CAMEL Model Basic Info..

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RELATIVE PERFROMANCE OF COMMERCIAL BANKS IN INDIA USING CAMEL APPROACH Sriharsha Reddy Kambhammettu A Study on Financial Health of Arasu Rubber Corporation, Kanyakumari District of Tamilnadu: A Z Score Approach Thavamalar D.H, Julius Prasad M AN EMPIRICAL STUDY ON TOURISTS DIFFICULTIES IN INDIA Lakavath Mothilal
Relative Performance of Commercial Banks in India using Camel Approach

Dr. K. Sriharsha Reddy, Professor & Head, Department of Business Management, Matrusri Institute of PG Studies, Saidabad, Hyderabad-50059
Abstract Due to the nature of banking and the important role of banks in the economy in capital formation, banks should be more closely watched than any other type of economic unit in the economy. The CAMEL supervisory system in banking sector is a substantial improvement over the earlier systems in terms of frequency, coverage and focus. In the present study an attempt is made to evaluate relative performance of banks in India using CAMEL approach. It is found that public sector banks have significantly improved indicating positive impact of the reforms in liberalizing interest rates, rationalizing directed credit and Investments and increasing competition. Key Words: CAMEL, bank performance, progress ratio. JEL: E1 1. Introduction A sea change has taken place in the banking environment since the initiation of reform process in 1992-93. The period of little more than one and half a decade, witnessed remarkable changes in perceptions, policies and practices of banks. In the light of changes in banking policies various studies were undertaken to assess the performance of banks in India. These studies attempted to compare the performance across the three categories of banks - public, private and foreign using profitability measures such as return on capital employed, return on assets and efficiency measures such as net interest margin, operating cost ratio. It was widely believed that foreign banks excelled over public and private banks. Banks have been increasingly diversifying into non-interest income activities as against traditional banking. Although domestic private and foreign banks performed better than public-sector banks initially during 199596, no observable relationship between ownership and performance is found in the Indian banking industry during 19992000 (Sarkar, Sarkar and Bhaumik (1998), Sayuri Shirai (2001)). Studies on the impact of privatization on banks performance and efficiency revealed that partially privatized banks have performed better than fully public sector banks and they are catching up with the banks in the private sector (Sathye (2005)). It was observed by some of the researchers that there exits convergence in performance between public and private sector banks in the post-reform era (Ram Mohan and Ray (2004)). The major factors affecting the profitability and efficiency of the banks were directed investments (cash reserves and statutory liquidity requirements), directed credit (priority sector advances), growth in assets, growth in advances and
increased proportion of other income in total income of the banks (Bhaumik and Dimova (2004)). Over the past years, the bank regulators have introduced a number of measures to link the regulation of commercial banks to the level of risk and financial viability of these banks. The regulators have augmented bank supervision through CAMEL (capital adequacy, asset quality, management quality, earnings and liquidity) rating model to include explicit assessment of banks ability to manage its performance. A large number of studies evaluating the performance of commercial banks in the reform period have come up. But, studies assessing the overall relative performance of banks using CAMEL (Capital adequacy, Asset quality, Management quality, Earnings quality and Liquidity) ratios remains untouched. In this paper an attempt is made to evaluate the relative performance of the banks using CAMEL approach after first phase of reforms (i.e., 1999) and after second phase of reforms (i.e., 2009)1. Due to the nature of banking and the important role of banks in the economy (i.e. capital formation), banks should be more closely watched than any other type of economic unit in the economy. The present supervisory system in banking sector is a substantial improvement over the earlier system in terms of frequency, coverage and focus as also the tools employed. Nearly one-half of the Basle core principles for Effective Banking Supervision have already been adhered to and the remaining is at a stage of implementation. Two Supervisory Rating Models, based on CAMELS (capital adequacy, asset quality, management quality, earnings, liquidity and systems) and CACS (capital, asset quality, compliance and systems & control) models for rating of the Indian Commercial Banks and Foreign Banks operating in India respectively, have been worked out on the lines recommended by the Padmanabhan Working Group (1995). These ratings would enable the Reserve Bank to identify the banks whose condition warrants special supervisory attention Following sections explain various types of CAMEL approaches adopted by regulators and rating agencies to evaluate the performance of the banks. 1.1 CAMEL Rating In the 1980s, the US supervisory authorities, through the use of the CAMEL rating system, were the first to introduce ratings for on-site examinations of banking institutions. The concept introduced a uniform system of rating a banking
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It should be noted that policies initiated in first phase and second phase of reforms are being continued till date.
www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012
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institution in the United States. It is based on examiner assessment of a banking institution under certain supervisory criteria, and is used by all three US supervisory agencies, i.e. the Federal Reserve System, Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)2. Under this system, each banking institution subject to on-site examination is evaluated on the basis of five (now six) critical dimensions relating to its operations and performance, which are referred to as the component factors. These are Capital, Asset Quality, Management, Earnings and Liquidity and are seen to reflect the financial performance, financial condition, operating soundness and regulatory compliance of the banking institution. In 1996, in an effort to make the rating system more risk-focused, a sixth component relating to Sensitivity to market risk was added to the CAMEL rating, making it CAMELS. Each of the component factors is rated on a scale of 1 (best) to 5 (worst). A composite rating is assigned as an abridgement of the component ratings and is taken as the prime indicator of a banks current financial condition. The composite rating ranges between 1 (best) and 5 (worst), and also involves a certain amount of subjectivity based on the examiners overall assessment of the institution in view of the individual component assessments. The new approach to inspection of banks (CAMEL) has been adopted from the cycle of inspections commencing since July 1997. It focused on the mandated aspects of solvency, liquidity, financial and operational health, based on CAMEL model. In India, CAMEL ratings are normally assessed every year as every banking institution is generally examined once a year. In the case of problem banks (those with a CAMEL rating of 4 or 5), the ratings may be assessed more frequently, as these banks are subject to more frequent on-site examination. Conversely, in the case of sound banks (those with a CAMEL rating of 1 or 2), on-site examinations may be conducted after an interval of 18 months, and the ratings would accordingly be updated once every one and a half years. 1.2 CAMEL Ranking It is a technique of using CAMEL ratios to estimate the relative positions of various banks. All the banks in the list may be ranked on each of the sub parameter of major parameter (for example Capital adequacy). These sub parameter ranks are combined either by simple average or weighted average. After obtaining the ranks for each major parameter, these are aggregated using the same method as mentioned above. CAMEL rating a subjective model which indicates financial strength of a bank, where as CAMEL ranking indicates the banks relative position with reference to other banks. Business standard (2003) used CAMEL ratios to rank banks in India by collecting data on a number of variables from the
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annual reports of banks. The data were combined under five heads profitability, safety, productivity, efficiency and growth. Banks were ranked on the basis of these five indicators. Each indicator was essentially an index built from a set of variables. The variables were normalised and converted into an index number. Indices of specific variables have been worked out relative to the banking sectors average. Based on the arrived index numbers for each variable, ranks were assigned in descending order of index numbers. The composite rank for each bank was worked out with weighted average3 of the ranks assigned to banks for all the five indicators. ICFAI publications (2006), also used CAMEL ratios to rank banks in India by using data from PROWESS database developed by Centre for monitoring Indian Economy (CMIE). Banks were classified into Public sector, Private sector, foreign sector and category wise ranks were assigned based on aggregate average of ranks under each group of parameters under CAMEL. All the banks in the list were ranked on each of the sub parameter of major parameter (for example Capital adequacy). These sub parameter ranks are combined to get overall rank of the bank based on a major parameter. After obtaining the ranks for each major parameter, these are aggregated using the same method as mentioned above. For example, consider ranking of two banks A and B using above methodology. According to ratios considered in Capital adequacy bank A is assigned 2nd rank for ratio 1, 10th rank for ratio 2 and 15th rank for ratio 3. Group score is obtained by estimating simple average of the three ranks. In the above case, bank A will get group score of 9 in Capital adequacy category. Similarly, if we assume that bank B got group score of 10, bank A gets 1 st rank and bank B gets 2nd rank in Capital adequacy category. Similarly, if we assume that bank A got 2 nd rank in Asset quality, 1st rank in management quality,2nd rank in earnings quality and 1st in Liquidity position, then the composite score of bank A will be 1.4 [(1+2+1+2+1)/5]. Bank B will get a composite score of 1.6 ([2+1+2+1+2]/5).Finally, bank A gets 1st rank and bank B gets 2nd rank, as composite score of bank A is lower than that of bank B. The above mentioned methodology is also used in Financial Express Earnst & Young banking survey4 and Business today KPMG banking survey5 to identify the best banks in Indian banking system
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In the United States, banks are supervised by different agencies depending on their charter. The OCC supervises Nationally - chartered banks. State-chartered banks that are members of the Federal Reserve System are supervised by the Federal Reserve and the FDIC supervises state-chartered banks that are not members of the Federal Reserve System
In arriving at an assessment of which was the best bank, the inherent bias in favour of smaller and private sector banks has to be neutralized. For instance, productivity in the case of public sector banks turns out to be low as their staff strength is huge even after the successful implementation of a voluntary retirement scheme. On the other hand, private and foreign banks have a slender work force and naturally their employees are more productive. To neutralise the bias, the weightage given to productivity is low in identifying the best bank. 4 http://www.financialexpress.com/news/fee&y-best-banksmethodology-overview/42326/1
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http://www.indiatoday.com/itoday/20070226/m-
banks.html.
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1.3 Modified CAMEL approach6 In this approach each ratio considered in the components of CAMEL is scaled using following formulae Component score (csj) = wi (R LL / UL LL) Composite Score(CS) = Wj csj (csj) Component score of each category in CAMEL wi Weights assigned to ith ratio in each component of CAMEL R value of the ratio considered LL Lower limit used to scale the value of the ratio ( it is a value slightly lower than the minimum ratio among all the banks considered) UL Upper limit used to scale the value of the ratio ( it is a value slightly higher than the maximum ratio among all the banks considered) All scaled ratios are averaged to get component score and finally all component scores are averaged to get overall composite score of each bank. These scores are used for ranking the banks performance. It is noteworthy that scaled ratios can be added to get component score as these are dimension free. ( i.e., free from units).We have estimated the composite scores for the years 1999 and year 2009 and estimated a measure called progress which is the ratio between composite score of bank in 2009 and composite score of bank in 1999. the higher the ratio the better is the progress of the bank between 1999 and 2009. Progress ratio indicates the relative performance of the bank with reference to its own performance in base year (in present study base year is1999). Progress Ratio = Composite score of bank in 2009/ Composite score of bank in 1999 Further, all the banks categorized into very good, good, medium, bad and very bad progressive banks using the following distribution formulae 2. Methodology and Frame Work of CAMEL Ratios To ascertain relative positions of banks, CAMEL ratios were computed for a panel data taken from STATISTICAL TABLES RELATING TO BANKS published by RBI
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(2009). Our data set consists of public (26), domestic private sector (19) and foreign banks (16) and rankings are given to various banks for the years 1999 and 2009. The significance of taking these time periods is that recommendations of Narasimham committee Report I were adapted by the end of 1998 and the latest year of the study. Various ratios were considered in assessing the relative performance of the banks by Business Standard, ICFAI, Business Today KPMG and FE Earnst & Young. In consultation with some of the practicing bankers we arrived at the following list of ratios to assess the relative performance of the banks. A brief discussion on the ratios considered in the analysis is presented as follows 2.1 Capital Adequacy: Capital Adequacy indicates whether the bank has enough capital to absorb unexpected losses. It is required to maintain depositors confidence and preventing the bank from going bankrupt. Some of the ratios considered to assess the capital adequacy of the banks by researchers were total capital as a percentage of total assets, total loans as a percentage of total capital, total assets to total shareholders funds, ratio of total shareholders funds to total net loans, ratio of total shareholders funds to total deposits, ratio of shareholders funds to contingency liabilities, ratio of total shareholders funds to total risk weighted assets (CAR).Debt- Equity ratio, Coverage ratio 7. However following ratios are considered in the present study. 1. Capital Adequacy Ratio (CAR) 2. Debt-Equity ratio (D/E) 3. Coverage ratio 2.2. Asset Quality: This indicates what types of advances the bank has made to generate interest income. When loans are given to highly rated companies, the rates attracted are lower than that of lower rated doubtful companies. Thus asset quality indicates the type of debtors of the bank. Some of the ratios considered to assess the asset quality of the banks by researchers are total loan as a percentage of total assets, loan loss provision to total net loans, ratio of loan loss provision to gross loans. On performing assets to net advances, investments in government securities to total investments and Standard advances to total advances8. However following ratios are considered in the present study. 1. Non-Performing Assets / Net advances (NNPA/NADV): 2. G-secs to investments (GSEC/TINV) 3. Standard advances / Total advances (STDADV/TADV) 2.3. Management Quality: This parameter is used to evaluate management quality so as to assign premium to better quality banks and discount poorly managed ones. It involves analysis of efficiency of
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One of the limitations of the method used by Financial Express- Earnst &Young, KPMG and Business Today, Business Standard and ICFAI Press is that degree of change in the performance of two banks cannot be reflected in the analysis. For example, consider three banks A,B and C with composite scores 1,5 and 15 respectively. According to CAMEL ranking technique A, B and C will be given 1 st, 2nd and 3rd ranks respectively. It can be observed that the difference in ranks between the banks is same, but It is clearly evident that the degree of poor performance of C is more than that of B. This limitation led us to devise a modified CAMEL ranking approach to rank the performance of the banks
See Gunsel Nil (2007), Marie-Joe Bou-Said and Philippe Saucier (2003) 8 Ibid 10
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management in generating business (top-line) and in maximizing profits (bottom-line).Some of the ratios considered to assess the management quality of the banks are operating expense as a percentage of total assets, deposit interest expense as a percentage of total deposits, total of risk weighted assets to total assets, total advances to total deposits (CD ratio), profit per employee, business per employee and return on net worth9. However following ratios are considered in the present study. 1. Total advances to total deposits (CDR) 2. Business per Employee (BEMP) 3. Profits per Employee (PEMP) 2.4. Earnings Quality: This parameter lays importance on how a bank earns its profits. This also explains the sustainability and growth in earnings in the future. Some of the ratios considered to assess the earnings ability of the banks were net income as a percentage of total assets, net-interest income as a percentage of total assets, ROA, ROE, Pre-tax profit/total assets, income spread to total assets, cost to income ratio, operating profit to total assets, interest income to total income and non - interest income to total income 10. However following ratios are considered in the present study. 1. Return on assets (ROA) 2. Income Spread/Total assets (SPREAD/TA) 3. Operating Profit/ Total assets (OP/TA) 4. Cost to Income ratio (COST/INCOME) 2.5. Liquidity Banks are in a business where liquidity is of prime importance. Among assets cash and investments are the most liquid of a banks assets. In this category of ratios, the ability of banks to meet its obligations is assessed. Some of the ratios considered to assess the earnings ability of the banks were Liquid assets as a percentage of total assets, liquid assets as a percentage of total deposits, total deposits as a percentage of total loans, deposits/total assets, liquid assets to demand deposits, cash to total assets and investments in government securities to total assets 11. However following ratios are considered in the present study. 1. Liquid Assets/Total Deposits (LA/TD) 2. Cash Assets/Total Assets (CASH/TA) 3. Government securities /Total Assets (GSEC/TA) Subsequent to the thorough discussions with practicing bankers and academicians, following set of variables with appropriate weights are included in the present study (Table 2) 3. Analysis of the CAMEL Model Ratios for the year 2009 3.1. Overall Rank for Each Bank The overall rank of each bank for the years 1999 and 2009 are computed using the above model and variables (Table
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3). During the year 2009 the top three performing banks in all the categories of CAMEL are Mashreq Bank, China Trust Commercial Bank and Bank of Ceylon and the worst three performers are American Exprss Bank, Development Credit Bank and Catholic Syriyan Bank. During 1999-2009 Mashreq Bank improved its position from 59th rank to 1st rank, and China Trust Commercial Bank improved from 7th rank to 2nd and Bank of Ceylon detoriated from 1st rank to 3rd rank. American Experss Bank drastically declined from 20th rank to 61th, Development Credit Bank drastically declined from its 17th rank to 60th rank and Catholic Syrian Bank slided from 57th rank to 59th ranks. Further, Mashreq Bank, Indian Bank, Oman International Bank,Punjab & Sind Bank,Abu Dhabi Bank, United Bank of India, Ratnakar Bank, China Trust Commercial Bank, Uco Bank are very progressive banks with high Progress Ratios during 19992009. UTI Bank,Jammu & Kashmir Bank,Indus Ind Bank, Development Credit Bank,American Express Bank, Sonali Bank are very bad progressive banks with low progress ratios during 1999-2009 . 3.2. Changes in the Performance of the Banks During the period 1999-2009, 18 banks have improved and 19 banks have deteriorated out of 61 banks 12 (Tables 4 and 5). Further, nine public sector banks, five foreign banks and four private sector banks improved their performance and 8 private sector banks, two foreign banks and nine public sector banks have deteriorated during the period 1999-2009. 24 banks from all the groups did not change significantly during the study period (if the change in the ranks is in the range of -5 to 5, it assumed that there is no significant change in the performance of the banks ) During the period 1999-2009, in public sector bank group 21 banks out of 26 banks were below average in 1999, but their performance has improved tremendously. Out of 26 banks nine banks have improved their ranks; where as nine banks have deteriorated. Further, of these nine banks, three banks have improved their ranks by more than 20 ranks and the banks were Punjab and Sind BankState, Bank of India and Indian Bank (Table 3).. In private sector banks, out of 19 banks, 12 banks were above average in 1999, but their performance has deteriorated significantly. Out of 19 banks eight banks have deteriorated their ranks where as four banks have improved. Further, of these eight banks, three banks have deteriorated by more than 20 ranks and the banks were Development Credit Bank, Indusind Bank, Jammu & Kashmir Bank (Table 2).. In foreign banks, out of 16 banks, 13 banks were above average in 1999, and their performance remained balanced. Out of 16 banks two banks have deteriorated their ranks and five banks have improved. Further, of these banks, two banks have deteriorated by more than 20 ranks such as
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Ibid 10 Ibid 10 11 Ibid 10

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The merger between HDFC and Times Bank, ICICI and Bank of Madura, Centurion Bank and Bank of Punjab, Oriental Bank of Commerce and Global Trust Bank may be one of the reasons for the improvement or deterioration of the banks performance which is beyond the scope of the present study
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American Express Bank and Sonali Bank and two banks have improved by more than 20 ranks such as Oman International Bank and Mashreq bank (Table 3). The above analysis indicates that public sector banks have significantly improved where as private sector banks have drastically deteriorated in their performance. The reasons for the better performance of public sector banks can be attributed to increased profitability and cost efficiency due to the reforms initiated since 1991. Increased competition, deregulation of interest rates, reforms in priority sector lending, decline in SLR and CRR investments and adoption of technology in providing banking services are some of the reasons for the relative improved performance of public sector banks Conclusion CAMEL approach is significant tool to assess the relative financial strength of a bank and to suggest necessary measures to improve weaknesses of a bank. In India, RBI adopted this approach in 1996 followed on the recommendations of Padmanabham Working Group (1995) committee. In the present study, modified version of CAMEL ranking approach is used to assess relative positions of commercial banks. It is found that during the year 2009 the top three performing banks in all the categories of CAMEL are Mashreq Bank, China Trust Commercial Bank and Bank of Ceylon because of high capital adequacy, and liquidity. The worst three performers are American Exprss Bank, Development Credit Bank and Catholic Syriyan Bank during the study period because of low capital adequacy, low assets and earnings quality and poor management quality. Further, Mashreq Bank, Indian Bank, Oman International Bank,Punjab & Sind Bank,Abu Dhabi Bank, United Bank of India, Ratnakar Bank, China Trust Commercial Bank, Uco Bank are very progressive banks with high Progress Ratios during 1999-2009. UTI Bank, Jammu & Kashmir Bank,Indus Ind Bank, Development Credit Bank,American Express Bank, Sonali Bank are Very bad Progressive banks with low Progress Ratios during 1999-2009 . Public sector banks have significantly improved indicating positive impact of the reforms in liberalizing interest rates, rationalizing directed credit and Investments and increasing competition REFERENCES 1. Bhaumik Sumon Kumar and Dimova Ralitza (2004), How Important is Ownership in a Market
with Level Playing Field? The Indian Banking Sector Revisited, Journal of Comparative Economics, Vol. 32, pp 165180 2. Business Standard (2003), Banking Survey 20022003. 3. Gunsel Nil (2007), Financial Ratios and the Probabilistic Prediction of Bank Failure in North Cyprus European Journal of Scientific Research, Vol.18, No.2 4. ICFAI University press (2006), Indian Banking 2005-06 - Performance Snapshot, The Analyst, October. 5. Padmanabhan Working Group (1995), On -site Supervision of Banks, RBI. 6. Ram Mohan T T & Ray Subhas C (2004), Comparing Performance of Public and Private Sector Banks, Economic and Political Weekly, Vol. 39, No. 12, March 20 - March 26 7. Report on Banking Statistical Returns (1998-2009), RBI 8. Report on Trends and Progress of Banking in India (1998-2009), RBI 9. Sarkar Jayati, Subrata Sarkar and Sumon K. Bhaumik (1998), Does Ownership Always Matter?Evidence from the Indian Banking Industry, Journal of comparative economics, Vol. 26, pp 262281 10. Sathye, M (2005), Privatization, Performance, and Efficiency: A Study of Indian Banks, Vikalpa, Vol 30, No1, pp 7-16 11. Sayuri Shirai (2001), Assessment of Indias Banking Sector Reforms from the Perspective of the Governance of the Banking System, This paper was presented at the ESCAP-ADB Joint Workshop on Mobilizing Domestic Finance for Development: Reassessment of Bank Finance and Debt Markets in Asia and the Pacific, Bangkok, pp 22-23, November Online references 12. http://www.financialexpress.com/news/fee&y-bestbanks-methodology-overview/42326/1 13. http://www.indiatoday.com/itoday/20070226/mbanks.html.
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Annexure Exhibit 1: Definition of Relative Degree of Progressive Banks Progress ratio lesser than m 0.842 s Very Bad Progression (VG) Progress ratio between m 0.842 s and m - 0.253 s Bad Progression (B) Progress ratio between m - 0.253 s and m + 0.253 s Medium Progression (M) Progress ratio between m + 0.253 s and m+ 0.842 s Good Progression (G) Progress ratio greater than m+ 0.842 s Very Good Progression (VB) Note: s Standard Deviation of Progress Ratio and m- Mean of Progress Ratio
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Table 1 : Description of Parameters Considered in CAMEL Ranking Description Interpretation Capital Adequacy Ratio is the ratio It measures the ability of a bank in absorbing of TIER-I and TIER-II Capital to the losses arising from risk assets. The higher the aggregate of risk weighted assets value of this ratio, the better the financial health (RWA). of a bank D/E This is calculated as the proportion This ratio thus indicates the banks financial of total outside liability to net worth. leverage. In the case of manufacturing sector the Thus this ratio is equal to (Capital + ideal ratio is 2:1. However, in the case of Reserves)/(Deposits + Borrowings + commercial banks, there is no standard norm for Other Liabilities). debt equity ratio COVERAGE It is the ratio between net worth This ratio indicates availability of capital to RATIO minus net NPAs to total assets. meet any incidence of loss assets in NPAs. Higher NPAs erode net worth of the bank and reduces availability of capital. Higher the ratio the better for the bank, indicating availability of high amount of capital. Asset Quality NNPA/NADV NPAs are the assets that are doubtful The lower the ratio, the better for the company. to return the principal and/or interest due in the near future. This results in huge losses to a bank. Net advance indicate the net of advances after deducting provisions made for NPAs. Thus Non-Performing Assets / Net advances indicate the level of non performing assets in net advances. GSEC/TINV It is the ratio of government This ratio indicates a banks strategy as being securities and total investments. high-profits high-risk or low profits-low risk. Government securities are generally considered as the most safe debt instrument carrying the lowest return STDADV/ This ratio indicates the proportion of A higher ratio means that the bank has high TADV standard advances to total advances performing assets which results in higher of a bank. Standard advances are the earnings net of total advances and gross NPAs. Management BEMP This ratio is used to find out whether The higher the ratio the better will be the Quality a bank is relatively over or under performance of the bank. staffed PEMP This is also a ratio to check The higher the ratio the better will be the efficiency of bank in maximizing performance of the bank. profits per employee. CDR It is the ratio of the total advances to It indicates the ability of a bank to convert its deposits deposits into higher earning advances. Earning Quality ROA It is the ratio of Net profit after tax Higher return on asset means greater returns and Total assets earned on assets deployed by the bank. SPREAD/TA Income Spread is the difference This ratio shows how much a bank can earn for between Interest Income earned and every rupee of investments made in assets. The Interest Expended. It is the ratio higher the ratio the better will be the between spread and total assets performance of the bank Category Capital Adequacy Ratios CRAR OP/TA This ratio indicates how much a bank The higher the ratio the better will be the can earn from its operations after performance of the bank meeting operating expenses for every rupee of investments made in assets.. It is the ratio between operating It indicates the ability of the company to meet expenses to Net Interest income and operating expenses from the revenues generated other income. by the banks. The lower the ratio, the better for
COST/ INCOME
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the bank. Liquidity CASH/TA GSEC/TA LA/TD Cash has the highest liquidity and safety among all assets.. Government securities are the most liquid and safe investments. This ratio measures cash as a proportion of total assets This ratio measures Government securities as a proportion of total assets.
Liquid assets consist of cash balance This proportion indicates ability of the bank to and investments. meet its deposit obligations with available liquid funds. The higher the ratio, the better for the bank
Source: Authors Table 2 : Weights of Variables Considered in CAMEL Ranking Weight Reasons Composite weights Capital CRAR 0.70 CRAR indicates availability of 0.20 Adequacy capital for a given level of risk D/E 0.15 weighted assets and considered COVERAGE 0.15 as more important variable RATIO indicating capital adequacy of a bank Asset Quality NNPA/NADV 0.10 Standard advances in total 0.25 advances contribute to higher GSEC/TINV 0.30 earnings to banks where as STDADV/ 0.60 NPAs results in decreasing profit TADV levels. Therefore STDADV/TADV parameter is given higher weight. Management BEMP 0.25 CDR indicates top-line of banks 0.2 Quality income statements and should be given higher weight. PEMP 0.25 CDR 0.50 Earning ROA 0.25 All the four variables explain the 0.25 Quality earnings quality from various SPREAD/TA 0.25 viewpoints such as earnings OP/TA 0.25 from interest and non interest COST/ 0.25 activities and ability to meet INCOME costs from income generated by the banks. All the variables are given equal weights because of their equal importance Liquidity CASH/TA 0.25 Liquid assets to total deposits 0.10 ratio is considered more GSEC/TA 0.25 important as it ensures higher credibility in the minds of LA/TD 0.50 depositors. Source: Discussions with bank officers Category Ratios
Reasons In CAMEL parameters Asset quality and Earnings quality are considered very important because assets size indicates growth of the bank and earnings efficiency ensures survival of the bank. Next important categories are Capital adequacy which ensures safety of depositors and Management quality which indicates productivity of the banks. Though liquidity is essential, it is given least weight as high liquidity deteriorates profitability of the banks and affects the overall performance of the banks.
SN 1 2 3 4 5 6 7
Table 3 : Comparision of Composite Ranks of Selected Banks During 1999 and 2009 BANK NAME RD COM RNK COM RNK19 PR 2009 2009 1999 99 STATE BANK OF INDIA 10 0.451 46 0.363 36 124.17 STATE BANK OF BIKANER & JAIPUR 11 0.465 43 0.374 32 124.21 STATE BANK OF HYDERABAD 9 0.457 38 0.386 29 118.30 STATE BANK OF INDORE 14 0.463 36 0.394 22 117.35 STATE BANK OF MYSORE -3 0.456 42 0.354 45 128.72 STATE BANK OF PATIALA 15 0.468 40 0.389 25 120.27 STATE BANK OF TRAVANCORE -2 0.465 32 0.366 34 127.05
PC M M M B M M M
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8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61
ALLAHABAD BANK ANDHRA BANK BANK OF BARODA BANK OF INDIA BANK OF MAHARASHTRA CANARA BANK CENTRAL BANK OF INDIA CORPORATION BANK DENA BANK INDIAN BANK INDIAN OVERSEAS BANK ORIENTAL BANK OF COMMERCE PUNJAB & SIND BANK PUNJAB NATIONAL BANK SYNDICATE BANK UCO BANK UNION BANK OF INDIA UNITED BANK OF INDIA VIJAYA BANK UTI BANK BANK OF RAJASTHAN CATHOLIC SYRIAN BANK CITY UNION BANK DEVELOPMENT CREDIT BANK DHANALAKSHMI BANK FEDERAL BANK HDFC BANK ICICI BANK INDUSIND BANK JAMMU & KASHMIR BANK KARNATAKA BANK KARUR VYSYA BANK LAKSHMI VILAS BANK NAINITAL BANK RATNAKAR BANK SBI COMMERCIAL & INTERNATIONAL BANK SOUTH INDIAN BANK TAMILNAD MERCANTILE BANK ABN AMRO BANK ABU DHABI COMMERCIAL BANK AMERICAN EXPRESS BANK BANK OF AMERICA BANK OF BAHRAIN & KUWAIT BANK OF CEYLON CHINATRUST COMMERCIAL BANK CITIBANK DEUTSCHE BANK HONG KONG & SHANGHAI BANKING CORPORATION MASHREQ BANK OMAN INTERNATIONAL BANK SOCIETE GENERALE SONALI BANK STANDARD CHARTERED BANK STATE BANK OF MAURITIUS mean ( m)
-8 -6 -17 -25 13 -19 16 -1 13 -42 -9 -1 -27 -13 6 -2 -2 0 3 10 2 2 12 43 -12 -33 4 2 42 36 11 9 16 5 -33 1 5 -6 3 -14 41 0 -19 2 -5 -1 3 0 -58 -39 -13 46 2 3
0.438 0.467 0.453 0.464 0.444 0.464 0.433 0.450 0.438 0.473 0.458 0.466 0.465 0.469 0.447 0.428 0.452 0.423 0.441 0.443 0.413 0.408 0.459 0.402 0.460 0.471 0.487 0.446 0.435 0.439 0.439 0.462 0.438 0.468 0.513 0.470 0.430 0.470 0.543 0.587 0.347 0.632 0.530 0.655 0.655 0.553 0.523 0.455 0.705 0.480 0.490 0.456 0.504 0.586 0.476
44 27 31 24 53 34 57 26 51 19 41 29 28 22 50 54 35 58 49 23 56 59 33 60 39 14 16 30 52 45 37 25 55 20 10 15 47 17 9 5 61 4 12 3 2 7 8 18 1 21 11 48 13 6
0.338 0.374 0.351 0.351 0.357 0.338 0.356 0.387 0.360 0.225 0.348 0.385 0.303 0.364 0.355 0.301 0.361 0.292 0.352 0.417 0.311 0.299 0.396 0.408 0.343 0.352 0.419 0.386 0.431 0.432 0.387 0.411 0.359 0.411 0.356 0.414 0.356 0.394 0.464 0.399 0.397 0.493 0.382 0.570 0.456 0.452 0.466 0.405 0.290 0.272 0.393 0.565 0.419 0.514 0.383
52 33 48 49 40 53 41 27 38 61 50 30 55 35 44 56 37 58 46 13 54 57 21 17 51 47 12 28 10 9 26 16 39 15 43 14 42 23 6 19 20 4 31 1 7 8 5 18 59 60 24 2 11 3
129.46 125.05 128.90 132.25 124.39 137.42 121.52 116.25 121.84 210.51 131.53 121.02 153.72 129.04 126.18 141.84 125.43 144.76 125.45 106.26 132.93 136.37 116.05 98.51 134.00 134.02 116.31 115.45 100.79 101.60 113.48 112.36 122.11 113.80 144.28 113.38 120.93 119.37 117.01 147.15 87.57 128.28 138.84 114.77 143.71 122.46 112.18 112.30 243.39 176.34 124.69 80.75 120.34 114.15 126.9
G M M G M G M B M VG G M VG G M VG M VG M VB G G B VB G G B B VB VB B B M B VG B M M B VG VB M G B VG M B B VG VG M VB M B
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Standard deviation (s) 0.063 0.062 m - 0.842 s 0.423 0.330 m - 0.253 s 0.460 0.367 m + 0.253 s 0.492 0.398 m+ 0.842 s 0.530 0.435 RD- Rank Difference, COM- Composite score, RNK- Rank, PR- Progress Ratio, PC- Progress Category
24.01 106.7 120.9 133.0 147.1
Table 4 : Frequency Distribution of Composite Ranks in 1999 and Changes in Composite Ranks During 1999-2009 -5 to 5 Composite ranks in 1999 0-10 11-20 21-30 31-40 41-50 51-61 7 5 3 2 3 4 Changes in composite ranks between 1999 and 2006 6-10 11-20 >20 -10 to -6 -20 to -11 0 0 0 0 0 1 0 2 1 1 0 1 1 2 0 1 1 1 3 1 1 2 4 0 Total 0 0 4 4 1 0 <-20 3 2 0 0 0 0 10 10 10 10 10 11
Table 5 : Frequency Distribution of Composite Ranks in 1999 and Changes in Composite Ranks During 1999-2009 Bank Group Wise TYPE PUB Composite ranks in 1999 0-10 11-20 21-30 31-40 41-50 51-61 0-10 11-20 21-30 31-40 41-50 51-61 0-10 11-20 21-30 31-40 41-50 51-61 Changes in composite ranks between 1999 and 2006 -5 to 5 6-10 11-20 >20 -10 to -6 -20 to -11 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 1 2 2 1 1 0 1 3 2 1 1 1 1 1 2 1 1 2 0 0 8 3 3 3 3 6 0 0 0 0 0 0 3 0 0 0 2 0 1 1 0 0 0 2 0 0 0 0 0 1 1 0 0 2 0 0 2 0 1 0 0 0 7 1 1 2 2 3 7 0 0 0 0 0 2 0 1 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 9 0 3 2 0 0 Total <-20 0 0 0 0 0 0 0 2 1 0 0 0 0 3 1 1 0 0 0 0 2 0 0 5 8 7 6 26 2 6 4 1 3 3 19 8 4 1 1 0 2 16
PRI
Total Composite ranks in 1999
Total FOR Composite ranks in 1999
Total
***
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A Study on Financial Health of Arasu Rubber Corporation, Kanyakumari District of Tamilnadu: A Z Score Approach
D.H.Thavamalar and M.Julius Prasad Assistant Professor, commerce wing, Directorate of Distance Education, Annamalai University, Annamalainagar-608002
ABSTRACT Rubber is one of the versatile materials discovered by mankind. It is used for making tyres, tubes, engine mountings, brakes, radiators, hoses, oil seals, beading, mattings, linings, cushions etc. necessary for automobile industry. Arasu Rubber Corporation was established during 1984. The corporation has a major share in the rubber production in Kanyakumari district. The companys profitability, liquidity, leverage, activity and growth could be measured through financial ratios. No single ratio calculation can provide a meaningful picture of a firms financial condition. Thus ,in the present study , Edward Altmans Z score has been used which focuses on a model which captures the predictive viability of a firms financial health by using a combination of financial ratios that ultimately predicts a score which can be used to determine the financial health of Arasu Rubber Corporation Key words: liquidity, leverage, Altmans Z score, financial ratios. Introduction Rubber has multifarious uses and there is hardly any segment of modern life which does not make use of rubber based material. At all India level, Tamilnadu holds the second place in the production of natural rubber. The share of Kanyakumari district in the total area of Tamil Nadu is 97.78 percent in 2007-2008. It is the only district which has suitable climatic conditions for rubber growing. Arasu Rubber Corporation was established by the Government of Tamil Nadu during 1984. The corporation has a major share in the rubber production in Kanyakumari district. It is the only organization in Tamil Nadu that is involved in the active management of rubber plantations and rubber processing. The companies profitability, liquidity, leverage, activity and growth could be measured through financial ratios. No single ratio calculation can provide a meaningful picture of a firms financial condition. Thus ,in the present study , Edward Altmans Z score has been used which focuses on a model which captures the predictive viability of a firms financial health by using a combination of financial ratios that ultimately predicts a score which can be used to determine the financial health of a company. Edward I. Altman [1] introduced the world to the Altman Z score, a technique designed to predict corporate bankruptcy. Over the past Forty two years, scores of academies and practitioners have put the Z-score to test under a wide range of industries and economic environments for their financial health. Based on the above facts the present investigation has been taken to study the financial health of Arasu Rubber Corporation based on Altmans Z score approach. Review of literature The multiple discriminate analysis [MDS] was used by Altman in his effort to find out a bankruptcy prediction model. Between 1946 and 1965 he selected 33 publicly traded manufacturing bankrupt companies and matched them to 33 firms on a random basis. The result yielded equations called Z score that correctly classified 94% of the bankrupt companies and 97% of the nonbankrupt companies a year prior to bankruptcy. This percentage dropped when trying to predict bankruptcy two or more years before it occurred. The ratios used in Altman model [2] are working capital over total assets, retained earning over total assets, earnings before interest, taxes over total assets market, value of the equity over book value of total liabilities and sales over total assets. Financial ratios usually lack theoretical justification. Since bankruptcy is cash oriented phenomenon, the use of variable based on cash flows is theoretically appealing. Statistics shows that more than 300 companies go out of business every week [3]. The high rate of bankruptcy is attributed to the combined effect of fierce competition in the market place and heavier debt burdens carried by the companies. While few firms were affected by the challenges, a large number of firms were affected by the competition. Gupta attempted a refinement of Beavers [4] method with the objective of building a forewarning system of corporate sickness the study among 728 industries revealed that earning before depreciation, interest and taxes to taxes and operating cash flows to sales had higher degree of sickness. In accordance with the literature, the liquidity and profitability ratios turned out to be the most important variable in forecasting default followed by the company size and its activity. The dynamic Z score[5] suggests that the time tested Altman Z score , originally designed to predict corporate default represents considerable value when used as a corporate performance metric if measured continuously as opposed to one moment in time. Used in this manner this article argues that the Z score should be considered more than in the corporate performance management setting.
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A sample of non parametric test for measuring the relative differentiating power of various financial ratios was used [6]. Methodology of the Study The study attempts to assess the financial Health of the Arasu Rubber Corporation in terms of retained earning to total assets position, networking capital position, and Equity-debt position and Net sales turnover position. Sources of the data A study on Financial Health of Arasu Rubber Corporation, Kanyakumari district of Tamil Nadu : A Z Score Approachhas been made using data from annual report of Arasu Rubber Corporation, Nagercoil , Kanyakumari district . The period of the study was ten years from 2000-2001 to 2009-2010. Hypothesis for the study 1. Net working capital ratio is uniform in all the years 2. Retained earning to total assets ratio is uniform in all the years. 3. EBIT to total assets ratio is uniform in all the years 4. Equity debt ratio is uniform in all the years 5. Total asset turnover ratio is uniform in all the years 6. No significant difference in Z-scores value in the selected years Techniques for the Study For the purpose of the analysis the researcher has used Altmans Z score to predict, analyze and compare the financial health of the company. The specified variable used is explained in Table- A and the interpretation of Z score value is presented in Table -B. To study the financial health of the company, different ratios are calculated and the simple statistical techniques such as mean and t test were also applied to analyze the consistency, stability and overall trends in the different ratio used in Altmans Z score approach. Table A Financial Ratio Coefficient of the ratio (recommended by Altman) Net working capital to 0.012 total assets (X1) Retained earnings to Total 0.014 assets (X2) EBIT to Total assets (X3) 0.033 Market value of equity to 0.006 total liabilities(X4) Net sales to Total 0.0999 assets(X5) Z score= (X1*0.012)+(X2*0.014)+ (X3*0.033) +(X4*0.006)+ (X5*0.0999) Table- B
Score Above 3.00 2.00-2.99 1.8-2.00 Below 1.8 Interpretation The company is Financially safe The company is on alert to exercise the caution There are chances that the company could go bankrupt in the next two years The companys financial position is embarrassing
Results Net Working Capital Ratio Net working capital to total assets ratio of Arasu Rubber Corporation is presented in Table-1.it is concluded that the corporation has lower net working ratio continuously in all the years studied. It indicated that the corporation suffers from meeting its current obligations. However, it could be observed that the networking capital is recovering slowly as years progresses which is observed from the Table-1.the t test revealed that the ratio of networking capital to total asset(Table-2) showed that t cal. (-4.775) is lesser than t crit.(2.26) which suggested that there is no significant difference in networking capital across the years studied. Retained Earnings to Total Assets The retained earnings to total assets ratio of Arasu rubber corporation is depicted in Table -3.As observed from in Table-3 , among the different years studied ,the corporation registered highest earnings in the year 200607(16.64%).however there is a progressive improvement in the retained earnings from 2000-01 to2006-07 and again it started declining in 2009-10.(0.49%). The retained earnings to total assets position of the corporation is compared and tested usingt test .as we find in the Table -4 , t cal. is < t critic at 5% significant level ,we accept the null hypothesis and conclude that the ratio of retained earnings to total assets of Arasu rubber corporation does not differ significantly . Return on Total Assets (Ebit/Total Assets) The return on total assets of the Arasu rubber corporation is depicted in Table-5. Among different years, 2006-07 sustained the highest return on total assets ratio (20.90%) followed by 2003-04 (11.40%) and 200506(11.00%). This indicated that the operational efficiency was the highest during 2006-07 compared to other years. The return on total assets position of Arasu Rubber Corporation is compared and tested using the following hypothesis. The results of t test as revealed from Table-6 suggested that the calculated value is lesser than the table value ,hence Null hypothesis is accepted and alternative hypothesis is rejected and it is concluded that the ratios of return on total assets of the Arasu rubber corporation does not differ significantly. Equity-Debt Ratio (EDR) The equity-debt ratio of Arasu rubber corporation id depicted in Table-7.Among the study period, the year 2008-09 recorded the highest equity-debt ratio (548.7%). followed by 2007-08(472.7%) and 2006-07(422.6%).The equity-debt position of the corporation is compared and tested using the Null hypothesis. The ttest results are depicted in Table-8 . As observed in Table-8, the ttest results for the Equity-debt ratio showed that t cal.(15.52) is greater than tcrit. (2.26) which suggested that there
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existed significant differences among different years of study for the equity-debt ratio. Total Assets Turnover Position The total assets turnover of the arasu rubber corporation is depicted in Table-9.it is observed that the year 2007-08 registered the highest total asset turn over ratio(67.73%) .This implies that the year 2007-08 generated sales of 67.73 for every rupee of investment in fixed. This is followed by the year 2008-09 (67.73%) and 200607(62.79%) . the total assets turnover position of the corporation is compared and tested using the following hypothesis and the t test results are depicted in Table10.the t test revealed that for the total assets turnover ratio,the tcal.(11.14) is more than than t crit.(2.26) there by suggesting significant differences in the total assets turnover across the years studied. Discussion The Z score values of the Arasu rubber corporation during the study period under review have been depicted in the Table-11. it is understood from the table that during the years 2005-06, 2006-07, 2008-09 and 2009-10 the corporation registered the score much above the suggested value of financial health .it is also understood that the financial health of the Arasu rubber corporation in the future years is expected to be sound enough to maintain liquidity. The Table-11 also revealed that during 2000-01 and 2001-02, the score was less than 1.8 indicating that the financial position of the corporation is very weak, sounding an alert to various stakeholders of the corporation. The corporation, however, has improved its score as more than 2.00 during 2002-03, 2003-04 and 2004-05 which suggest that the corporation is improving so as to sustain from bankruptcy. The financial health has improved progressively viz., 2005-06, 2006-07.2007-08, 2008-09 and 2009-10 which suggested that the corporation is financially safe. The Z score position of the corporation has been tested through the null hypothesis. The results pertaining to the t test are depicted in table -12.the calculated value is more than the table value ,hence null hypothesis is rejected and alternative hypothesis has been accepted and it can be concluded that there existed significant differences among different years with regards to Z score. From the Analysis and Interpretations the Major Findings of the Study are as Follows i) It is understood that the financial position of the company has improved progressively from 200001 to 2009-10 which suggested the company is financially safe. ii) The working capital has slowly improved as the years progresses thus suggested that the company has gone for debt raising. iii) The debt position of the corporation was lower than the market value of the equity, which helped the company to maintain a reasonable leverage position.
iv) v) vi)
The operating efficiency was low throughout the study period and hence, increase in EBIT did not match with the increase in total assets. The retained earnings ratio of the corporation is not satisfactory even though 2005-06 and 200607 recorded a marginal satisfactory effect. However, the results of the sales volume clearly showed that the corporation has succeeded in achieving the standards ratio through sales.
Financial health of any corporation is a matter of concern for every stakeholder of the business. It is in fact, the financial position of the company that drives the decision making process of any stakeholder. In this context, Altmans Z score plays an important role in judging the financial soundness of the Arasu Rubber Corporation. The study on an overall basis, revealed that out of the different years of study, the company was very weak during the first 5 years of the study period (ie., from 2000-1 to 2004-05) and the financial position has improved as the year progresses and it has reached the safe level during the last 5 years (ie., from 2005-06 to 2009-10) as observed by the Z score value. References 1. Altman, (1968). Financial ratios discriminate analysis and prediction of corporate Bankruptcy, Journal of finance, sep. 598. 2. Altman, (2002). Corporate distress prediction models in turbulent economic and base environment, Journal of Finance, 5. 3. Abdul Aziz, (1984). Bankruptcy prediction and investigation of cash flow based models, PhD. Thesis at Dallas, 3 9. 4. Beaver, W.H., (1966). Financial ratios and predictions of failure: Empirical research in according selected studies, Journal of accounting research, 77111. 5. Eidleman Gregous, (1995). Z Scores guidance to failure prediction by CPA Journal online, Feb. 4. 6. Gupta, L.C. (1999). Financial Ratios as forewarning indicators of corporative sickness,Bombay 1C1C1, XIX (4) 37.
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Annexure Table 1: Networking Capital Ratio (%) of Arasu Rubber Corporation Year 200001 -62.55 200102 200203 -20.70 200304 -23.10 200405 -29.30 200506 200607 200708 -15.50 200809 -22.30 200910 -13.20 Mean -29.77 19.71 S.D.
Net working -69.18 -26.17 -15.73 capital Source: Computed from Annual reports of Arasu Rubber Corporation
Table 2: One sample t test for net working capital ratio of Arasu Rubber Corporation Variable df t cal. P -value t crit. 2.262 95% confidence interval of the difference lower upper -43.8775 -15.6685
Net working 9 -4.775 0.001 capital Source: one sample test had been done using SPSS Software
Table 3: Retained Earnings to total Assets Ratio(%)of Arasu Rubber Corporation Year 200001 -17.65 200102 16.03 200203 02.05 200304 05.99 200405 02.30 200506 06.15 200607 16.64 200708 05.39 200809 0.40 200910 0.49 Mean 1.02 S.D. 10.39
Retained Earnings to total Assets Source: Computed from Annual reports of Arasu Rubber Corporation
Table 4: One sample t test for Retained Earnings to total Assets Ratio(%) of Arasu Rubber Corporation Variable df t cal P -value t critic 2.262 95% confidence interval of the difference lower upper -6.412 8.458
Retained 9 0.311 0.763 Earnings to total Assets Source: one sample test had been done using SPSS Software
Table 5: Return On Total Assets (EBIT/Total Assets (%) of Arasu Rubber Corporation Year 200001 -12.60 200102 -10.80 200203 04.69 200304 11.40 200405 06.80 200506 11.00 200607 20.90 200708 08.00 200809 0.77 200910 05.13 Mean 4.38 S.D. 10.17
Return On Total Assets Source: Computed from Annual reports of Arasu Rubber Corporation
Table 6: One sample t test for Return On Total Assets (EBIT/Total Assets(%) of Variable df t cal P -value t critic 2.262
Arasu Rubber Corporation 95% confidence interval of the difference lower upper -2.900 11.650
Return On 9 1.36 0.207 Total Assets Source: one sample test had been done using SPSS Software
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Table 7: The Equity-Debt Ratio (%) of Arasu Rubber Corporation Year 200001 294.7 200102 304.2 200203 327.7 200304 340.4 200405 359.0 200506 378.6 200607 422.6 200708 472.7 200809 548.7 200910 415.5 Mean 386.4 S.D. 79.9
EquityDebt Ratio Source: Computed from Annual reports of Arasu Rubber Corporation
Table 8: One sample t test for Equity-Debt Ratio (%) of Arasu Rubber Variable df t cal P -value t critic 2.262
Corporation 95% confidence interval of the difference lower upper 32.92 44.35
Equity-Debt 9 15.52 0.00 Ratio Source: one sample test had been done using SPSS Software
Table 9: The Total Assets Turnover Ratio (%) of Arasu Rubber Corporation Year 200001 34.31 200102 31.27 200203 37.49 200304 43.38 200405 37.66 200506 56.79 200607 62.79 200708 67.73 200809 66.53 200910 52.43 Mean 49.03 S.D. 13.91
Total Assets Turnover Source: Computed from Annual reports of Arasu Rubber Corporation
Table 10: One sample t test for Total Assets Turnover Ratio (%) of Arasu Rubber Corporation Variable df t cal P -value t critic 2.262 95% confidence interval of the difference lower upper 39.08 58.99
Total Assets 9 11.14 0.00 Turnover Source: one sample test had been done using SPSS Software Table 11: Z Score Values of Arasu Rubber Corporation Year Z Score Values 200001 0.71 200102 0.74 200203 2.29 200304 2.68 200405 2.45 200506 3.00
200607 3.93
200708 3.70
200809 3.75
200910 3.28
Mean 2.65
S.D. 1.16
Table 12: One sample t test for Z Score Values of Arasu Rubber Corporation Variable df t cal P -value t critic 2.262 95% confidence interval of the difference lower upper 1.83 3.48
Z Score 9 7.25 0.00 Source: one sample test had been done using SPSS Software
***
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An Empirical Study on Tourists difficulties in India

LAKAVATH MOTHILAL, Department of Management Studies, Pondicherry University, Pondicherry 605 014.
This paper explores the potential for tourism industry and difficulties during tourists travel, accommodation, and infrastructural facilities available for tourists. II. FUTURE OUTLOOK Tourism has become a popular global leisure activity. Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who travel to and stay in places outside their usual environment for more than twentyfour (24) hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. (Wikipedia, 2011 & UNWTO, 1995). Definition of tourism being broad, it presents very bright future. a) Leisure Travel Leisure travel was associated with the Industrial Revolution in the United Kingdom the first European country to promote leisure time to the increasing industrial population). Along with economic progress, people will continue to change life-style with a priority focus on leisure travel. People from rural areas are going for leisure travel unlike in the past which was unthinkable. Often people wish to take a break from their regular activity and spend time leisurely for tourism that that is developing into wide variety of forms including drug tourism, ecotourism, extreme tourism, female sex tourism etc. Many leisure-oriented tourists travel both in the summer and winter. Globally, places of such nature often visited include: Bali in Indonesia, Brazil, Cuba, the Dominican Republic, Malaysia, Mexico the various Polynesian tropical islands, Queensland in Australia, Thailand, Saint-Tropez and Cannes in France, Florida, Hawaii and Puerto Rico in the United States, Barbados, Sint Maarten, Saint Kitts and Nevis, The Bahamas, Anguilla, Antigua, Aruba, Turks and Caicos Islands and Bermuda (wikipedia.org, 2011). Indian leisure spots include: Jammu Kashmir, North Eastern States, Dehradun, Kaoidakanal, Ooty, Kerala etc. New commercial ventures leisure spots are also emerging to attract tourists. b) Mass Tourism Mass tourism could only have developed with the improvements in technology, allowing the transport of large numbers of people in a short space of time to places of leisure interest, so that greater numbers of people could begin to enjoy the benefits of leisure time (wikipedia.org, 2011). Disposable income of people even in rural areas had been increasing for the last
ABSTRACT Economic progress of India for the last two decades had profound impact on tourism sector making it as the second highest foreign exchange earner. Tourism had contributed to the progress of several industries directly and indirectly and provides an employment to about 20 millions. However, the demand for tourism had been far higher than infrastructure that can support. This had been adding to the woes of tourists in the form of traffic congestions, inadequate availability of accommodation, lack of affordable and reliable transportation. Unhygienic and adulterated food outlets are very common. Clean washrooms, tourists security and lack of proper audits of tourist centers add to the problems. Facilities for tourists are very meager and insignificant help lines even at some of the major tourist places are unthinkable in modern India. Government needs to add capacities in order to sustain the high growth of the tourism sector which is concomitant with the economic progress of the nation. Capacity addition is an uphill task for the government although, future of tourism sector is expected to be extremely well as Indian economy will progress rapidly even beyond 2020 as per leading international consultants. I. INTRODUCTION Robust growth of an Indian economy contributed to the tourism sector substantially and India has tremendous potential to become a major global tourist destination. Travel and tourism industry is the second highest foreign exchange earner for India. Tourism contributes to the economy directly and indirectly through its linkages with other sectors like horticulture, agriculture, poultry, handicrafts and construction. It also consumes goods and services from other sectors and provides employment to an about 20 millions of people in India (iloveindia.com, 2007). One cannot think of getting either comfortable accommodation or hassle-free travelling tickets through any mode of public transport. Various public welfare schemes of central and state governments such as Rural Employment Guarantee Scheme etc. helped common people in rural and semi-urban areas earn money. There had been an easy circulation of money among all - the poor and rich, as the myriads of economic activities and huge infrastructure projects are underway. Government had also planned several huge infrastructure projects during twelfth plan period-2012-17. Despite progress of an economy and the growth in tourism, public services need to be enhanced substantially to make tourists travel comfortable.
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decade in India. There is going to be a substantial contribution from the rural segment to the tourism industry in the coming decade. c) Recent Trends in Tourism Tourism industry had been gearing up to cater the growing needs of burgeoning middle class and niche services for the rich in the last few decades, especially in Europe, where international travel for short breaks is common. Tourists have considerable amount of high levels of disposable income, leisure time, are well educated, and have sophisticated tastes. And hence, there is now a demand for a better quality products, which had resulted in a fragmenting of the mass market for beach vacations; people want more specialized versions, quieter resorts, family-oriented holidays or niche market-targeted destination hotels (wikipedia.org, 2011). Recent developments in technology and transport infrastructure, such as jumbo jets, low-cost airlines and more accessible airports have made many types of tourism more affordable. As of April 28, 2009 The Guardian article noted that, the WHO estimates that up to 500,000 people are on planes at any time. There have also been changes in lifestyle, such as retiree-age people who sustain year round tourism. This is facilitated by internet sales of tourism products. Some sites have now started to offer dynamic packaging, in which an inclusive price is quoted for a tailor-made package requested by the customer upon impulse. d) International Tourist Arrivals There were 940 million international tourist arrivals in 2010, with a growth of 6.6% as over 2009. As per the report of the World Tourism Organization France, United States, China, Spain, Italy, United Kingdom, Turkey, Germany, Malaysia and Mexico are the top ten countries most visited by the number of international travelers. When compared to 2009, China surpassed Spain to become the third most visited country. Most of the top visited countries continue to be on the European continent, followed by a growing number of Asian countries (wikipedia.org, 2011). France occupies the first place with 76.8 million international tourist arrivals in 2010 followed by the U.S. and China with 59.7 and 55.7 million tourists respectively (table-1). International tourist arrivals are expected to reach 6.04 million in 2011 (businesswire.com, 2011). Table-1: Most visited countries by international tourist arrivals in 2010 UNWTO International Change Rank Country Regional Tourist Arrivals /2009 Market 1 2 3 4 France United States China Spain Europe North America Asia Europe 76.8 million 59.7 million 55.7 million 52.7 million = +8.7% +9.4% +1.0%
5 6 7 8 9 10
Italy United Kingdom Turkey Germany Malaysia Mexico
Europe Europe Europe Europe Asia
43.6 million 28.1 million 27.0 million 26.9 million 24.6 million 22.4 million
+0.9% -0.2% +5.9% +10.9% +3.9% +4.4%
North America Source: wikipedia.org
e) International Tourism Receipts International tourism receipts recorded US$919 billion (693 billion) in 2010, corresponding to an increas e in real terms of 4.7% from 2009. United States, Spain, France, China, Italy, Germany, United Kingdom, Australia, Hong Kong, (China) and Turkey were reported by the World Tourism Organization as given in the Wikipedia the as the top ten tourism earners for the year 2010. Table-2: International Tourism Receipts in 2010 UNWTO International Change/2009 Rank Country Regional Tourism in local Market Receipts currencies 1 2 3 4 5 6 7 8 9 10 United States Spain France China Italy Germany United Kingdom Australia Hong Kong (China) a North America $103.5 billion +9.9% +3.3% -1.3% +15.5% +1.4% +5.3% +1.7% +0.8% +39.8% -2.1%
Europe $52.5 billion Europe $46.3 billion Asia $45.8 billion Europe $38.8 billion Europe $34.7 billion Europe $30.4 billion Oceani $30.1 billion
Europe $23.0 billion
Turkey Europe $20.8 billion Source: Wikipedia.org
It is noticeable that most of them are on the European continent, but the United States continues to be the top earner (Wikipedia.org, 2011). f) International Tourism Expenditures in 2010 The World Tourism Organization reports the countries as the top ten biggest spenders on international tourism for the year 2010 that include: Germany, United States, China, United Kingdom, France, Canada, Japan, Italy, Russia and Australia. Of late developing economies had been spending on tourism as the income levels of people are increasing.
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Table-3: International Tourism Expenditures in 2010 Ran Country UNWT Internationa Change Expenditur k O l /2009 e Regiona Tourism in local per capita l Market Expenditure currencie (US$) s s 1 Germany Europe $77.7 +0.7% 952 billion 2 United North $75.5 +1.9% 244 States America billion 3 China Asia $54.9 +25.6% 41 billion ($) 4 United Europe $48.6 -2.4% 780 Kingdo billion m 5 France Europe $39.4 +7.6% 625 billion 6 Canada North $29.5 +10.0% 866 America billion 7 Japan Asia $27.9 +4.0% 219 billion 8 Italy Europe $27.1 +2.0% 449 billion 9 Russia Europe $26.5 +26.8% 189 billion ($) 10 Australi Oceani $22.5 +9.0% 1,014 a a billion Source: Wikipedia.org III. TOURISTS DIFFICULTIES IN TRAVEL & TOURISM Contrast to a popular belief that Indian life-style is inexpensive, products and services in India are expensive. Astronomical price rise of construction material, coupled with fuel price rise in the last five years had led to exorbitant stay for hotel accommodation. It is also time consuming to travel to most of the tourist destinations in India as the infrastructure is inadequate (Peter J. Buckley and Stephen F. Witt, 1990) for the exponential flow of tourists demanding for good roads and public transportation system. Though several roads are made four-lane, these are inadequate on account of inefficient use; most of the two-wheelers, Autorikshaws, Tractors, local vehicles owned by politicians or influential people, cattle occupy space on roads, leading to traffic chaos at several places. Often the above difficulties make our public transportation unreliable. This makes few tourists hire private transport services at exorbitant prices. Majority of the tourists use uncomfortable transport system and some tourists do not opt for visiting places at all. Holidaymakers would rather cut short their vacation than wrestle with traffic jams (Scott Casey, 2009).
India had credited with two world-class Airports at Hyderabad and Bengaluru. However, the cost of flights is rising every now and then beyond the reach of even middle class. What Indian tourists need are high-tech Airports as well as hundreds of affordable Airports at many towns and small cities. a) Inappropriate Linkages with all Modes of Transport Systems Transport systems in India are not integrated causing utmost difficulty between various modes of transport. For an example, one has to reach an Airport with luggage from his/her residence. Then there are no appropriate bus services that links residential areas as well as Airports with Bus Stations and Railway Stations. There must be regular bus services available 24 hours between Airports, Railway Stations and Bus Stations. There also should be services connecting these systems with residential areas. This facility will not only save cost of travel but also provides comfort with ease. Since 1990s Indian economy had been growing at about 7-8 per cent annually. Almost all sectors are performing well in the booming economic environment. Most commercial ventures had grown several folds in the last two decades. However, there has been no substantial addition of trains. All train routes are overcrowded with traffic and there is no space to add two-lane tracks. Therefore, Railways need to plan for bullet trains to cater the needs of growing tourists. Often there is an excuse that there is no land for huge commercial projects. However, if adequate remuneration and land suppliers were made as shareholders in the commercial venture, it would solve many land acquisition problems. b) Poor Maintenance of Buses and Trains Buses are rarely cleaned as one can see early in the morning after boarding a bus. Although, trains are washed after every long journey, some trains are strewn with lot of waste, often stinking. In addition to this problem, beggars, thieves and transgender travel freely as the security in the trains is very poor. c) Availability of Hygienic Food Despite the fact the Indians can adapt to most of the unfavorable situations, there is a need to have hygienic food in our hotels and all places of commercial food centers (Worsfold, 1997). For an example, the travel time is 3.5 hours between Chennai and Pondicherry and there is not even a single hygienic hotel. Private hotels have come up at several places and made some arrangements with bus drivers and conductors to stop vehicles. All passengers have no option if one has to take some food. Indian Railways stations are infested with unhygienic food. Travelers have no option but to
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consume what is available at stations. Government has to have appropriate food quality standards served for public convenience. To solve this issue, Government may allow corporate sector in providing modern amenities along with hygienic food at railway stations. i) Lack of usable washrooms is another major difficulty during travel. In a modern economy, bus driver stops a vehicle at some isolated place and mostly men go for open toilet. However, women cannot go in most of the situations. This is totally against the civilization. d) Matching Appropriate Time for Tour Insufficient infrastructure, unreliable transport system, public strikes and bandhs often make tourists planned schedule of no use. e) Booking of Travel and Accommodation One can recollect bitter experience of booking railway tickets in India. There had been huge demand for railway transport services compared to the paltry supply. Tickets are sold months in advance and there is hardly any way for common people to book tickets as and when they need. Private transport services enhance ticket fares by 200% to 400% especially during festivals as public move between the work-place and their native places. Despite such increase in fare, hardly services are available. This had to be rethought by the Government in terms of capacity addition in various modes of transportation. f) Local Language Despite the fact that India is together, there are huge differences led by political parties in not having a common language. Most of the Indians speak Hindi except in Tamilnadu and Kerala. Tourists often face this as a major barrier between their fellow Indians to communicate (Cohen, 1986). j)
information is available on some tourist spots such as Goa. This is one of the major difficulties tourists faces. For an example there are no scheduled buses to the Auroville International Township and Matramindir. Restricted Online Booking Websites generally contain information about medium to high quality hotels and online booking is also mostly restricted to them. Most of the tourists often book rooms after arrival or take the help of known people friends/relatives for booking rooms. This is often on account of lack of local knowledge.
g) Lack of Dust Bins Often at most of the tourist centers there are inadequate or no dust bins being provided despite that fact that tourists consume variety of eateries and throw the waste (J. Kelly et al, 2007). Many religious places are polluted with lot of waste strewn around as local government officials pay little attention to improve facilities. Rich often stay in moderate to expensive hotels and take the help of guides. However, this is one of the major problems for the middle class tourists. In general, polluted places attract less number of tourists (Bauer, 2001). h) Local Conveyance Reaching a tourist destination itself is a uphill task and further to it local conveyance is often very much inadequate and not even appropriate
Unsystematic Ticket Booking Counters Government transport system playas a vital role in conveyance of tourists. Most of the staff working in booking tickets are following archaic system which is totally unintended to serve tourists. Bureaucrats leading such departments have to update and need to be trained in providing memorable services, both online and offline. Although, customers are often willing to pay premium for comfortable service, there are no facilities. k) Attitude and Behaviour of Tourists Tourists often indulge in various desirable and undesirable activities such as child sex abuse and prostitution, drug abuse and drug trafficking etc. (Frederick Noronha, 1999) causing inconvenience to fellow tourists as well as disturb the local ambience and society. Once the situation becomes alarming, local residents may oppose tourism. l) Lack of Public Information Most of the tourist centers are guided by private and local citizens residing in a tourist spot. Officials professionally engaged are almost none for giving reliable information for tourists to plan their vacation and tour with ease. India cannot boast of being IT prowess without digital content being made available for public use. For an example, Indian Railways has reasonably a good website with information trains. In contrast to this, hardly there is any information on bus services in many bus stations. Governments are yet to plan for websites. IV. METHODOLOGY Out of 550 surveys distributed 496 received and 31 were incomplete and had to be rejected. Finally 465 were complete in all respects and taken for data analysis. Survey was conducted from the citizens of Pondicherry city and the students of Pondicherry University belonging to several states of India. Respondents Profile: Majority of the respondents (68%) were of below the age of 30 (Table-4). Male respondents were 329 and females were 136. Students constituted 50% of the respondents with 232 in number. 31% of the respondents were from the state of Tamilnadu with 144 numbers and Pondicherry with 119 constituted 26%. While the educational qualification of the respondents was Post
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Graduate (70%) and Undergraduate were only 30%. Annual income of family of the respondents were evenly distributed between 22-29% among the income groups of below2 lakhs, 2-3 lakhs, 3-5 lakhs and above 5 lakhs. Table-4: Descriptive Summary of Respondents Socio Demographic No. of % of Total Variable Respondents Age of the Respondents: 11 2.4 Less than 20 317 68.2 20-30 68 14.6 31-40 69 14.8 Above 40 465 100.0 Total Gender: 329 70.8 Male 136 29.2 Female 465 100.0 Total Profession: 232 49.9 Student 35 7.5 Teachers 22 4.7 Doctors 23 4.9 I.T. 26 5.6 Govt. Staff 54 11.6 Business 73 15.7 Others 465 100.0 Total Native State/Province: 144 31.0 Tamilnadu 119 25.6 Puducherry 41 8.8 Kerala 47 10.1 A.P. 27 5.8 Karnataka 35 7.5 Orissa 11 2.4 Bihar 4 .9 Andaman & 37 8.0 Nicobar 465 100.0 U.P. Total Educational 142 30.5 Qualification: 323 69.5 U.G. 465 100.0 P.G. Total Annual Income of 116 24.9 Family: 112 24.1 Less than 2 136 29.2 Lakhs 101 21.7 2-3 Lakhs 465 100.0 3-5 Lakhs More than 5 Lakhs Total Source: Primary Data V. RESULTS AND DISCUSSION
fact that Indian economy is poised for joining the major tourist countries as the life-style is increasingly westernizing. There are loans available from banks and financial services companies for tourism and attractive tours being organized in India. Table-5: Like Travel & Tourism Frequency Percent Valid Cumulative Percent Percent No 2 .4 .4 .4 Yes 463 99.6 99.6 100.0 Total 465 100.0 100.0 Source: Primary Data b) Frequency of Travel Frequency of travel increases along the economic progress of the nation. As per table-6, 31% of the respondents preferred to travel sometime, while 29% liked to travel frequently and 12% wished to travel very frequently. It is also true that along with increase in salary levels and westernizing life-style, people prefer to take breaks from their regular work-life which not only relieves from boredom but also adds some different experience in life. Table-6: Frequency of Travel Frequency Percent Valid Cumulative Percent Percent Sometimes 142 30.5 30.5 30.5 Frequently 135 29.0 29.0 59.6 Very 57 12.3 12.3 71.8 frequently Rarely 128 27.5 27.5 99.4 Never 3 .6 .6 100.0 Total 465 100.0 100.0 Source: Primary Data c) Preference to travel with In a growing economy and globalizing world people have individual tastes and preferences to travel and tourism. 5% of the respondents preferred to travel alone while with their spouses 9% opted (Table-7). The highest majority of 42.2% preferred to travel with family and the second majority of 41.9% preferred to travel with friends. It can be inferred that family is still a priority although individualism is increasing. Tourism industry need to make arrangements for group travels such as institutional tour packages/friends/groups. Table-7: Preference to Travel with Valid Cumulative Frequency Percent Percent Percent Alone 24 5.2 Spouse 41 8.8 Family 197 42.4 Friends 195 41.9 Others 8 1.7 Total 465 100.0 Source: Primary Data 5.2 8.8 42.4 41.9 1.7 100.0 5.2 14.0 56.3 98.3 100.0
a) Like Travel & Tourism Out of 465 respondents only 2 did not like to travel and tourism while 463 liked tourism (Table-5). It presents the
d) Mode of booking Accommodation Travelling is generally unexpected for some people that arise on account of official exigency or personal necessity as
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21% of the people said that they will book accommodation on the spot (Table-8). 23% of the respondents had expressed their opinion that they will take their friends help in booking accommodation. Booking through travel agents constituted only 29% while through phone 13% and through websites 14%. This presents an opportunity for booking through online/mobile will rise as the I.T. and Telecom industry had been pervading the lives of almost every human being. Table-8: Mode of Booking Accommodation Mode of Valid Cumulative Booking Frequency Percent Percent Percent On spot 98 Friends 109 Travel 133 Agents Phone 58 Website 67 Total 465 Source: Primary Data 21.1 23.4 28.6 12.5 14.4 100.0 21.1 23.4 28.6 12.5 14.4 100.0 21.1 44.5 73.1 85.6 100.0
Table-10: Expensive Accommodation Valid Cumulative Frequency Percent Percent Percent Least difficulty 1 53 2 109 3 128 4 144 Most difficulty 5 31 Source: Primary Data 11.4 23.4 27.5 31.0 6.7 11.4 23.4 27.5 31.0 6.7 11.4 34.8 62.4 93.3 100.0
g) Time Consuming Table-11 presents the opinion on tourism as time consuming process. 9% of the respondents felt that it was a least difficulty while 28% opined it was a mild difficulty. Moderate difficulty was for the 30% of the respondents and 25% were expressed some difficulty and for the 8% it was the most difficulty. This gives interesting facts that tourism infrastructure with moderate cost has to be in place with high-speed transportation. Table-11: Time Consuming Valid Cumulative Frequency Percent Percent Percent Least difficulty 1 2 3 4 Most difficulty 5 43 129 137 118 38 9.2 27.7 29.5 25.4 8.2 100.0 9.2 27.7 29.5 25.4 8.2 100.0 9.2 37.0 66.5 91.8 100.0
e) Ever booked online Majority of the respondents constituting 84% (Table-9) said that they never booked accommodation online. It is inferred that most of the tourists still feel insecurity in booking online which need to be tackled by the industry. Also, many hotels are small and operate non-professionally and therefore, may not be using technology to take advantage. Table-9: Ever Booked Online Valid Cumulative Frequency Percent Percent Percent No 389 83.7 Yes 76 16.3 Total 465 100.0 Source: Primary Data 83.7 16.3 100.0 83.7 100.0
Total 465 Source: Primary Data
f) Expensive Accommodation In tourism one of the most pressing concerns was expensive accommodation. There is also no information on some reasonably good and comfortable hotels as they do not bother to be available online for booking rooms. As per table-10, 28% of the respondents were moderate between the least difficulty and the most difficulty with accommodation cost.
h) Availability, Reliability & Reasonable Cost of Transportation Among respondents, 10% were of opinion that availability, reliability & reasonable cost of transportation was a least difficulty (table-12). 24% expressed difficulty and the moderate difficulty was for the 40%. It was very difficult for 20% and very difficulty was 6%. Table-12: Availability, Reliability & Reasonable Cost of Transportation Valid Cumulative Frequency Percent Percent Percent 1 46 2 110 3 186 4 94 Most 5 29 difficulty Total 465 Source: Primary Data Least difficulty 9.9 23.7 40.0 20.2 6.2 100.0 9.9 23.7 40.0 20.2 6.2 100.0 9.9 33.5 73.5 93.8 100.0
Table-10: Expensive Accommodation Valid Cumulative Frequency Percent Percent Percent Least difficulty 1 2 3 4 Most difficulty 5 Total 53 109 128 144 31 465 11.4 23.4 27.5 31.0 6.7 100.0 11.4 23.4 27.5 31.0 6.7 100.0 11.4 34.8 62.4 93.3 100.0
In a growing economy there are numerous infrastructure projects under-way. However, the demand had been surpassing the supply levels in tourism as the transportation
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system is highly unreliable. The growing population and increasing urbanization had been adding to the woes of travelers and tourists. Very frequently the cost of transportation is increasing. Most of the people from middle-class had been purchasing vehicles for reliable conveyance to the place of work. Government policies generally focus on meager addition of capacities and ignore addition of huge capacities to provide adequate supply of services.
Table-14 Matching of Appropriate Time to Visit Valid Cumulative Frequency Percent Percent Percent Least difficulty 1 32 2 117 3 136 4 137 Most 5 43 difficulty Source: Primary Data 6.9 25.2 29.2 29.5 9.2 6.9 25.2 29.2 29.5 9.2 6.9 32.0 61.3 90.8 100.0
i) Availability of Hygienic Food From table-13, for the 10% of the respondents availability of hygienic food was least concern while for 20% it was some difficulty. Moderate concern was for 28% and for the 30% it was prime concern and very difficult for 13%. Table-13: Availability of Hygienic Food Valid Cumulative Frequency Percent Percent Percent Least difficulty 1 47 2 92 3 130 4 137 Most difficulty 5 59 Total 465 Source: Primary Data 10.1 19.8 28.0 29.5 12.7 100.0 10.1 19.8 28.0 29.5 12.7 100.0 10.1 29.9 57.8 87.3 100.0
Corporate sector had to consider the value of their employees families and grant leave as per their satisfaction. This also helps employee morale to increase and enhance their productivity levels. k) Booking Travel & Accommodation Booking accommodation was least difficult for 19% (table15). Respondents with some difficulty level were 25% and with moderate difficulty were 24%. For 21% the level of difficulty was high and for 11% it was the most difficulty. Table-15: Booking Travel & Accommodation Valid Cumulative Frequency Percent Percent Percent 1 90 2 117 3 111 4 97 Most 5 50 difficulty Total 465 Source: Primary Data Least difficulty 19.4 25.2 23.9 20.9 10.8 100.0 19.4 25.2 23.9 20.9 10.8 100.0 19.4 44.5 68.4 89.2 100.0
In a developing economy availability of hygienic food is a prime concern. There are very few hotels with hygienic food. Many private dairies and hotels often use cheaper milk, adulterated oil etc. to reduce the cost. In addition to highly corrupt government officials do not check all the places of eateries and often collect their commissions from them. This is one of the major setbacks to tourism industry as sizable numbers of tourists with primar y concern on health do not venture out for long-distance tourism. j) Matching of Appropriate Time to Visit Amidst economic progress and ever expanding commercial activities, individuals had difficulty to match their timing of tour and the rest of the factors such as family members time. As per table-14, it was the most difficulty to match their tour timings and for 30% of the respondents high difficulty. Moderate level of difficulty was for 29% and for 25% it was some difficulty. 7% of the respondents felt that it was least concern. Table-14 Matching of Appropriate Time to Visit Valid Cumulative Frequency Percent Percent Percent 1 2 3 4 5 Most difficulty Total Least difficulty 32 117 136 137 43 465 6.9 25.2 29.2 29.5 9.2 100.0 6.9 25.2 29.2 29.5 9.2 100.0 6.9 32.0 61.3 90.8 100.0
Often during weekends, almost all the hotels and resorts are operating at full capacity as people go out for breaks. Therefore, budget hotels need to expand their capacities substantially to gain from the increasing leisure activities. l) Local Language Despite unity in diversity and India being a single nation, culturally it is very diverse. Every 50 kilometers of distance, there are changes in the customs and traditions of people along with language. The major problems for tourists in entire India are Tamilnadu and Kerala on account of language barrier to communicate. The rest of the states speak Hindi as a national language. Largely, the reason for this barrier was created by political parties.
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4. Table-16: Local Language Valid Frequency Percent Percent Least difficulty 1 59 2 85 3 103 4 126 Most difficulty 5 92 Total 465 Source: Primary Data 12.7 18.3 22.2 27.1 19.8 100.0 12.7 18.3 22.2 27.1 19.8 100.0 Cumulative Percent 12.7 31.0 53.1 80.2 100.0
Emre Gunce (2003), Tourism and local attitudes in Girne, Northern Cyprus, Vol. 20, No. 3, June, pp.181 195. Erik Cohen and Robert L. Cooper, (1986), Language and tourism, Annals of Tourism Research, Vol. 13, No. 4, pp.533-563 Frederick Noronha, (1999) Ten years later, Goa still uneasy over the impact of tourism, International Journal of Contemporary Hospitality Management, Vol. 11 No. 2/3, pp.100-106 iloveindia.com , (2007), Tourism Industry in India, Viewed on 29-June 2011, http://www.iloveindia.com/economy-of-india/tourismindustry.html Joe Kelly, Wolfgang Haider, Peter W. Williams and Krista Englund, (2007),Stated preferences of tourists for eco-efficient destination planning options, Tourism Management, pp.377-390. Peter J. Buckley and Stephen F. Witt, (1990), Tourism in the centrally-planned economies of Europe, Annals of Tourism Research, Vol. 17, No. 1, pp.7-18.
5.
6.
7.
13% of the respondents opined that the language barrier was a least difficulty while for the 18% it was some difficulty. Moderate difficulty was for the 22% and the 27% expressed that it was major difficulty. 20% of the respondents felt that it was the most difficult. VI. CONCLUSION Indian economy is poised for growth till 2020 and this bodes a great potential of growth for travel industry. India is also preferred over other tourist destinations as it offers various categories of tourism that include rural tourism, historical tourism, adventure tourism, cultural tourism, medical tourism, eco-tourism, religious tourism, spiritual tourism, and beach tourism etc. For developing economies, India can also become an educational destination in near future (iloveindia.com, 2007). Tourism is one of the most important activities in modern society and consequently, growth has both negative and positive impact upon the environment and its values. It is therefore important that the tourism industry remains positive and sustainable in every way it interacts with the environment (Emre Gunce, 2003). REFERENCES 1. Bauer, T. G., & Chan, A. (2001), Does the environment matter? Experiences, attitudes, and revisit intentions of international visitors to Hong Kong. Pacific Tourism Review, 5(1), 7582. Businesswire.com, (2011), An India Tourism Report for Q3 2011 - The Indian Tourist Recovery Continues with Arrivals Anticipated to Reach 6.04 Million in 2011, Viewed on June 29, 2011, http://www.businesswire.com/news/home/2011062800 5937/en/Research-Markets-India-Tourism-Report-Q32011 Denise Worsfold, (1997) Food safety behaviour in the home, British Food Journal, Vol. 99, No. 3, pp.97-104
8.
9.
10. Scott Casey (2009), Bottleneck blues: tourists avoid traffic nightmare, September 24, Viewed on June 30, 2011, http://www.brisbanetimes.com.au/queensland/bottlenec k-blues-tourists-avoid-traffic-nightmare-20090924g3fg.html 11. Wikipedia.org, (2011), World tourism statistics and rankings, Viewed on July 1, 2011, http://en.wikipedia.org/wiki/Tourism#World_tourism_s tatistics_and_rankings 12. WTO, (1995), UNWTO Technical Manual No.2: Collection of Tourism Expenditure Statistics, Viewed on July 1, 2011.
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3.
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Relative Performance of Commercial Banks in India using Camel Approach

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Ibid 10 Ibid 10 11 Ibid 10

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24.01 106.7 120.9 133.0 147.1

Total Composite ranks in 1999

Total FOR Composite ranks in 1999

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www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012

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www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012

An Empirical Study on Tourists difficulties in India

www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012

Italy United Kingdom Turkey Germany Malaysia Mexico

Europe Europe Europe Europe Asia

+0.9% -0.2% +5.9% +10.9% +3.9% +4.4%

North America Source: wikipedia.org

Europe $23.0 billion

Turkey Europe $20.8 billion Source: Wikipedia.org

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Total 465 Source: Primary Data

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www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012

www.theinternationaljournal.org > RJEBS: Volume: 01, Number: 04, Feb-2012

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