more competitive on the ease of doing business. Whether this objective is finally delivered will depend on two things – the rules that supplement the Act and what they look like, and the change in attitude towards enforcement. The Act will also mean a transformation of the audit profession in the

_______________________________________________________ 2

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ country; with thousands of listed companies require changing their audit relationships. A significant consolidation can be expected in the profession as a result and significant gains for the firms that have invested in quality and capability over the last decade. Experts believe that auditor rotation doesn't become a sham and this is where audit committees will have a critical role to play to ensure due opportunity that has been provided to multiple service providers to pitch for the work.



  



Some of the corporate governance issues are as follows: 



    

  

At least 1/3 of the board of directors of the listed company shall be independent directors.

Independent directors can serve 2 consecutive terms of five years each on the Board. Their liability shall be limited.

Mandatory internal and secretarial auditing provisions.

Mandatory rotation of auditors.

Limitation of number of companies which can be audited by an auditor.

Elaborate quorum requirements.

Prohibition on insider trading and forward dealing by directors and key management persons.

Uniform financial year from April to March for all companies.

Higher disclosure requirements.

Stringent accountability on directors,

auditors and other professional associated with the company.

Restriction on investment through more than two layers of investment companies.

Mandatory disclosure of interest by directors.

Streamlined procedure and disclosure in respect of related party transactions.

Introduction of voting though electronic participation, meeting through video conferencing.

Requirement that at least one director shall be stayed in India for a total period of not less than 182 days.

Salient Features Of The New Companies Act 2013 Following are some of the salient features of the new Companies Act, 2013: Governance      

At least one woman director At least one Indian resident director Independent director (ID) legislated; role and responsibilities defined Database of IDs to be maintained; may select IDs from this database One-person company permitted unlike minimum two before Maximum directors increased to 15; any additional directors only through Special Resolution

_______________________________________________________ 3

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________    



Maximum 20 directorships per person; maximum 10 public companies Stakeholders Relationship Committee introduced M a nd a to ry a p p o intment o f Key Management Personnel (KMP) Directors responsible for design and operating effectiveness of internal financial controls Significantly enhanced penalties for directors

Financial Statements and Auditors 

 





 

Consolidated financial statements mandatory for all Groups, including Unlisted/ Private companies, with more than one entity; includes associates or joint ventures; Mandatory rotation of audit firm for listed companies post 10 years Financial year for all companies to be March 31 (exception for subsidiaries of foreign entities) Re-casting and re-statement of financial statements can be ordered; Voluntary revision of financial statements for previous periods now permitted Auditor to also report on adequacy of internal financial control system and the operating effectiveness of such controls Increased restrictions on non-audit services provided by Auditors Auditor to be a whistleblower to Central Government, if becomes aware

 



of any fraud The maximum limit of 20 companies per Partner in an Audit firm Prescribed companies to appoint internal auditor; manner, period and reporting to be prescribed by Central Government Significant enhancement of penalties for auditors

Mergers and Restructuring 



 







Restriction on multi layered structures (certain exemptions to foreign acquisitions/ to comply with law) Mergers without Tribunal approval permitted between two small companies or between a holding c o m p a n y a n d i ts w h o l l y- o w n ed subsidiary Merger into a foreign companies introduced Valuation report mandatory along with notice to concerned parties in case of proposed mergers Scheme of compromise or arrangement must be in line with accounting standards; auditors' certificate attesting same needed In case of 'reverse merger' of listed company into unlisted company, the transferor may continue to be unlisted Holding of treasury shares directly or through a Trust, prohibited

_______________________________________________________ 4

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ Other Miscellaneous Provision 











2% of the average net profit of preceding three financial years to be spent annually on Corporate Social Responsibility (CSR) or explain why not; for Companies with net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit more than Rs 5 crore.

Valuations for any property, stocks, shares, goodwill or any other assets, net worth of a company etc. must be performed by a registered valuer.

Class action suits introduced as a remedy for small investors against wrongful acts Establishment of a National Financial Reporting Authority (NFRA), with the objective of monitoring and enforcing compliance of auditing and accounting standards Establishment of vigil mechanism (whistle blowing) in the prescribed manner by every listed company Deposit accepted (including interest due) to be repaid within 1 year from enactment or from due date of such payments, whichever is earlier

Implications of the Companies Bill 

Definition of Control:

AS-21 operates on a rule-based principle of

'control' — control is presumed to exist when either the ownership (directly or indirectly through subsidiaries) of voting power exceeds 50 per cent, or an entity controls the composition of the board of directors in the case of a company or the composition of the governing body in the case of any other enterprise, so as to benefit economically from its activities. This can potentially lead to a situation where a company is a subsidiary of more than one company and, therefore, both would end up consolidating it. Interestingly, the definition of subsidiary in the 2013 Act prescribes that the holding-subsidiary relationship exists when the investor controls a majority of the total share capital of an investee. In other words, whether or not such shares carry voting power (for example, preference shares often do not carry voting rights), they will be counted for determining control. This is a significant departure from existing accounting literature and will require companies to revisit the list of companies that should be consolidated in its financial statements. 

Temporary Control:

AS-21 precludes consolidation of a subsidiary when the control is intended to be temporary, because it was acquired with a view to dispose of it in the near future (ordinarily not more than 12 months, unless a longer period can be justified). The “intention at acquisition” is the deciding factor, which should be welldocumented.

_______________________________________________________ 5

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ 

Uniformity Of Reporting Date:

The financial statements used in consolidation should have the same reporting date. If that is not practical for one or more subsidiaries, there should be adjustments for the effect of significant transactions or other events occurring in between the reporting dates. In any case, the difference in reporting dates should not exceed six months. This presents a significant challenge, especially when a company has acquired subsidiaries overseas, where year ends other than March 31st are common. 

Uniform Accounting Policies

Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If that is not practical, the fact should be disclosed, together with the proportions of the items to which different accounting policies have been applied. This in itself presents a significant challenge, which is greatly enhanced when subsidiaries are in overseas jurisdictions that follow different accounting principles and the local finance teams are not well-versed with Indian generally accepted accounting principles (GAAP). 

Changes in Holdings

A parent company sometimes disposes of a

stake in its subsidiary without losing control.

AS-21 is silent on the related accounting, which can be done either through the Statement of Profit and Loss or directly in equity. Companies with significant relatedparty transactions and balances spend a lot of effort in identifying and eliminating such transactions. Multiple financial reporting platforms in a group of companies add to the woes. 

Accounting Standard and Taxation Issues:

Another issue bothering many tax experts while considering any related-party transactions is that the threshold of ownership is different between I-T Act and the companies Act. Transfer pricing regulations look at 20 per cent or more ownership of voting power, whereas the companies law looks at control of 20 per cent or more of total share capital (including preference share capital.

Therefore, there is an inconsistency between the two to that extent, point out experts.

Provisions relating to consolidated financial statements may also clash with the listing agreement. Under the new Act, companies need to prepare the consolidated statements using the applicable Accounting Standards.

However, under the listing agreement, currently, the listed companies are given the choice of preparing the CFS either by Indian Accounting Standard or under IFRS on a

_______________________________________________________ 6

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ voluntary basis, or decide not to prepare these at all.

As per the new Act, the maximum number of audit assignments undertaken by a chartered accountant cannot exceed 20. However, this Act, unlike the old Act, does not prescribe the types of companies and other assignments, which will be included or excluded for the purpose of calculating this limit. The vagueness will remain till the time MCA and ICAI clarify the combination. ď‚&#x;

Tax Related Implications

The new Act mandates spending for corporate social responsibility (CSR) by companies. However the Central Board of Direct Taxes (CBDT) is still examining the issue of giving tax breaks on CSR spending.

Auditors point out that under Section 135 of the new Act, the CSR committee in a Board shall have at least one independent director.

However, under Section 149(4) and the Rules framed there under, a private company is not required to have an independent director.

This dichotomy needs further clarity from the ministry. On restatement of financial statement, the reported profits of the company are likely to undergo a change, if the restatement relates to a profit and loss item.

This could potentially impact the Minimum Alternate Tax (MAT) calculations of the company. However, the ability of the company to revise its MAT calculations could be

restricted if the tax laws are not suitably amended to permit revision of returns for periods that match the periods for which financial statements can be revised. ď‚&#x;

The Introduction of OPC

The introduction of OPC may change the traditional manner in which the individual or household business functions in the country at present. They will prefer to structure their business in the form of OPC rather than sole proprietorship. Further, it can be extended in respect of creation of wholly owned subsidiaries also. At present a nominal shareholding is allotted to nominees to hold it on behalf of parent company in order to fulfill the requirement of minimum shareholders. It is worth noting that with the recognition of OPC, the corporate veil between the company and the shareholder is further narrowing. One of the challenges will be to regulate the related party transactions and transparency in such companies. ď‚&#x;

Dormant Company

The Bill allows creation of Dormant Company for future projects to hold an asset or intellectual property and has no significant accounting transaction. Certain liberal treatment has been extended to dormant company in respect of certain requirements. It has to be seen how the dormant company is going to evolve in future and whether we are

_______________________________________________________ 7

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ going to have investors ready to purchase shelf companies as it is available in certain offshore tax havens. 

are also essential in order to make these changes more effective. For the investors, the Bill comes as good news for the new law substantially empowers the shareholders.

Merger and Restructuring 

One of the main problems for setting up a business in India is the restriction on merger of an Indian company with offshore companies.

The Bill permits such cross border mergers with certain specified jurisdiction. The Bill also liberalises intergroup merger and restructuring. The corporate world has been demanding these changes for a long time as it expedites mergers and restructuring. 

Increase in Number of Members

The maximum number of members in a private company has been increased from 50 to 200. This will definitely cheer up the corporate world as it enables the private companies to increase the number of members without becoming a public company which has to follow more stringent norms. 

Recognition of Inter se Agreement Between Shareholders

The Bill recognizes inter se arrangement between shareholders and transfer restrictions. This will help corporate transactions as uncertainty in this area is one of the major stumbling blocks for transactions.

Changes in the security contract regulations

Class Action

The Bill introduces the concept of the class action suits whereby certain members or depositors can bring suits on behalf of other members or depositors against the company, directors, auditors etc., seeking a wide variety of reliefs, including damages. The concept of class action is well developed in the West. So far India lacked a legal recourse mechanism for collective action by a group of investors against a company. For the first time now, it will allow investors to seek remedial action from courts as a single group. 

Exit Opportunity for Dissenting Shareholders

In terms of the bill, a company cannot change its object in the prospects or vary the terms of the contracts referred in the prospectus after raising money from public unless the promoters or controlling shareholder provide an exit opportunity to the dissenting shareholders. This new provision will particularly benefit the retail investors. By giving more power to the shareholders, this provision will enhance the sense of responsibility of the companies.

_______________________________________________________ 8

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ ď‚&#x;

Provision for Purchase of Minority Shareholders

The Bill provides for purchase of minority shareholders by the person/group of persons holding 90% or more equity shares by virtue of amalgamation, acquisition etc. ď‚&#x;

some of the proposals are intended to make it easier for companies to implement the scheme, others impose checks and balances to prevent possible abuse of these provisions by companies.

Some of the key amendments that are proposed in the Bill are analysed below

Cross Border Merger & Acquisition

M&As are a vital commercial tool required for the growth of corporate business whether by way of internal restructurings or for the purpose of acquisitions / divestments. The procedures for M&A under the present Companies Act, 1956 ('Co Act') are governed by the provisions of Section 391 to 394 which detail the manner in which arrangements and compromises between Company and their shareholders and creditors are given effect to.

Like its past avatars (The Companies Bill 2009 and Companies Bill 2008), the Companies Bill 2011 (the 'Bill') was enacted keeping in view the globalisation of the Indian corporates. An illustration of this ethos is the proposal in The Bill permitting both inbound and outbound cross border mergers between Indian Companies and foreign companies whereas the Co Act permits only inbound mergers (foreign company merging into an Indian company) and not the other way round. The Companies Bill 2011 provides for Compromises, Arrangements and Amalgamations which are likely to have an impact on restructuring transactions. While

1. Pr o v i s i o n s f o r C r o s s B o r d e r Mergers: One of the key provisions in the Bill permits Indian companies to merge into companies located in specific foreign jurisdictions and vice versa. While the Bill seeks uncharted territories by including such mergers, it remains to be seen whether the RBI will permit such cross border mergers under the automatic route. If not, it is likely that the step taken in the Bill will be negated to a large extent.

2. Small Companies' Merger/ Short Form Merger: Under the Bill, the protracted procedures required for an M&A have been dispensed with for M&A between two small companies or between a holding company and a wholly owned subsidiary company by allowing them to proceed further without the approval of Court /NCLT subject to certain conditions.

The limits for 'Small Company' have been relaxed to include a company with a share

_______________________________________________________ 9

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ capital of Rs 50 lakh or a turnover of Rs 2 crore which under the Companies Bill 2009 was Rs 5 crore and Rs 20 crore respectively.

introducing the concept of exit opportunities to dissenting shareholder in case of any restructuring, which may be insufficient protection.

3. Reverse Merger: 

The Bill has plugged an existing loophole that allows a 'backdoor' listing of companies. A merger of a listed transferor company with an unlisted transferee may not automatically result in listing of the resulting entity unless it goes through the process of a public offering.

The proposed bill offers an option to the transferee company to continue as an unlisted company by buying out shareholders of the listed transferor company who may decide to opt out of the unlisted transferee company by paying them in cash. However, the proposal of opting out of listing the transferor has been done away with in the case of a demerger. 

Protection of Minority Interest:

The Bill permits any shareholder, creditor or other “interested person” to object to a scheme of arrangement, however subject to an onerous requirement that only persons holding at least 10% of the shares of the Company or at least 5% of the total debt outstanding in the Company are eligible to raise an objection. This provision is likely to substantially erode the power of minority shareholders and creditors in case of restructuring schemes. However, the Bill seeks to protect the interest of minority by

Va l u a t i o n & A c c o u n t i n g Requirements

An unlisted company will have to procure a certificate from the Company's Statutory Auditor stating that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with applicable accounting standards. Under the existing provisions there is no such requirement either for listed or unlisted companies. SEBI has directed that this auditor's certificate is required to be filed with the respective stock exchanges on which the shares of the company are listed. The purpose of this requirement is to ensure that the Court does not consider Schemes involving 'dubious' financial reengineering since schemes of arrangement tend to have overriding impact on matters of accounting and valuation.

The Bill also specifically provides that the report of an expert valuer has to be disclosed to the shareholders. This is significant because a substantial amount of litigation on schemes of arrangement relate to matters of valuation, and consequently the share exchange ratio.

There is currently no requirement to obtain an expert valuation, although it has now become

_______________________________________________________ 10

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ a matter of practice for companies to obtain at least one, if not two, valuation reports as a part of the restructuring process. 

Introduction of National Company Law Tribunal (NCLT)

Under the Companies Act, schemes of arrangement are to be approved by the High Court that has jurisdiction over the companies involved. While this ensures an oversight of the scheme and its fairness, there have been concerns regarding possible delays. For example, the average time taken for a scheme to be implemented from start to finish is no less than 6 months, and in several cases, the schemes have taken a couple of years to be approved by the High Court.

issued under the scheme. However, in the last few years, a practice has developed where shares were in fact issued under the scheme by the transferee company to a trust, to be held for its own benefit. The trust could further sell those shares and pay over proceeds to the beneficiary, being the company.

This resulted in the dual advantage to the Company to indirectly hold such shares in order to provide access to liquidity should the company require it in future, while still allowing the promoters to retain a controlling stake over the company. The Bill effectively negates this practice, and requires any crossheld shares to be compulsorily cancelled. 

To that extent, the proposal to move the jurisdiction of the High Court in such matters to the NCLT is welcome since it will be a specialized body dealing only with cases under company and related laws thereby introducing elements of timeliness and efficiency.

Although the setting up of the NCLT has been on the anvil for a long time, with the passing of the Bill, the process may get expedited. 

Abolition of Trust Shares:

When there are mergers between companies that have cross-holdings of shares (e.g. between a parent and a subsidiary), the shares that one company holds in the other will be

Notice to Regulatory Authorities:

Certain other reforms have been proposed by the Bill one of which is that notice of the scheme must be additionally provided to various regulatory authorities such as the Income Tax Department, SEBI, Reserve Bank of India (RBI), Competition Commission of India (CCI) which is not presently required.

On account of this, the procedure for obtaining approval of the various specified regulatory authorities is likely to become cumbersome and time consuming. 

Regulatory norms in other Acts will have to get aligned with the new Companies Act

_______________________________________________________ 11

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ India is waking up to the implications of the new company law. As sections get notified in tranches and the rules are put out for public comments, several areas of overlap with other laws and regulations are emerging, which need to be sorted out. Some of the key areas where the overlaps are seen include issues related to taxation, related-party transactions, issue of preferential shares, Corporate Social Responsibilty revision in financial statements, provisions related to securities in listed companies, cross-border mergers, and auditor assignment, among others. Unless clarified in time, the conflicting provisions may lead to confusion. Some of the provisions of the new companies Act overlap certain key norms made by other financial sector regulators. They include regulations in SEBI Act, I-T Act, competition law, accounting standards and other sectoral regulations.

Business Standard takes a look at some of these overlaps in the companies Act which has left many corporate lawyers, accountants, auditors, and CXOs confused. Some of the points of concern are over:         

Insider trading regulations Schemes of arrangement Purchase of minority shareholding Related party transactions Corporate social responsibility Definition of the term 'Control' Consolidated financial statements Issue of preferential shares Cross border merger and its taxability

   

tax neutrality Revision in financial statements Revision in depreciation Stamp Act, state legilations Accounting standards / Indian accounting standards

Conclusion The companies Act, 2013 allows for a contemporary legislation of the corporate sector in India. The Act provides for business friendly corporate regulations, better corporate governance, focus on corporate social responsibility, enhanced disclosure norms, investor protection, etc. The Bill is progressive and looks to align the law with current commercial realities. However, it also proposes to subject mergers and amalgamations to certain cumbersome regulatory approvals which may not necessarily be required. Historically, the status of company as a “legal entity” has been exploited in India. Promoters and directors have taken undue advantage of increased personal wealth and assets despite the companies failing. They were free to use the company funds for their personal gratification.

In the absence of proper auditing standards, even large investors were unable to detect the rot in companies, as was seen in the Satyam Computers scandal. Infact, scams such as Satyam have accelerated the passing of the bill.

Undoubtedly, “corporate regulation” is a complex matter. It has to be a right mix of

_______________________________________________________ 12

RIMS Journal of Management, Vol.2(1I), July - December 2016

New Companies Act-2013: Issues And Implications _______________________________________________________ self-regulation and Government regulation. It appears that the new Bill has tried to manage both the aspects. The real challenge will be to formulate an efficient and transparent procedure which will run the Indian corporate society smoothly and curtail corporate scams.

In this connection the Serious Fraud Investigation Office (SFIO), the agency mandated to investigate corporate scams, has a great role to play.

Bibliography: 1. Anupam Kumar (2013), “Private Cos groans under weight of Companies Bill”.

The Hindu Business Line on 19 August 2013.

2. Delloitte (2013). “Companies Act 2013, new rules of the game”. 12 September 2013, www.deloitte.com/in 3. E r n s t & Yo u n g L L P ( 2 0 1 3 ) .

Understanding Companies Bill 2013.Aanalysis of Accounting, Auditing and Corporate Governance Changes.

4. The Hindu Business Line dated 23 September 2013 5. Times Ascent on 04 September 2013.

6. The Hindu Business Line on 02 December 2013 7. Grant Thornton (2013) “How do India's top company boards measure up?” article published in Mint on 27 August 2013, 8. India-Inc Companies Act 2013 an overview.

9. Sai Venkateshwaran (2013), “It's Catch 22 for independent directors”. The Hindu Business Line dated 1 April 2013.

10. Sai Venkateshwaran (2013), “It's Catch 22 for independent directors”. The Hindu Business Line dated 25 February 2013.

11. Vishesh Chandiok (2013), “India gets its companies 'act' together”. Business Standard on 16 August 2013.

12. Vishesh Chandiok (2014), 'Impact of New companies Act-2013, published article, firm.moneycontrol.com on 02 January 2014.

13. www.PWC.in 14. Yogesh Sharma (2013). “The net widens for internal control”. The Hindu Business Line dated 25 February 2013s

_______________________________________________________ 13

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ Dr. Ashoka M L Faculty, Department of Studies in Commerce, University of Mysore, Manasagangotri, Mysore.

Vinay S Faculty, MBA Department, Ramaiah Institute of Management Studies, Bangalore. E-mail: vinay@rimsbangalore.in Abstract Banking is one of best and biggest service sector in India. The growth of Indian banking industry has been more qualitative than quantitative. The present scenario is concerned in the banking industry in India going through a modern phase namely e-banking. E – Banking is slowly substituting use of cheques, pay-in-slips, drafts and most importantly customers personally dropping into the floors of banks. The mobile banking has accrued in revolutionary changes where in customers can operate the bank accounts through mobile phones from anywhere. To avoid fraudulent transactions and to provide more transactions are ensuring all security measures. The technological innovations combined with revolutionary changes in the communication industry has provided and created congenial ground for successful E – Banking. Every 9 out of 10 customer of the age below 40 years in the urban area aspires to go with E – Banking at least in as much as to withdrawal of money through ATM is concerned. The survey conducted in Mysore District reveal that the corresponding percentage in respect of rural customer is only 60 percentage with the total sample size of 179 the percentage for E- Banking in the aggregate group counts for 80 percentage the main reason for non-patronization of E – Banking is illiteracy and fear of losing money when E – Banking is practiced.

Keywords: E – Banking, ATM, Mobile Banking, NEFT, RTGS

1.0 Introduction A recent trend in the Indian banking system is highly diversified activities by providing a length of financial services within the bank themselves or the subsidiary route. In the

present context e – banking is one of the modest practices and e-banking as a new phase in retail banking services reduces time and cost to banker and customer in respect of balance inquiry, inter account transfers, utility bills payment, request cheque book and

_______________________________________________________ 14

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ obtaining statement of account. The competition between physicalmarket andvirtual market is getting intense with revolution in the field of electronic communication.Of late banking companiesare thinking about switching their businesses from the physical to virtual market. The subsystems in bank- deposit collections, arrangements for payments and transfer of funds, management of investment portfolio and loan management are getting digitized. Concomitantly e-banking is getting simplified and internalized in the banking system.Trust, security and safety are the most challenging all time issues for the banks. Since inception banks are effectively handling these challenges, hence, banks are blooming. The time tested adaptation of banks in the evolutionary process has given much required edge to the bankers.Banks began online banking business with Automated Teller Machine (ATM) and now package of services such as RTGS, NEFT, M-Banking and Internet banking as major tools in e-banking.Online banking ishelping banksin the process of customer experience engineering.

Concept of E Banking E-banking transactions are billet on a highly secured website operated by all the types of banks. Customers should individual internet access with a respective mail identification. To access internet banking must register to the internet banking facility and setup the password for customer verification. Banks

now routinely allocate unique customers numbers whether or not customers aspire to access their online banking facility. Number of account number to able to associate to the one customer number. The customer will connect to the customer numbers any of those accounts which the customer many account numbers can be linked to the one customer number. The customer will associate to the customer number any of those accounts which the customer predominance, which includes savings, loan accounts details etc. To ingress online banking, the customer would go to the respective bank website, and enter the online banking facility using the customer number and password.

Facets of E-Banking The following are used to carry out assorted banking transactions namely: A bank customer can accomplish nontransactional quest through online banking include: viewing of account balance, recent transactions, statement of accounts etc. it can also download in PDF format. Bank customers can transact banking tasks through online banking, including –funds transfers between the customer's associated accounts, to the payment of third party transfer, including all the types of bill payments, such as repayments of respective enrolments, schedule bill payments, management of multiple users having varying levels of authority, transaction

_______________________________________________________ 15

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ approval process the process of banking has become much faster 1.1

Significance of the Study

In spite of fatten interest and importance of electronic banking (internet banking) in many banks in Mysore, the enactment of such upheaval in public sectors bank, private sectors bank, foreign banks, regional rural banks and co-operative banks. In Mysore district multitudinous branch persist low and transformation rates amid clients and its usage has not bring consequential outputs in the way clients suit happy with the services offered, one of the benefits obtain from internet banking in bank operations substantially with veneration to service delivery is improved efficacy and potency of their operations so that majority of transactions can be processed faster and most favourable, which will undoubtedly bump appreciably on the overall performance of the banks. The customers on the other hand, point of view to relish the sake of swift service delivery, lessen frequency of going to banks physically and reduced cash hold, which will allowupswing to higher volume of movement. Yet, this evolution Mysore district banks branches appear not to have attain its aims. Long queues are hush to seen at the banking transaction area, account holders or other customers still holdunduly much cash and barely do people thinking about the internet banking products that are available in major branches.

Purpose of the Study The purpose of the study is to find out the problems and prospects of e-banking services and its acceptance by the customers in Mysore district with a sample size of 179.

1.2

Review of literature

Kumbhar, Vijay (2011), examined the relationship between the demographics and customers' satisfaction in internet banking, he also investigate the relationship between service quality and customers' satisfaction as well as satisfaction in internet banking service provided by the public sector bank and private sector banks. The study found out that overall satisfaction of employees, businessmen and professionals are higher in internet banking service. Also it was found that there is significant difference in the customers' perception in internet banking services provided by the public and privates sector banks.

Nath Ravi &Schrick Paul (2001),in every industry, E-commerce is revolutionizing the way business is conducted. New business models are replacing outdated ones and organizations are rethinking business process designs and customer relationship management strategies. Banks are no exception to this transformation. This study examines bankers' views on providing banking services to customers using the web.

_______________________________________________________ 16

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ The results show that internet banking is in its nascent stage only a small number of banks offer web-based banking to customers and the full benefits of internet banking are still to be realized by many banks.

Neha Dixit &Dr.Saroj K Dutta (2010), Points out that in a country like India there is a need for providing better and customised services to the customers which can be made possible through e-banking. The people have positive perception about online banking, should be treated with the great value.

Pooja Malhotra &Balwinder Singh (2009), describes the current status of internet banking in India and it's implication for the Indian banking industry. The attempt was made to see if there is any association between adoption of Internet banking and the banks' performance and risk. The internet banking has a negative and significant impact on risk, which shows that, the adoption of Internet banking has not increased the risk profile of banks.

Rod et al (2009), the study focused on relationship between service quality, overall internet banking service quality and customer satisfaction in New Zealand. The study found out that online customer service quality and online information systems were significantly and positively related to overall customer internet banking service quality. Overall internet banking service quality and customer

satisfaction were positively correlated.

1.3

Objectives of the Study

1. To u n d e r s t a n d t h e c u s t o m e r s perceptions regarding E – Banking services.

2. To study the comforts and hurdles of E – Banking services.

3. To evaluate E – Banking services on the basis of an empirical study.

4. To suggest the improvement of EBanking services.

1.4

Hypotheses of the Study

H1: There is a pragmatic thump of utilisation of e -banking on customers in Mysore district.

H2: There is no risk factor involved in the e banking Transaction.

1.5

Research Methodology

The study focuses customer perceptions and problems and prospects of E - Banking services in Mysore District, based on a survey conducted in October – December 2014, Public Sector Banks, Private Sector and Foreign Banks operating in Mysore District.

The study based on descriptive research with a total sample size of 179 respondents. The study intends to confined awareness of e – banking facilities.

Statistical Tools Used: The data collected

_______________________________________________________ 17

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ from various sources were analysed by applying appropriate mathematical and basic statistical techniques along with percentage analysis.

1.7 Table No. 1: Socio – Economic Profile

Primary Data: Primary data is one which is collected specifically for the purpose of the research and can be obtained from various people working in the organization. For this study the primary data was collected from following sources namely Questionnaires and Discussion with bank customers and employees Secondary Data: For this study the secondary data was collected from the following sources namely books related to EBanking, published and unpublished documents and related websites 1.6 Limitations of the Study 1.

Sample size was limited to 179 only. The sample size may not represent whole market.

2.

This study is limited to the customers of Mysore District only. Therefore the inferences cannot be generalized

Source: Primary Data- Survey

Table no.1 showing details of socio-economic profile of 179 respondents in Mysore District, of bank, age, gender, profession and education of respondents.

Table No. 2: Respondents utilizing EBanking Services

Source: Primary Data- Survey

Table no. 2 showing respondents utilize ebanking services in Mysore District. 125 respondents (out of 179) using e-banking services and remaining 54 respondents do not utilize e-banking services.

_______________________________________________________ 18

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ 1.8 Table No. 3: Reasons of using EBanking Services

3.

Source: Primary Data- Survey

Note: - S A:Strongly Agree, A: Agree, M: Moderate, D A: Disagree & S D: Strongly Disagree

4.

Table no. shows that 110 respondents (out of 179) fill this question, in which ten questions were asked to respondents to know reasons of using E – Banking services.

1.

2.

30.00% e-banking services users are strongly satisfied with e-banking which is more convenient than branch banking services and 60.90% users trace on “Agree” which shows that they are satisfied. Collectively 90.90% users of ebanking are satisfied (Strongly Agree &Agree), 2.73 % are disagree and 1.82% are strongly disagree of this services.

20.00% e-banking service users are strongly satisfied with more reliable and

5.

6.

safe than branch banking and 30.00 % user's streak on “Agree” which shows that they are satisfied. Collectively 50.00% users of e-banking are satisfied (Strongly Agree & Agree), 33.64% of the respondents are moderate, 10.90 % are disagree and 5.46% strongly disagree of this services.

34.55 % e-banking services users are strongly satisfied with internet banking or mobile banking transactions which can be done faster than branch banking and 56.37 % users smut on “Agree” which shows that they are satisfied.

Collectively 90.92% users of e-banking are satisfied (Strongly Agree & Agree), 2.73 % are disagree of this services.

26.36% e-banking services users are strongly satisfied which allows easier maintenance of transaction activities and 54.55 % users speck on “Agree” which shows that they are satisfied.

Collectively 80.91% users of e-banking are satisfied (Strongly Agree & Agree), 4.55 % disagree of this services.

4.55% e-banking services users are strongly satisfied which meet their cash requirement after the bank have closed and 4.55 % users trace on “Agree” which shows that they are satisfied.

Collectively 9.10% users of e-banking are satisfied (Strongly Agree & Agree), 63.64 % are disagree of this services.

13.64% e-banking services users are strongly satisfied with feel hesitation to

_______________________________________________________ 19

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________

7.

8.

9.

wait in a queue for deposit or withdrawal the cash and 13.64 % users'speck on “Agree” which shows that they are satisfied. Collectively 27.28% users of ebanking are satisfied (Strongly Agree & Agree), 13.64 % disagree and strongly disagree of this services.

27.28% e-banking service users are strongly satisfied with well conversant with e-banking and found it is a userfriendly system and 31.82 % users speck on “Agree” which shows that they are satisfied. Collectively 59.10% users of ebanking are satisfied (Strongly Agree &Agree), 27.28% are moderate in the service and 4.55% are disagree and strongly disagree of this services.

11.18% e-banking service users are strongly satisfied with use as e-banking a status symbol and 27.28 % users mark on “Agree” which shows that they are not used a status of symbol. Collectively users of e-banking are not satisfied (Strongly Agree & Agree), 55.94 % are 27.97% are disagree and strongly disagree of the status of symbol.

13.64% users are strongly satisfied with I have a strong faith that machine cannot make any mistake and 16.36 % users mark on “Agree” point which also shows that they are not satisfied of faith that machine cannot make any mistake.

Collectively 30.00% users of e-banking are satisfied (Strongly Agree & Agree), 60.90% are moderate and 5.45 % and

10.

disagree and 3.63% are strongly disagree of this services.

36.36% e-banking service users are strongly satisfied with the transaction system of e-banking and 45.45 % users mark on “Agree” which shows that they are satisfied. Collectively 81.81% users of e-banking are satisfied (Strongly Agree & Agree), 4.55 % disagree and 4.55% strongly disagree of this services.

In the disparity relates to know the problems and prospects of e-banking services by the utilizations of customer's proclivity regarding security, forged transaction, ATM services etc.

For this impetus the respondents who were not satisfied with e-banking services and system were asked to fill the second section of the questionnaire in which 09questions regarding reasons for not using e-banking services. 5-Point Likert Scale is opted here degree of agreement with statements.

Table no.4 showing 36 respondents (out of 179) fill this question, in which nine questions were asked to respondents to know the reasons of not using e-banking services – majority of the respondents fear of losing money on ATM services and complained facing problem on withdrawing money.

Respondents not aware towards using of debit card, credit card and mainly fear on security for the transactions. Respondents do not know about internet and mobile banking do not trust the internet as a channel for banking

_______________________________________________________ 20

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ as it is not safe and also chances of Fraud and forged transactions in E-Banking services 1.9

Table No. 4: Reasons of not using EBanking Services

customers and to which service customers prefer more. In this regard, ATM (Debit Card) is given first rank. NEFT & RTGS, Credit Card is given third and fourth rank. Mobile Banking and Internet Banking have also gained better preferences of customers and ranked fourth and fifth.

1 . 1 1 Ta b l e N o . 6 : S u g g e s t i o n s o f respondents to improve bank services through E-Banking

Source: Primary Data- Survey

1.10 Ta b l e N o . 5 : B a n k c u s t o m e r preference regarding E-Banking Services

Source: Primary Data- Survey

Bank provides various types of E – Banking facilities namely, ATM (Debit Card), NEFT & RTGS, Credit Card, Internet Banking and Mobile Banking. An attempt is made to know which service is most popular among

Source: Primary Data- Survey

As per the respondents, employees of banks should be fully aware about the use of EBanking because a total awareness on EBanking employee can effectively guide the customers. Convenient accessibility and variety of services are also in the suggestion list of customers and they are given second and third place, respectively. Effective methods of delivery have gained fourth and polite and sympathizing employees and assisting customers to choose has gained the fifth and sixth place in the list of suggestions. In the 7seventh place customers recommends to frequent meetings and proper network and infrastructure, ATM machines should be installed at suitable locations eighth and ninth

_______________________________________________________ 21

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ place. Online shopping facilities in the tenth list of suggestions.

6.

1.12 Suggestions to enhance E – Banking Services 1.

2.

3.

4.

5.

Strategies to create knowledge: customer must have education and awareness for the use of e – banking.

There should be customer education campaign through media, printed media, social network, workshop or seminar conducted for knowledge about e – banking services.

Frequent meeting with banker and customers: banks or banker should organize meetings with customers to educate regarding e- banking services.

Proper network and infrastructure: customers facing problems on many times server is down and customers have to wait till the network is settled. In the rural area there is lack of infrastructure facilities and so on ATM machines should be installed at suitable locations: sometimes it is seen that ATM machines do not access the cards and also many times ATM machines have out of service for days. All these factors contribute in losing confidence of bank customers in ebanking. Banks should necessary to provide good facilities to the customers.

Trained staff: the staff should be friendly, polite and well trained to guide the

customers in effective way to operate e – banking.

Procedure to open an account should be simple and easy: it is necessary for all groups of bank the procedure to open a new internet banking or mobile should be easy and simple.

Conclusion A study on problems and prospects of ebanking services of customer perceptions has clearly portrayed that there is significant patronized for e – banking in the present day context. E-banking in India is only at its primordial juncture dominated by the Indian private and foreign banks and now a day's public sectors bank also bestow e-banking services. The utilization of online banking or internet banking is cramped to a few customer lump. The utilisation of internet banking or online banking are many, which the banks have to replicate the using enlightened systems and substantial utilisation of technology. The respected banks should focal the point on strategic customer groups to maximize its revenues from internet banking. Savings in time security ensured in transaction, flexibility and convenience has made e banking very popular. Another interesting revolution of the study is socially customers have no aversion of standing in que for off line banking and majority of them are not endorsing e banking as a status symbol. Suggestions offered the researchers again that strengthening of

_______________________________________________________ 22

RIMS Journal of Management, Vol.2(1I), July - December 2016

Problems And Prospects Of E-banking Services - An Empirical Study In Mysore District

_______________________________________________________ e banking system. An era has come to see the metamorphosis in banking services which are erected upon information and communication technology. Hope present genre bankers concur with contemporary demand.

5.

Laforet, S and Li, X. (2005). Consumers' attitudes towards online and mobile banking in China. International Journal of Bank Marketing, Vol. 23 No. 5, 2005, pp. 362-380

Bibliography

6.

Nath Ravi &SchrickPoul (2001), Banker s Perspective on Internet Banking, e-service Journal, vol. 1, no.1, 21-36

7.

Neha Dixit &Dr.Saroj K Dutta (2010), Journal of Internet Banking and Commerce, Acceptance of E-banking among Adult Customers: An Empirical Investigation in India, Vol. 15 no. 2.

8.

Pooja Malhotra &Balwinder Singh (2009), Eurasian Journal of Business and Economics, the Impact of Internet Banking on Bank Performance and Risk: The Indian Experience, Vol. 2 no. 4.

9.

Rod M; N J Ashil; J Shao and J Carrethers (.2008), “An Examination of the Relationship between Service Quality Dimensions, Overall Internet Banking Service Quality and Customer Satisfaction: A New Zealand study”, Marketing Intelligence & Planning. Vol. 27 No. 1. pp. 103-126.

1.

2.

3.

4.

Acharya, R. and Lingam, A. (2008).

Online banking applications and community bank ` performance. The International Journal of Bank Marketing, Vol. 26 No. 6, 2008 pp. 418-439 Broderick, A. and Vachirapornpuk, S. (2002). Service quality in Internet banking: the importance of customer role. Marketing Intelligence & Planning, Vol. 20, No. 6, pp. 327 – 335 Casalo, L., Flavia´n, C., Guinalı´u, M. (2007). The role of security, privacy, usability and reputation in the development of online banking. Online Information Review, Vol. 31 No. 5, 2007 pp. 583-603 Kumbhar, Vijay (2011)-“Service Quality Perception and Customer's Satisfaction in Internet Banking Service : A Case Study OF Public Sector and Private Sector Banks”, Cyber Literature Online Journal, Vol .2,No4 ,pp. 21-30

_______________________________________________________ 23

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ Mr. Prasad. L, (PhD), MBA, B.E. Research Scholar and Faculty, Ramaiah Institute of Management Studies Dr. Noor Firdoos Jahan, PhD Professor, R. V. Institute of Management Abstract Organizational effectiveness, organizational efficiency, organizational performance and the contribution of business organization to the economic growth of a country have been a topic of hot interest for many years now around the world. More so, in the perspective of the state or government run enterprises. India's economic policy, in the early years after independence, was built around the Central Public Sector Enterprises (CPSEs).

These organizations were established by the Government of India with an objective of making India self sufficient in the production of goods and services, apart from ensuring that the CPSEs promoted heavy industry in the country and provided jobs to millions of people.

This research papers studies the performance of the CPSEs in India, in terms of their organizational effectiveness, efficiency and examines the roles played by them in the economic growth of the country. The research paper also analyzes the role played by the leaders of these CPSEs in achieving economic growth.

The source of data is the Public Enterprises Survey (2013-14), an annual document of the Ministry of Heavy Industries & Public Enterprises, Government of India, which reviews the developments in the Central Public Sector Enterprises, including their subsidiaries, over the previous 12 months and summarizes the performance on major financial and economic parameters. This document is presented to both the Houses of Parliament during Budget Session It was found in the survey, that as on 31/03/2014, there were 234 operating CPSEs in India, of which only 69% were profitable. The overall net profit of these CPSEs grew at a CAGR of just 6% during 2007-08 and 2013-14 and the performance of the CPSEs on major financial ratios has consistently declined since 2004-05. The Gross Value Addition of the CPSEs in the GDP of the country has declined from 8.28% in 2007-08 to 4.51% in 2013-14.

Keywords: Organizational efficiency, organizational effectiveness, organizational performance, economic growth, leadership

_______________________________________________________ 24

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ 2.0 Introduction Functional effectiveness, organizational performance, economic growth and leadership are intricately linked to each other, though they are part of varied domains such as Organizational Behaviour, Human Resources Management, Enterprise Performance Management and Economics. The common thread that links these diverse topics is the domain of Business Environment.

Since Independence, economic growth in India has been largely spurred by the manufacturing and services sector, which comprises of the private sector, public sector and joint sector enterprises. According to the Economic Survey of 2014-15, the manufacturing and services sector combined have contributed 82.4% to the GDP of the country and have helped India become the seventh largest economy of the world. This, by no means, is a small achievement. How did we reach there? Were the economic reforms introduced in 1991 by the Government of India alone responsible for this? Or, was it the effectiveness and efficiency, coupled with the superior organizational performance of these enterprises, led by able leadership responsible for this?

This research paper throws light on the role of the leader in synergizing functional effectiveness and organizational performance in achieving economic growth. In particular,

this research paper focuses on the effectiveness, efficiency of the Central Public Sector Enterprises (CPSEs), their contribution to the economic growth of India and the role of the leaders of these CPSEs. 3.0

Literature Review

3.1

Business Environment

Business Environment consists of all those factors that have a bearing on the business, such as strengths, weaknesses, internal power relationships and orientations of the organization; government policies and regulations; nature of the economy and economic conditions; socio-cultural factors; demographic trends; natural factors; and, global trends and cross-border developments.

3.2 Organizational Effectiveness, Organizational Efficiency and O r g a n i z a t i o n a l Pe r f o r m a n c e Management In an organizational context, the words 'performance' and 'control' have traditionally been used interchangeably with 'financial performance' and 'financial control'. These words are very closely associated with terms such as 'budgets', 'variances', and 'financial audits'; and in a broader sense, with 'rigidity', 'bureaucracy', 'imposed by management', and 'preserving the status quo'. In this view, the emphasis is on controlling the numbers with a

_______________________________________________________ 25

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ top-down orientation to management.

'Effectiveness' and 'efficiency' are not merely about 'doing the right things' and 'doing things right' by planning and setting standards at the beginning of the planning period and conforming to the plan and standards during the execution phase. The business environment is dynamic; competition cuts across product categories and national boundaries, and consumers are well informed and willing to explore the choices at hand. At all levels and across all functions of the organization, excellence of execution requires 'double-loop learning' – the habit of anticipating changes and adapting to them in a proactive manner. Often, this adaptation is simultaneously required on multiple aspects such as strategy, structure, systems, and culture. And such adaptation is required both for guarding against possible declines in an organization's performance and for gaining competitive advantage.

To study the concept and practice of enterprise or organizational performance management, we take a management control systems approach, that is, an integrated approach to performance and compliance.

We look at organizations as open systems where people in different functional areas use resources to perform a variety of activities that results in outputs and outcomes that satisfy stakeholders and realize the organization's objectives, while complying

with the law and adhering to ethical principles.

Therefore, to ensure that the organization achieves its objectives, management control has to address all its sub-systems.

Management control thus has four broad objectives – effectiveness, efficiency, disclosure and compliance. Technically, we can limit the scope of organizational or enterprise performance management to the first two issues of effectiveness (including learning and innovation) and efficiency. But in reality, these two issues go hand in hand with the other two issues of disclosure and compliance for the management to meet the expectations of shareholders as well as other stakeholders.

Organizational or enterprise performance management is broadly concerned with attainment of goals and implementation of strategies. An organization has to make an effective and efficient use of its resources to achieve its objectives and succeed in its operations. It should maintain an edge over its competitors in terms of cost and/or quality. An organization can survive and continue operations in a complex business environment only if it meets its stakeholder's (customers, suppliers, employees, investors, the government, and society) demands.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) broadly classifies the objectives of management control under the following heads:

_______________________________________________________ 26

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ Effectiveness and efficiency of business operations  Reliability of financial reporting  Compliance with applicable regulatory and legal framework An effective organization is one that is able to accomplish its purpose or mission, and is able to achieve the objectives and goals set within the scope of organizational purpose. Purpose reflects the intended position of the organization in society and the value that the organization aims to create for its target customers. An efficient organization will have achieved its purpose by making use of minimum resources while meeting stakeholder's expectations. It should be noted that business operations include not only production-related operations, but also a wide range of organizational outcomes. 

3.3 Economic Growth and GDP The structure of the economy – factors such as contribution of different sectors like primary (mostly agricultural), secondary (industrial) and tertiary (services) sectors, large, medium, small, and tiny sectors of the economy, and their linkages, integration with the world economy are important to business because these factors indicate the prospects for different types of business and also highlight the factors which affect the business, etc.

It is important to recognize the role of income

in reducing poverty and improving living standards. In this context, it is vital for us to understand the process of economic growth.

Increase in national income of a country can be considered as the first step to economic growth of the country.

Economic growth refers to the increasing ability of a nation to produce more goods and services. National income – the income of a country in a given year – is the basic measure of economic growth. There are four versions of national income:    

Gross Domestic Product (GDP) Gross National Product (GNP) Net Domestic Product (NDP) Net National Product (NNP)

GDP is the basic measure of national output and economic growth. GDP is the value of all final goods and services produced within the country's geographical territory, irrespective of the ownership of resources. The growth rate of the economy normally refers to the rate at which the GDP is increasing. Economic growth is the expansion of a country's productive capacity. This leads to a rise in total national output.

According to the Economic Survey of 2014-15 (Department of Economic Affairs, Ministry of Finance, Government of India), India's GDP grew at 7.4% during 2014-15 and the share in the Gross Value Added (GVA) at factor cost at

_______________________________________________________ 27

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ current prices, of the various sectors of the economy is as follows: Agriculture and allied activities : 17.6% Industry : 29.7% Services : 52.7% India's agriculture, industry and services sectors are comprised of a good mix of private sector, public sector and joint sector enterprises.

3.4

Leadership

An organization without a leader can be compared to a ship without a rudder.

Leadership is the ability to influence people so that they are driven toward the achievement of desired goals. Leadership is of huge significance in the organizational context.

Leaders provide vision to the organization.

They shape the organizational culture, initiate organizational change, and motivate employees to strive to achieve organizational goals. Even if an organization is bestowed with sufficient resources, it usually fails to function effectively if an effective leadership is absent.

Leadership style is the way leaders influence their followers. It can be adopted consciously or subconsciously by the leader. There are different models of leadership styles. Kurt Lewin's Leadership Styles, Rensis Likert's Leadership Style, Blake and Mouton's Managerial Grid, and Daniel Goleman's Six

Emotional Leadership Styles are some of them. However, popularly, leadership styles have been classified into ten categories: the authoritative style, the autocratic style, the benevolent style, the coaching style, the democratic style, the pacesetting style, the expert style, the manipulative style, the bureaucratic style, and the participative style.

Robert Katz, in 1974 (HBR article 'Skills of an Effective Administrator') identified three basic skills – technical skills, human skills, and conceptual skills that should be possessed by all business administrators – managers as well as business leaders – at different organizational levels. However, leaders different from managers and hence are required to possess some special skills that will enable them to gain followers and lead them towards a pre-determined goal. Of these skills, the most significant are: persuasion skills, motivational skills, and conflict resolution skills. Apart from possessing these skills, leaders also need to apply some tactics to get their work done.

Leadership is of great significance in modern organizations. In the organizational context, a business leader is more of a generalist. He/she provides vision for the organization. This vision acts as a rudder for the organization to achieve its objectives. He/she has to analyze the business environment to understand the changing needs of customers, employees, and other stakeholders. On the basis of the vision

_______________________________________________________ 28

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ established and analysis of the business environment, leaders set at least the broadlevel strategies and also find means to execute those strategies to ensure sustainable growth and profitability for the organization. A leader is also required to motivate the organizational members to strive for achievement of organizational vision, goals, and objectives.

Apart from motivating the members, leaders are also required to develop the capabilities of individuals and the organization as a whole.

They do this by initiating people development processes. Leaders contribute in the organizational development process by coaching and developing performing teams.

Research on leadership has led to the development of three types of theories – trait theories, behavioural theories, and contingency theories. According to trait theories, some traits such as extroversion, aggressiveness, self-confidence, honesty and integrity, and intelligence differentiate leaders from non-leaders. According to behavioural theories, successful leadership depends more on appropriate behaviour and skills, and less on personality traits. Four different behavioural theories – the Ohio State Studies, the University of Michigan Studies, the Managerial Grid, and the Scandinavian Studies – have sought to identify the different behaviours adopted by leaders. The contingency theories, on the other hand, deal with the situational aspects of leadership styles. Some of the well known contingency

theories are Fielder's Contingency Model, Hersey and Blanchard's Situational Theory, Leader-Member Exchange Theory, Leader Participation Model, and the Path-Goal Theory.

Rapid changes in the business environment pressure organizations to be innovative, more efficient, and extremely adaptive to change. In such circumstances, for any organization, effective leaders who can provide direction in times of turbulence and change are a great source of competitive advantage.

Leadership development can be viewed from two perspectives – developing individual leaders and developing collective leadership.

Modern leadership development is more of 'collective leadership development'. Of late, organizations are more concerned about developing organizational teams of leaders who together will face the challenges posed by the changing techno -economic-socio environment and move the organization to the next level of organizational growth and prosperity.

4.0

Objective of the study

Organizational effectiveness, organizational efficiency, organizational performance and economic growth seem to be positively linked to each other. Does an organization which is effective & efficient and which is performing well under the leadership of an able leader

_______________________________________________________ 29

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ contribute more to economic growth of the country than an organization which is not effective & efficient and which is not performing well under the leadership of a weak leader? This research paper tries to provide answers to the above question and lays the framework for future researchers to further throw light on this subject. The research paper restricts itself to studying the performance of Central Public Sector Enterprises (CPSEs) over the years and attempts to make conclusions regarding the relationship between organizational effectiveness, organizational efficiency, organizational performance, economic growth and leadership.

4.1 Data Collection Methodology This research paper relies solely on the secondary data available from published sources such as the Ministry of Corporate Affairs, Department of Public Enterprises, Department of Economic Affairs, financial portal websites, etc.

In the Public Enterprises Survey (2013-14) conducted by the Department of Public Enterprises, as on 31/03/2014, there were a total of 290 Central Public Sector Enterprises (CPSEs) comprising of 234 operating CPSEs and 56 CPSEs under construction.

The Public Sector Enterprises were the brain child of the architect of modern India – Pandit Jawaharlal Nehru, the first Prime Minister of Independent India. The CPSEs were established to serve the broad macroeconomic objectives of higher economic growth, self-sufficiency in the production of goods and services, long term equilibrium in balance of payments, and low and stable prices. Graph 1 shows the growth of CPSEs in India since 1950.

Graph 1: Growth of CPSEs in India since 1950

4.2 Facts of the Data Collected According to the Ministry of Corporate Affairs, as at 31/03/2015, there were 10, 22,011 active companies in India, of which approximately 94% were private companies and 6% were public limited companies. These include the Central Public Sector Enterprises (CPSEs)

Some of the other information related to CPSEs is listed as under: Total paid up capital Rs. 1, 98,722 crores, as on 31/03/2014

_______________________________________________________ 30

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ Total investment (equity plus long term loans) Rs. 9, 92,971 crores, as on 31/03/2014 To t a l t u r n o v e r / g r o s s r e v e n u e Rs. 20, 61,866 crores, as on 31/03/2014 Overall net profit Rs. 1, 29,109 crores, as on 31/03/2014 The growth rate of turnover at current market prices from 2007-08 to 2013-04 shows a compounded annual growth rate (CAGR) of 10%. However, if inflation is accounted for, then in terms of constant prices, the CPSEs turnover is stagnant. Table 1 shows the turnover growth of CPSEs from 2007-08 to 2013-14.

Table 1: Turnover Growth of CPSEs, 2007-08 to 2013-14

engineering (BHEL), aviation industry (HAL and Air India), storage and public distribution system (Food Corporation of India and Central Warehousing Corporation), shipping and trading (Shipping Corporation of India and State Trading Corporation of India), and telecommunication (BSNL and MTNL), etc.

With economic liberalization, since 1991, many sectors that were the exclusive preserve of the CPSEs were opened up to the private sector.

The economic reforms of 1991 opened up the domestic market for private players and made the economy resilient, deep and strong. But, this also meant that the CPSEs had to face competition from these private players who were far more efficient and effective than the CPSEs. The turnover distribution of the 234 operating CPSEs is as shown in Graph 2.

Graph 2: Turnover distribution of 234 operating CPSEs

Along with other public sector majors such as State Bank of India, Life Insurance Corporation of India, and Indian Railways, the CPSEs are leading companies of India with significant market shares in sectors such as petroleum (ONGC, GAIL and IOC), mining (Coal India and NMDC), power generation (NTPC and NHPC), power transmission (Power Grid Corporation), nuclear energy (Nuclear Power Corporation of India), heavy

_______________________________________________________ 31

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ The profit of profit making CPSEs was Rs. 1, 49,164 crores during 2013-14 as against the loss of loss making CPSEs of Rs. 20,055 crores during 2013-14. Graph 3 shows the number of CPSEs reporting profit/loss during the last ten years

Graph 4: CPSEs performance on Financial Ratios

Graph 3: Profit and Loss making CPSEs

The net profits earned by the CPSEs since 2006-7 to 2013-14 is as shown in Table 2.

Table 2: Net Profit of CPSEs

Table 3 provides the list of the top ten profit making CPSEs. These top ten profit making CPSEs accounted for 57.21% of the profits made by the profit making CPSEs. Table 4 provides the list of ten major loss making CPSEs. These ten major loss making CPSEs accounted for 84.78% of the losses incurred by the loss making CPSEs. Table 3: Top Ten Profit Making CPSEs (2013-14) (In Rs. Crores)

The performance of the CPSEs on all important financial ratios for the period 200405 to 2013-14 is as shown in Graph 4.

_______________________________________________________ 32

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ Table 4: Ten Major Loss Making CPSEs (2013-14) (In Rs. Crores)

The CPSEs play a significant role in the growing Indian Economy. They influence the growth in the economy and are affected by the overall growth in the economy. During 201314, the contribution of the CPSEs to the GDP of the country was 18.16% (in terms of gross revenue to GDP). But, the share of gross value addition by the CPSEs (net value addition + depreciation) in the GDP for the same period was 4.51%. Graph 5 shows the gross value addition of the CPSEs in the GDP for the period 2007-08 to 2013-14.

Graph 5: Gross Value Addition by the CPSEs

The Memorandum of Understanding (MoU) system in CPSEs is a mutually negotiated agreement between the management of CPSEs and the Government of India/Holding CPSEs. The MoU system involves goal setting in financial and non-financial areas and performance evaluation of these goals. A High Power Committee under the Cabinet Secretary oversees the MoU system. The MoU facilitates empowerment and enhancement of performance of CPSEs. CPSEs are made more accountable and result oriented. Objectives of the MoU are: 

  

Improve the performance of CPSEs by increasing autonomy and accountability of management Fixing the targets in accordance with the goal and objectives of CPSEs Enable performance evaluation through objective criteria Provide a mechanism of rewarding and incentivizing performance

The MoU system that was started with 4 CPSEs signing the MoU in the year 1986-87, increased its coverage to 190 CPSEs in 201213 and 187 CPSEs in 2013-14. Performance evaluation is done based on the comparison between the actual achievements and the annual targets agreed upon between the government and the CPSE. In order to distinguish 'excellent' from 'poor', performance during the year is measured on a 5-point scale.

_______________________________________________________ 33

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ Government of India having transparent performance evaluation measures known as Memorandum of Understanding (MoU) with the CPSEs

4.3 Data Analysis and Interpretation 



 











The number of CPSEs has consistently grown from 5 in 1950 to 290 in 2014 and at the same time, the CPSEs have also registered growth in revenues (10% CAGR at current prices for the period 2007-08 to 2013-14) The CPSEs play an important role even today and some of the CPSEs are market leaders in sectors such as petroleum, oil and gas, power generation and distribution, banking, insurance, nuclear e n e r g y, h e a v y e n g i n e e r i n g , telecommunications, etc 69% of the CPSEs are profit making and 31% of the CPSEs are loss making The net profit of the CPSEs has increased at a CAGR of 6% from 200708 to 2013-14, at current prices The collective performance of all the CPSEs on key financial ratios has consistently declined since 2004-05 The top 10 profit making CPSEs account for 57.21% of the profits earned by the profit making CPSEs The ten major loss making CPSEs account for 84.78% of the losses incurred by the loss making CPSEs The Gross Value Addition by the CPSEs in the GDP of the country has decreased from 8.28% in 2007-08 to 4.51% in 2013-14 Overall, the performance of the CPSEs can be termed as dismal, despite the

Some of the reasons as to why the performance of the CPSEs is on the decline could be: 







The economic reforms that the Government of India introduced in 1991 meant that the CPSEs no longer had a protected market and had to compete not only with domestic companies but also international companies who were far more efficient and effective than themselves Those CPSEs which recognized the increased competition from domestic and international companies were quickly able to re-align their strategy in order to be able to compete in a highly competitive environment. The others who did not recognize this threat started suffering poor performance For years, lack of accountability in the CPSEs at all levels of management has dragged down the performance of these CPSEs Crippling of decision making powers for the CEOs of the CPSEs (maybe due to political compulsions) could be another reason as to why the CEOs were not able to take a deep look at the problems that were being faced by their

_______________________________________________________ 34

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ 









companies and implement course changing actions The assurance of job security, benefits and perks at the CPSEs had probably made the employees complacent and they did not find enough motivation to lift their productivity to higher levels Maybe the CEOs of the CPSEs failed to constantly monitor the ever changing business environment and hence failed to tweak the company's strategies to meet the challenges thrown up the changed business environment?

The web of red tape and inordinate delay that exists within the power corridors of the Government could be another reason as to why change was not fast paced at the CPSEs Despite not having a shortage of trained manpower to man the CPSEs (most CEOs, MDs and Chairmen of the CPSEs are drawn from either from the elite Indian Administrative Services or Indian Revenue Services, etc), if the collective performance of the CPSEs has been on the downslide, it only speaks about the leadership and managerial skills (or the lack of these skills) of these officers Maybe the need of the hour was to introduce a corporate culture that values productivity and efficiency more than anything else?

5.0 Conclusion As can be seen, an organization's contribution to economic growth maximizes only when the leader of the organization plays a proactive role in ensuring that the various functional entities within the organization are synergized with the overall performance objectives of the organization. When a leader attempts to do this, invariably he will be laying the foundation to achieve a core competence for his organization, which in turn leads to sustainable competitive advantage for the organization. In their 1990 HBR article “The Core Competence of the Corporation”, C. K. Prahalad and Gary Hamel define core competence as “the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technology”. It is also about the organization of work and the delivery of value.

A core competence must: Have the potential to provide access to a variety of markets  Make a contribution to preconceived consumer benefits of the end product  Be difficult for a competitor to copy 

_______________________________________________________ 35

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________ From being the pride of the India economy in the early years after Independence, most of the CPSEs have become a drain on the Government's exchequer and on the economy. The intentions with which the Government of India established the CPSEs were noble: economic growth & industrialization, develop strategically important areas, check concentration of economic power, promote redistribution of income and wealth, create employment opportunities, balanced regional development, import substitution, and utilize natural resources in national interest, easy availability of goods and price control. But, as India is attempting to move from a mixed economy to a market economy, it definitely makes sense to have a re-look at the overall policy on CPSEs and take some tough decisions - including closing down the loss making CPSEs or privatising them.







   

There is a need to bring in a sense of urgency and professionalism in our CPSEs. The leaders who lead these CPSEs must be given a mandate of “Perform” or “Perish”. As leaders, they must be provided not just the necessary training and resources but also the required responsibility to improve the overall performance of the enterprises under their command.

A few suggestions as to what the leaders of the anizational performance are listed below:



Analyze the business environment, establish vision, mission, goals, and objectives for the organization, formulate and implement an appropriate strategy that is in line with the overall vision of the company Clearly communicate the vision of the company to its employees and motivate them to achieve the vision, mission, goals, objectives, and strategy of the organization Shape a culture within the organization that is supportive of its strategy and implement an organization structure that is supportive of its strategy. After all, structure always follows strategy Lead by example. Most effective leaders “walk the talk” Build high performance teams Meet the expectations of stakeholders and shareholders Have perseverance, passion, and principles – honesty, integrity, ethical behaviour Improve organizational effectiveness by promoting learning and innovation within the organization. They have to create “learning organizations”. A learning organization is one which facilitates the learning of its members and continuously transforms itself.

Learning organizations develop as a result of the pressures facing modern organizations and enables them to remain competitive in the business

_______________________________________________________ 36

RIMS Journal of Management, Vol.2(1I), July - December 2016

Synergizing functional effectiveness and organizational performance for economic growth – The role of the leader

_______________________________________________________







environment. Innovation is the key to attaining and sustaining a competitive advantage. The very survivability of an organization in a highly competitive environment depends on how innovative it is.

Focus on making changes to the strategy, structure, systems, and culture of the enterprise as and when it becomes necessary, especially in today's rapidly changing business environment. Efforts like these not only help guard the organization against a decline in its performance but also help attain a competitive advantage over its competitors.

Make efforts to restructure their business if that is the need of the hour, by using proven techniques such as Business Process Restructuring (BPR).

Establish a transparent performance evaluation method that recognizes and rewards good performers, and offers performance improvement plans to under performers.

 

 





Francis Cherunilam (2014), Business Environment – Text and Cases, pp 4, 78 Enterprise Performance Management – An ICMR Centre for Management Research concept paper Leadership – An ICMR Centre for Management Research concept paper Economic Survey (2014-15), Department of Economic Affairs, Ministry of Finance, Government of India, retrieved from website http://finmin.nic.in/the_ministry/dept_e co_affairs/dea.asp on 20/11/2015 Public Enterprises Survey (2013-14), Department of Public Enterprises, Ministry of Heavy Industries & Public Enterprises, Government of India, retrieved from website http://dpe.nic.in/ on 20/11/2015 Monthly Newsletter, Volume 47, April 2015, Ministry of Corporate Affairs, Government of India, retrieved from w e b s i t e h t t p : / / w w w. m c a . g o v. i n /MinistryV2/newsletters.html on 20/11/2015

6.0 References 

Justin Paul (2013), Business Environment – Text and Cases, pp 26-27

_______________________________________________________ 37

RIMS Journal of Management, Vol.2(1I), July - December 2016

Future of Digital Marketing and its role in E-commerce _______________________________________________________ Ankur Chauhan BBA1534(3rd Semester), RIBS

Abstract The term digital marketing and marketing are going to be synonymous in the coming future. It is exactly the right time for people to understand that what is digital marketing and its future. This article will focus on different scenarios of digital marketing and its role in e-commerce as well. Additionally the benefits as well as the elements of digital marketing are also presented in this paper.

Keywords: digital marketing, e-commerce, SEO, PPC, SMM

Introduction The key objective of digital marketing as we know is to promote brands and reach out to consumers through various forms of digital media such as the Internet, mobile phones, and social media. The age in which we are living today is the digital age. Firms are increasingly looking to hire people having digital marketing skills as both business and consumers are quickly shifting their focus towards the digital medium. Digital marketing is not just limited till internet marketing, it goes beyond that i.e., through text messaging via mobile phones or through television or radio.

Information can be accessed anytime and from anywhere you want. Digital marketing has filled the gap between the products and the consumers.

The future of digital marketing is immense.

Emerging markets have welcomed digital

marketing with open arms. India, which is now the fastest growing major economy in the world use to have 1 million cell phone users in the year 1998, and presently there are more than 900 million cell phone users in India now, and I if just talking about India! The numbers are going to increase substantially in the near future as well. There is a digital revolution going on the world right now. The number of people using digital media are directly proportional to the scope of digital marketing.

Digital marketing is even cementing its place in unconventional markets such as real state.

According to a recent study which came in Economic Times (ET), home buyers are finding it convenient to explore various options virtually before physically checking out the short listed properties. In India, digital marketing currently contributes to around 25% of leads generated through all sources and helps generate around 8%-10% of

_______________________________________________________ 38

RIMS Journal of Management, Vol.2(1I), July - December 2016

Future of Digital Marketing and its role in E-commerce _______________________________________________________ revenue. In the next 3 years, digital marketing contribution would be close to 25%-30% of the revenue.

How digital marketing helps E-commerce E-commerce industry in India in the year 2010 was worth USD 4.4 billion, which spurted to USD 13.6 billion by 2014 and by the end of 2015, it was valued at USD 16 billion. This is driven by growing adoption of smart phones and increase in the number of internet users .India is projected to cross USD 80 billion by 2020 and USD 300 billion by 2030 , according to a report by SNAPDEAL ( one of the leading e-commerce company of India).On the other hand China is already a USD 450 billion industry and it is still growing rapidly.

India had 330 million internet users till the end of 2015, and it is set to cross the mark of 730 million by the end of 2020. Smart phone users in the country are expected to be 350 million by the end of 2017 and 500 million by the end of 2020. All these numbers are a proof that both the e-commerce industry as well as the digital marketing industry are booming and are going to boom further. Also, large number of people are moving from rural to urban areas where there is better availability of internet and digital media. With such a huge number of people getting connected digitally there is no doubt that the digital industries will grow even bigger.

Now, what has lead to e-commerce industries rapid growth? The e-commerce industry has marketing strategies which focuses on the buy and sell process through online platforms and other electronic systems. It capitalizes a lot on digital marketing as well as on electronic fund transfer and online transaction.

Various digital marketing elements are adopted by e-commerce and that has helped the industry in a great way, such as SEO (search engine optimization),PPC(pay per click), text messaging, email marketing etc.

Now we will discuss each of the elements briefly.

SEO: The main aim of an e-commerce website is to attract visitors and generate sales. This is where SEO plays a very important role as it helps to increase the number of visitors to an e-commerce website.

An e-commerce website has to have a well written product description and the site structure also needs to be proper so that the search engines can properly index the website. More time the search engine will show the website on the result page, more the number of visitors will increase for the website. SEO is the cheapest way to promote any website . The more SEO work is done on a website, the more it benefits the entire website. It improves the website ranking in every search engine and provides a long term return on investment.

_______________________________________________________ 39

RIMS Journal of Management, Vol.2(1I), July - December 2016

Future of Digital Marketing and its role in E-commerce _______________________________________________________ PPC (pay per click): PPC is one other element of digital marketing which is employed by many e-commerce websites.

The best thing about pay per click is that it is fast to implement and it is the fastest route to attract traffic. The websites decide on their keywords for the ads which is one of the most important step in this process. These keywords can be seen easily whenever a related search is made. All the PPC ads are shown on top of the page of the search engine, which play a great role in attracting customers.

Social media marketing (SMM): social media marketing is about how the companies are reaching out to the people and communicating with them regarding promotion of their new products or the quality of the products or enquire about the services they are providing through social media. With more than 2 billion active users on social media which is further going to grow, companies now understand how big a role SMM can play and it can be game changer. Ecommerce websites such as AMAZON and FLIPKART are very much active on social media, be it FACEBOOK or TWITTER .

Various great deals for customers come out during the festive season and these companies promote them on social media . Amazon has more than 23 million likes on Facebook and more than 108 million followers on twitter.

Amazon responds to customer queries and does not take much time in replying. Also, if you see a product on Amazon's page on Twitter , there is a way for the users to directly

add that item to your Amazon cart immediately by replying with #AmazonCart.

All the e-commerce websites foresee the potential of social media marketing and they invest their time, money and effort in it.

E-mail marketing: When companies send the information about their existing or upcoming products and services through email to their customer then that type of marketing is known as e-mail marketing. Many e-commerce websites follow this type of strategy as it is very cheap form of marketing.

The website try to make their content attractive in a graphical way so that it will attract customers. There main objective is to get more and new customers and they are constantly looking whether more customers are subscribing to their website or not, and they accordingly change their methodology.

Text messaging: websites and companies use this to send information to their customers about the recent offers or about products. Dependency on this method was a lot more a decade earlier when there were less Smartphone users and internet users. It is still very much in use and many e-commerce websites engage with their customers through text messaging.

Online advertising: online advertisement is a very important element of digital marketing which is employed by many e-commerce companies. Companies engage with their customers in the form of advertisements

_______________________________________________________ 40

RIMS Journal of Management, Vol.2(1I), July - December 2016

Future of Digital Marketing and its role in E-commerce _______________________________________________________ which are relevant to them. These are the advertisements which we see when we are watching youtube or doing shopping online , the advertisements that pop up during that time are the online advertisements.

Conclusion We have come across a lot of things in this article. We looked into the different scenarios which have taken place and are going to take place in the digital industry in the future. We know that ultimately the digital marketing will overtake the traditional marketing. We also came to know how e-commerce industry depends on digital marketing and how it has

helped them. Lot of people in India are moving from rural to urban areas and the number of internet users will definitely grow in the coming years. The story of digital media is far from climax and the future of digital marketing is immense. People are addicted to digital media and there is no chance that the number will decrease in the near future. Marketing tactics can further be improved and can be furthermore innovative which will help in attracting more potential customers.

References ď‚&#x; ď‚&#x;

The Hindu newspaper Economic times

_______________________________________________________ 41

RIMS Journal of Management, Vol.2(1I), July - December 2016

A Golden Age For Women Entrepreneurs Has Begun... _______________________________________________________

By Ranjitha. S. N BBA 1st year, RIBS Abstract “If by strength is meant moral power, then woman is immeasurably man's superior.�

Women are the largest untapped reservoir of talent in the world and this talent has lead to successful women entrepreneurship. Successful women entrepreneurs are not only matching their male counterparts in several ways, they're outperforming them. Today, when businesses are facing a severe crunch in entrepreneurial talent. Any discussion on the status of women in India tends to conjure up pictures of illiteracy, exploitation, discrimination and low life expectancy. Entrepreneurship was once considered a man's domain, but the tide has shifted, more than nine million U.S firms are now owned by women, employing nearly 8 million people and generating $1.5 trillion in sales. In March we celebrate International women's day and October is celebrated as National women in small business month, So this is one of my reason to dedicate this article on women entrepreneurs.

What's good for women is good for the economy. The need to improve the status of women and the promotion of women's roles in development are no longer seen merely as issues of human rights or social justice. Investments in women are now widely recognized as crucial to achieving sustainable development. Economists agree women entrepreneurs are an under-tapped force that can rekindle economic expansion.

Women have been paving the path for entrepreneurs in every industry for many decades. Today, the list of women entrepreneurs spans many industries, from fashion to semi-conductors, and even more. Women entrepreneurs are historically must known for running fashion houses and cosmetic companies. But, in most recent decade a remarkable number of entrepreneurs have made their marks in other industries like biotech, real estate and technology, for example Kiran Mazumdar Shaw, the founder of Biocon.

Introduction Across the globe, women entrepreneurship development has acquired significant

attention in recent years. The next decade could see increased effort in this direction due to objectives of regional balance and employment. Women in business are a recent

_______________________________________________________ 42

RIMS Journal of Management, Vol.2(1I), July - December 2016

A Golden Age For Women Entrepreneurs Has Begun... _______________________________________________________ phenomenon in India. By and large they had confide themselves to petty business and tiny cottage industries. Women entrepreneurs engaged in business due to push and pull factors. Which encourage women to have an independent occupations and stands on their own legs. A sense towards independent decision making on their life and career is the motivational factor behind this urge. There is no dearth of exceptional and talented women entrepreneurs in India. Whether it is Pepsi co's Indira Nooyi or our very own Television Queen, Ekta Kapoor, these women have proved that they can very well handle the economics of the business as much as they can manage the home accounts. We have many examples in the present who have made big name for themselves in the business world but what about tomorrow? Who will be the torch bearer for women power in the future?

Start-up India, Make In India, and entrepreneurship, in general, made news this year, especially with the governments at both the State and Central level rooting for entrepreneurs. The allocation of Rs 200-crore budget by the Modi government towards the empowerment of women was also welcome news. Saddled with house hold chores and domestic responsibilities women want to get independence. Under the influence of these factors the women entrepreneurs choose a profession as a challenge and as an urge to do something new. Such situation is described as pull factors. While in push factors women are engaged in business activities due to family

compulsion and the responsibility is thrust upon them. Women entrepreneurship is gaining importance in India in wake of economic liberalisation and globalisation.

There exist a plethora of successful business women entrepreneurs both in social and economic fields in India.

In Hindu scriptures, a woman has been described as the embodiment of shakti.

Women are leaving the workforce in chores in favour of being at home. Not to be home makers, but as job-making entrepreneurs.

Entrepreneurship has been a male-dominated phenomenon from the early age, but the time as today's memorable and inspirational entrepreneurs. In almost all the developed countries in the world are putting their steps at par with the men in the field of business.

Women entrepreneurship must be moulded properly with entrepreneurial traits and skills to meet the changes in trends, challenges global markets and also to be competent enough to sustain and strive for excellence in entrepreneurial arena. The women entrepreneurs are key players in any developing countries particularly in terms of their contribution to economic development.

In recent years, even among the developed countries like USA and Canada, women's role in terms of their share in small business has been increasing. Breaking centuries of tradition, the Indian women today has not only embraced a life in the corporate world but has also begun to make her moves beyond the corporate career and into entrepreneurship.

_______________________________________________________ 43

RIMS Journal of Management, Vol.2(1I), July - December 2016

A Golden Age For Women Entrepreneurs Has Begun... _______________________________________________________ The reason for this being that many women nip their interests in the bud or give up midway not because it is hard to become an entrepreneur but because they find their journey too uphill to become one. Economists and academics agree women entrepreneurs are an under-tapped force.. The trend in India is changing, women entrepreneurs has been increased significantly, women are showing interest to be economically independent , they are coming forth with all different business ideas to start up small and medium enterprises. The role of women entrepreneurs is especially relevant in the situation of large scale unemployment that the country faces. According to the 2013 womenowned business report, published by small business payment card issuer American xpress OPEN, more than 8.6 million U.S. businesses are owned by women.

Problems Faced India has its own pool of fearless and talent women entrepreneurs who've made a mark for themselves in India as well as overseas.

They've embraced entrepreneurship and established their own venture. These women entrepreneurs face a series of problems right from the beginning till the enterprise functions. Being women itself poses various problems to a women entrepreneur. The problems of Indian women pertains to her responsibility towards family, society, the traditions, culture, socio cultural values, ethics, motherhood subordinates to ling

husband and men, physically weak, feeling of insecurity, cannot be tough are some peculiar problems that the Indian women are coming across while they jump into entrepreneurship.

What stops them from taking on that journey?

Why is it that despite the change in numbers?

We do not see as many women on the entrepreneurial map? And whether we like it or not, why do most perceive potential failures for women who do take the plunge?

Are some of the questions which strike our mind. There are umpteen problems faced by women at various stages beginning from their initial commencement of enterprise, in their management like shortage of finance, marketing problems, shortage of raw materials, stiff competition, limited managerial ability, high cost of production, absence of entrepreneurial aptitude, low risk taking ability, family conflicts, patriarchal society, lack of entrepreneurial training, legal formalities, travelling, credit facilities, male-dominated society, exploitation of middle men, lack of self confidence, aggression and assertiveness networking, prioritization expectations, business mindedness, sustainability and safety and security.

Along with the above problems there are many successful women entrepreneurs in India like Kiran Mazumadar shaw (CMD,Biocon), Indira Nooyi (chairmen and CFO pepsico), Chanda kochar (MD and CEO, ICICI) are some of the best examples. Right efforts from all the areas are required in the development of women entrepreneurs

_______________________________________________________ 44

RIMS Journal of Management, Vol.2(1I), July - December 2016

A Golden Age For Women Entrepreneurs Has Begun... _______________________________________________________ and their greater participation in entrepreneurial activities. The problems faced by women entrepreneurs can be overcome by some of the measures like considering women as specific target group for all developmental programmes, better educational facilities and schemes should be extended to women folk from government part, encourage women's participation in decision making, vocational training to be extended to women community that enables them to understand the production process and production management, training on professional competence and leadership skill to be extended to women entrepreneurs.

dire need to encourage women entrepreneurship as women workforce is promptly available to exploit the unexplored dimensions of business ventures. Women entrepreneurs should be moulded properly with entrepreneurial traits and skills to meet changing trends and challenging global markets, and also be competent enough to sustain and strive in the local economic arena.

It is hoped that the article provides some idea about women entrepreneurship in India as well as world in general.

References https://hbr.org/2013/09/global-rise-offemale-entrepreneurs

Conclusion Entrepreneurship is presently the most discussed and encouraged concept all over the world to overcome economic challenges.

Women being the vital gender of the overall population have great capacity and potential to be the contributor in the overall economic development of any nation. Hence, programs and policies need to be customised not to just encourage entrepreneurial culture among youth. Developing countries are definitely in

http://bigstartups.in/articles/article/10successful-women-entrepreneurs-india https://en.wikipedia.org/wiki/Female_entrep reneur http://www.forbesindia.com/blog/economypolicy/why-india-needs-more-womenentrepreneurs/

_______________________________________________________ 45

RIMS Journal of Management, Vol.2(1I), July - December 2016

M S RAMAIAH FOUNDATION RAMAIAH INSTITUTE OF MANAGEMENT STUDIES RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES Evolving Leaders

No.15, New B.E.L. Road, MS Ramaiah Nagar, MSRIT Post, Bengaluru - 560054 Ph: +91-080-23607640 / 41, 080-236907579 Fax:+91-080-23607642 email: dean@rimsbangalore.in, swapna@rimsbangalore.in Website: www.rimsbangalore.in