CHAPTER V

PROBLEMS AND PROSPECTS OF WOMEN ENTREPRENEURSHIP IN THE SMALL SCALE SECTOR

CHAPTER V

PROBLEMS AND PROSPECTS OF WOMEN ENTREPRENEURSHIP IN

THE SMALL SCALE SECTOR

Contents
Title

Page 128- 189

1
2

Introduction Growth of Small Scale Sector Growth of women in the Small Scale 'sector Socio economic and Educational background Working Status and Sustainability Problems in launching a unit Problems in running the unit
Nature of Financial problems in women units.

3
4

5
6
7
8

CHAPTER V

PROBLEMS AND PROSPECTS OF WOMEN ENTREPRENEURSHIP IN THE SMALL SCALE SECTOR

Since the women entrepreneurs are predominantly found in the small scale sector, a review of the development of women in this sector will provide a vivid picture of their status in the entrepreneurial scenario. Small business units form the vibrant source of income generating activity for women. Government has taken several measures to encourage women entrepreneurs to set up small scale and micro enterprise. A s a result of a new gesture of enthusiasm among women to participate in economic activities, together with state and central government support there was a phenomenal growth in the number of women owned business units in the state. About 82 per cent of the units registered by women in the state as on 3 1 S t March 2000 were promoted during 90s i.e., between March 2000.
A s revealed in the table 5.1 till 199/P(3 the growth of women
lSt

April 1990 and 3 1 S t

units was lower than the rate of growth of men units. But since 1993 women overrun their counterpart in terms of units registered in the District industries Centres. The maximum registration was in 199394 and afterwards there found a decline in the trend. The compounded average annual rate of growth in the women sector was 18.89 against entrepreneurs. the rate of growth of 10.7 per cent of men

Growth of Women units in the Small Scale sector

As on March 31
1991

No of units promoted Women Men

7551
C;<071

Growth rate Women Men

1998 1999 2000

29976 34435 38364

150115 165392 181469

18.4 14.9 11.4

11.0 10.2 9.7 10.7

Annual average

18.1

Source: Economic Review, State Planning board, Kerala 1991-2000 Even though there were variations in the rate of growth, in all the districts there was significant increase in the number of units during 1990-2000. When the total number of units in the state was increased by three times, the women registered a n increase of five times over the decade. By the end of the decade, the participation of women in the State's small-scale sector,increased from 10.3 per cent to 17.5 per cent, (Economic review various issues) Table 5.2 and exhibit 9 shows the growth of women enterprises
in different districts in Kerala

Exhibit 9

Growth of Women enterprises in the SS1 sector

3 Women

RI Men

5 6 Period 1991-2000

Table 5.2 District wise Growth of Women units in Kerala 1991-2000

nits Promoted by Women

I
l Kottayam
/ Idukki

percentage

District Thiruvananthapuram
1112 804 734 720 451 1 4736 242 1 3827 305.67 489.05 229.84 43 1.53

Unllam

Pathanamthitta Alappuzha

407

1945

1377.89

per cent of women to

1. 03

17.5

69.90

Source: Economic Review, State Planning board, Kerala- 199 1-2000 Note: *Increase based on the base year 199 1.

The growth of women enterprises as revealed by table 5.2 taken place in the state a t all districts a t a n outstanding rate. The highest rate of growth recorded in Ernakulam district where the decadal growth was 657 per cent. It was followed by Malappuram (544 per cent) and Palakkad 517 per cent. The growth rate was the lowest in Pathanamthitta district. The decadal growth of women units was 408 per cent against 175 per cent growth rate registered by men.

Sample
The sample for this study has been structured by selecting 330 women units registered in ~ h i r u v a n a n t h a ~ u r a mKottayarn and , Thrissur districts. These units had been selected by providing reasonable proportion to total number of units registered in each district and reasonable representation to all the major product groups. Table 5.3 depicts the product wise distribution of units in the sample district and Table 5.4 shows the product wise distribution of units included in the sample
A s revealed by the table 5.3 out of the total 4088 units

registered (between March 315' 1991 and March 3 1 S t 1996) in the sample districts 55.63 per cent was comprised of enterprises in the Garments and ready made sector. Food processing and allied units account for 12.23 per cent and Repair and personal service units consisted of 6.87 per cent. Garments, Food, Repair and Rubber/ plastic sectors account for about 80 per cent of the total units. Since ten product groups account for 92 per cent of the total units the units were classified in to 11 product groups to take the sample. Table 5.4 represents the product wise distribution of units included in the sample. Particular care was given to include units in

the sample with a reasonable representation according to their proportion in the sample districts. Table 5.3 Product wise distribution of women units in the Sample districts.
P -

khiruvananthapurd Kottayam Product Groups Units

1. Garments & Textiles
904 164
1 I
I

)
I

~hrissur-[
I
I

Total
I

per cent
57.58 10.45

Units Per units Per cent cent

749 55.03 621 3.67 174 12.78
I I I

nits
2274 500
I

per cent
55.63 12.23
i

2. Food & Allied Products

3 . Repair, Personal Services
.

162 4.00
I

98

6.24

103 7.57

80 6.91 38 3.281 41 3.54) l I 33 2.85

l
l

281 174 133 100

I

6.87

Rubber & Plastics

1
I
I

86 39 45

1
1
I
I

5.48 2.48 2.87

1 /
50

3.671 3.89) I 1.62

l

/
1
l

4.26 3.25 2.45 2.20

1
1

/5.~le, Electronic& computer] Manufacturing. Industries

7. Furniture & wood
I

1'
I
I

53 22

1
I
l

1
I

27
I

1.72
I

32
I

2.35
I

3 1 2.68
I

90
I

Printing & Paper products

. Construction Materials

31

1.97 1.34

31 20 30

2.28 1.47 2.20

18 1.56 27 2.33 14 1.21

80 68 61

1.96 1.66 1.49

10. Chemicals

17

1.08

Source: Directorate of Industries and commerce, Thiruvananthapurarn units registered during 199 1-96. A s revealed in the table the products were classified in to eleven product groups. Garments consisted of textiles and ready made units, Food and allied products includes all units engaged in the production

of food and beverages, Repair and service sector consist of all types of personal services, Other manufacturing group consists of all units having a product but not included in other groups. Miscellaneous group includes all other units including small scale business units. Tale 5.4 Product wise Distribution of units in the sample

Source: Primary data

Accordingly the sample units were selected a t random by computer consists of 177 Garment units (53.64 per cent), 32 (9.7 per cent) Food processing units, 21 Service units (6.36 per cent), 8 Rubber and plastic units, 12 units (3.64 per cent) each from Other Manufacturing industrial units, Electrical and Electronics, and Furniture sectors, 9 Printing and paper works units, 9 Manufacturing of Construction materials units, 6 Chemical industrial units and 22 ( 6.67 per cent) units included in the Miscellaneous group. Hence information for this study had been collected from 330 entrepreneurs from 3 districts and 11 product groups.

Socio

Economic and Educational background of women

entrepreneurs
Entrepreneurship is a creation of socio-economic and cultural environment. In the following paragraphs an attempt is made to analyse the socio-economic background of women in the context of entrepreneurial development.
A.

Religion

In Kerala Muslims Hindus and Christians are the principal religions in the total population of the state. Hindus constitute- 57.28 per cent, Christians -19.32 per cent and Muslims -23.33 per cent. (Census reports 199 1). Table 5.5 shows the distribution of entrepreneurs by religious groups. A s seen from the table out of 330 units in the sample selected at random 49 per cent (161 units) were promoted by Hindu women, 12 per cent (39 units) by Muslims and 39 per cent (130 units) were, promoted by Christian women. In the Garments sector 49 per cent were Hindus, 41 per cent Christians and 10 per cent were Muslims. In Food and allied products

group 56 per cent were Hindus, 6 per cent Muslims and 38 per cent Christians. In repair and service units Hindu women have more participation. Table 5.5 Distribution of sample units by religion

Hindus

1 Total Source: Survey data.

Note:

1 39/12) 1 130f391

1330

(Figures in bracket shows percentages to Row totals.) The analysis shows that in Kerala, none of the religious groups

found dominated in the entrepreneurial arena. In the total population of the three districts selected for study these religious groups represented as Hindus 59.36 per cent, Muslims 11.04 per cent and Christians 29.20 per cent. The study shows that taking the proportion of representation in the total population, When Hindu women represent less than their proportion in the population, Christian women found represented more than their proportion in the population

and the presence of Muslim women was found more or less equal to their representation in the population.
B. Marital status & Age

Under the prevailing social set u p encouragement and support of family members are vital factors motivating women to start a venture require investment and involve risk. Parents of educated children try to get an employment for their daughter even by giving lakhs of rupees a s capitation fee. If a n u.nmarried woman starts a business very often she has to discontinue: it after her marriage. For this and other reasons parents are reluctant to support their daughters to start a self employment venture before marriage.'. Marital status of women a t the time of commencement of the business
is rather important in this context.

Table 5.6 Distribution of entrepreneurs by marital status and age No of Entrepreneurs Total percentage To total Married
I
I

lAge
Unmarried
34 (68.00)

Widows / Divorce nil

50 (100) 15.11 66.36

0-25

16 (32.00)

26-35 194 (88.58)

18 (8.21)

7 (3.19) 219 (100)

~bove 451 8 (80.00)

1 (10.00)

1 (10.0)

10 (LOO)

3.02

Source: survey Note (Figures in brackets shows percentages to row total )

Exhibit 10

Marital Status of women entrepreneurs

Widdows I divorce

Table 5.6 shows the distribution of entrepreneurs by age and their marital status
A s revealed by the table and exhibit 10 out of 330 women

entrepreneurs interviewed, 260 persons

(78.78 per cent) were

married at the time of commencement of the business .57 units (17.22 per cent) in the sample were launched by unmarried women and 13 units (3.93 per cent) were initiated by widows or divorced. Majority of the women units, 219 out of 330 (66.36 per cent) were started during their age between 25 and 35. Average age of women entrepreneur a t the time of commencement of the unit was 31 years with Standard deviation 5.1. The lowest value was 2 1 and the largest 58.
C . Education

Formal Education is considered a s a n effective tool to bring women to the main stream. Kerala is ranked first in the country for women literacy and has a better position in higher education. Annually about 9,89,900 girls enrol u p to plus two levels, 93000 girls enrol for degree courses, 10604 for PG, and 9707 in various polytechnics. Table 5.7 depicts the distribution of entrepreneurs by level of education.

A s per the table 5.7 out of 330 entrepreneurs in the sample ,

136 entrepreneurs (41.2 per cent) have education u p to the school level, 124 persons, (37.57 per cent) have education a t the college level and 70 (21.21 per cent) persons have Professional or technical qualifications. Even though Kerala women possess higher levels of education which is a favourable condition for development of entrepreneurship, only a few of women with technical and, professional qualilicaLion are

Exhibit 11

Educational Qualificatlon of Entrepreneurs in the sample

entering the entrepreneurial arena. This leads to the conclusion that formal education alone is not enough to attract women to the entrepreneurial sector. Or in other words, existing system of education is not sufficient to equip and prepare female students to become entrepreneurs Table 5.7 Distribution of entrepreneurs by age and educational qualifications Age group School level College level Professional Total

0- 25 26-35 36-45
Above 45 Total

22 (44.0) l 9
86

(:38.00)

(18.00)

50 (100) 219(100) 51 (100) 10 (100 330(100)

(39.2) 79 (34.36)

54 (24.44) 6 1 (11.71) (10.00)

24 (47.11) 21 (41.18) 4 136 (40.0) 5 (!50.0)

(41.1) 124 (37.57)

70 (21.15)

Source: Survey data Note: Figures in brackets show percentages to Row Totals) *School level includes
-

Includes SSLC & Pre degree/ Plus two, College level -

Under Graduates & graduates, Professional & technical-

includes Post graduates and technicqi diploma and degree holders D. Economic background Income of the family is considered as the indicator of economic status. If it is true, majority of women entrepreneurs are from the lower strata of the society. Table 5.8 shows the Distribution of entrepreneurs by monthly income of their faqily a t the time of promoting their business.

A s shown by the table 5.8 out of 330 women entrepreneurs

interviewed, 143 (43.33 per cent) were from families with a monthly income less than Rs. 2000. At the time of promoting the unit 115 persons (34.84 per cent) had income between Rs.2000-3000 and another 30 persons (9.06 per cent) had income between Rs. 3000-and

5000. In this group 23 entrepreneurs had a monthly income between Rs. 5000-10000.
Nineteen entreprenkurs in the sample have a monthly income above Rs. 10,000. Table 5.8 Distribution of entrepreneurs by income a t commencement o f business Monthly Rupees. Income in No of units
L 43

percentage to total

I Below 2000

43.33

500 1-l0000
Above 10000

6.97 5.77 :330 100.00

/ Total
Source: survey

Average income of a woman entrepreneur was Rs. 2324. Lowest income was R s . 500 per month and the Highest was Rs.15, 000 per month. Most of the women enterprises promoted by women under self-employment schemes offered for low-income group.
E. Previous Experience

No doubt, experience is the best teacher. In the business arena experience rnav be considered a s a vital input for success.

Table 5.9 Distribution of women entrepreneurs by previous experience

In the same line

In other areas

Source: Survey data Note: Figures in brackets give percentages to sub-totals

A s revealed by the table 5#.9out of 330 units in the sample, 138

entrepreneurs (41.82 per cent) had some previous employment or experience. Out of this only 97 persons (29.39 per cent) have got experience in the same line of activity. Forty-one entrepreneurs (12.42 per cent) had job experience in other areas of activities.
A s per the table 5.9 out of 138 entrepreneurs had some previous

experience 60 had less than 3 years experience and 57 (41.3 per cent) had 3 to 4 years experience. Only 2 1 entrepreneurs had 5 or more than
5 years experience and out of this only 18 had experience in the same

line. Average

period

of

experience

was

3 years.

Majority of

entrepreneurs, (70.6 per cent ), have started their unit without any previous experience in the line. Out of them, 192 (58.18 per cent) entrepreneurs had no experience in any area of employment or business.
F. Business Tradition

Entrepreneurs are made, not born. Occupation of parents, husbands or brothers and sisters will have some influence in moulding one's behaviour and selection of one's line of activity. Involvement in the conduct of business run by close relatives may create a business culture and motivate one to start a business unit. Table 5.10 Distribution of units by Business tradition of entrepreneurs

I
(

Business Tradition Close Relatives have business units

No relatives have business activities

I
I

units

per cent

I
/

182 1248 330

124.85

75.15 100.00

Total Source: Primary data.

(Note: *Parents, Husband, brothers or sisters have some business unit and the entrepreneur had a n involvement in the conduct o the f business.) A s seen in the table 5.10, out of 330 entrepreneurs, only 82 persons (24.85 per cent) have :some business experience or business contacts before they start the unit. On the other hand the majority of them, 248 entrepreneurs (75.15 per cent), are first generation
enLrep~.e~leu~.s draw11 from non-business families. The study revealed

that majority of the women entrepreneurs are drawn from families having no business tradition.
G. Product perceptiveness

Selection of product has a paramount importance in launching a business unit. Market potentiality, (Demand in the future market), viability, and stage of life cycle of industry are the major considerations to be given while selecting a product line. Product wise analysis of the units in the sample districts revealed the high rate of concentration of units in four or five limited number of items. About 80 per cent of the total units are clustered around five items of product. The dimension of growth of the sector further shed light on the enormity of this problem. In March 1991, 51.1 per cent of the total units promoted by women were in Garments, hosieries, and textiles. By 1998 percentage of this item to the total women owned units increased to 55.49 per cent. Food products account for 11.4 per cent in 1991 increased to 12.45 per cent in 1998.. In 19991, major 10 items were account for 86.2 per cent of the total units. By 1998, these l 0 items become 91.83 per cent of the total units. This indicates the scale of concentration of units in limited number of items. Table 5.1 1 shows the product wise distribution of units and growth in their proportion to total units during 1991-2000.
A s seen in the table 5.1 1; out of 11 product groups only six

items show a positive index of growth. All the other units showed a negative growth indicating the disproportionate growth of the sector with increasing rate of concentration'on limited product groups. Women enterprises had grown by 508 per cent during 1990s.

Table 5.1 1 Distribution of units by percentage of units registered and increase in the proportion of each product Product group Garments Food& allied Repair& Service Rubber& plastic Manufacturing Furniture Printing &Paper Electrical& Electronic Construction materials Chemicals Others
11.2 12.23 6.87 4.26 2.45 3.25 1.96 1.66
2.20
1.49

4.5
3.7 4.3

109 153 115

57

2.7
2.7 2.5

120
73

66

1.6
1.9 13.8 100

138
78 58

8.00

100 Source: Directorate of Industries & Commerce. Registration 19912000

Note: Calculated on the basis o units f

100

by women in Kottayam,
1990-91 to 1998-99
*

Thiruvananthapuram and Thrissur Districts from

f f according to the classzjication o main product a t the time o registratiori However, the sector wise growth in numbers and their participation in different sectors. indicate that women have entered into almost all segments in the small scale sector but are more and more concentrated in a limited range of product lines. This phenomenon will lead to severe competition in this sector and adversely affect the sustainability

H.Size of enterprises
Size of a unit is often measured in.terms of investment or on the basis of number of employees. Investments in Fixed assets and number of employees are the two common measurements to assess the size of a business unit. In India small scale industry is defined in terms of investment on plant and machinery. However, investments in women enterprises are far below the allowed limit. Against the state average of Rs. 139426, average investment in women enterprises was found only R s 71647. Many of the Garments & Food units have registered with Rs. 20000 or less and with 3 or 4 employees. Table 5.12 shows the: average investment on futed assets and average employment in different product. Low investment on futed assets per unit and Low investment per employee illustrates the size of women units in the small scale industrial sector.
A s seen in the table, Garments alone represent about 56 per cent

of the sector in which average investment on fxed assets was Rs. Only 37000 and average employment was less than 6. In Food and allied products, the average investment was Rs. 39000 and average employment was 7. Average investment for the entire sector was Rs.72000 and average employment was only six. The study shows that majority of the units in the women sector are too tiny and they possess advantages of small size but they have to overcome the limitations of small size.

Table 5.12 Average investment in fxed assets and employment of sample units
I
l
l

verage Product group

1 Repair Services Rubber& Plastics Manufacturing Electrical, \paper/ printing Construction Furniture Chemicals

2.19

/ 1
1

4.6
l
ll

10652 19909

6.8
I

2 1324
4324

0.81

5.3

15283

0.89

12361

.state average Source: Survey data Note: Registration dataDirectorate of Industries & Commerce, 1991-99

Sources of Finance
The main requirements of finance for SS1 units include long term and short term. Following is a brief list of main sources of finance for small scale business units. Long term finance Long-term requirements include investments in futed assets. The chief sources of long-term finance for a new enterprise include the following
1.

Owner's / Promoters Capital Hire purchase or lease Seed capital or margin money from government / institutions Subsidy from government Venture capital DepositsJLoans from friends, relatives, customers etc
( informal sources)

2.
3.

4.

5.

6.

7.

Borrowings from institutions

Short-term finance Short-term finance is required to meet working capital requirements. The main sources are:
1.

Commercial banks Private money lenders and Chits

2.

3.
4.

Trade Creditors Factors Advance from customers Deposit from friends and relatives. Informal Associations.
I.

5.

6.

7.

Financing

Owners or promoters of a unit are expected to invest a reasonable share of initial investment. Debt- equity ratio is the test of financial strength of a business unit for the long run. . This will depend upon the financial standing of the owners or. the type of organisation. For getting financial accommodation from institutions 10-20 per cent of the project cost to be invested by the proprietor or promoters. In the case of self-employment projects promoted by women, it is found that the promoters find it difficult to raise their minimum share a t the time of promoting the unit. Though 2: 1 is the advisable Debt- Equity ratio, in most of the cases promoter's share is limited to the minimum margin money fmed by the bank or other financial institutions for sanction of a loan. In the case of Cooperative societies and Self-Help Groups, the member's coniribution has been found more significant. Table 5.13 gives the details of source of funds for investment in the women sector. Cost of capital has a direct impact on operating profit. A s revealed from the table 5.13 for 268 units (81.21 per cent) funds borrowed from institutions was the main source of finance. Out of them 213 units (64.54 per cent) raised their capital from commercial banks. Only 26 units (7.88 per cent) mobilised their capital from industrial financing institutions. When 45 units (13.63

per cent) raised funds from private moneylenders, 11 (3.35 per cent) units have gathered funds from friends or relatives Table 5.13 Distribution of women enterprises by source of funds per cent in the sample

No of units Source of borrowings Commercial banks

I

Financial institutions
I

26
I

7.88

Private money lenders

I

45
I

13.63 3.35
I

Deposits from friends and relatives

I

11

Source: Primary data. Though a number of specialised financing institutions are functioning in the state women are mainly depend on commercial banks for their long term a s well as short term requirements. Several reasons were found for this trend. Women entrepreneurs in Kerala are promoted with very small projects, which will not be entertained by industrial financing institutions. Moreover, the procedure and efforts involved in getting financial assistance from specialised institutions forced the women to borrow from other sources. In spite of exorbitant rate of interest 13.6 per cent entrepreneurs in the sample used to borrow from private moneylenders. Delay in getting loans and lack of securities to offer for bank loans compel them to borrow from moneylenders. It is further found that the entrepreneurs did not try to borrow from non-conventional sources like mobilising deposits from friends and relatives etc the table below show the sources of borrowings in the sampled units.

Investment of funds
The return on investment will depend upon the nature of investment and its contribution to revenue. In women entrepreneurs it
is seen that a significant proportion of total funds available has been

invested on Land and buildings. Table 5.14 shows the investment of funds in women sector. Table 5.14 Distribution of Funds as percentage of total investment

Product group Garments& ready made l~ood allied products & Repair and Services
23.79 35.85 40.35 100.00

24.78 33.38

39.10 46.97 35.88 44.51 32.43

36.12 19.65 32.81 19.48 28.52

100.00 100.00 100.00 100.00 100.00

Paper & printing Construction materials

i * ++

Chemicals Miscellaneous

34.87

3 1.80

Source: WIP Cell , Directorate of industries and Commerce,

In 'Garments' and 'Food' units most of the units are functioning either in own building or in rented building , the investment on land and building is comparatively less only about 23 per cent of the total investment is invested on land and buildings and above 40 per cent is invested to meet working capital requirements. In the case of Food and Furniture industries investment on Land and building is found less than 30 per cent of total funds. In all other sectors it is found more than 30 per cent of the available funds has been invested on Land and building. Owner's Equity Table 5.15 Distribution of Owner's equity. Product group Garments& made Food & allied products Repair and Services Rubber& plastics Manufacturing
I

Owners share

Borrowed funds

Total Investmen t

32.6 48.4

36.2 31.5 38.3 33.6

Electrical, Electronics Paper & printing

1 t55:: 1 1I II
f3: 5 3:
61.7 66.4 67.9 71.4 65.4

:(l:
t:)

: l (:

1 1l

Construction Materials
36.7 32.1 28.6 34.6

1 Furniture & wood l Chemicals

Miscellaneous . p Total

--

100

Source: Survey data. ( Note: Average of percentage to total investment)

Owners' share of investment in the business may be taken as the test of financial sustainability. Majority of the women entrepreneurs were drawn from middle income or low-income group and had to depend on borrowed funds to start their venture. Most of the units used to borrow from commercial banks for launching their units. Table 5.15 provides the distribution of owners' share and borrowed fund invested in the sampled units. In the Garment sector that represents more than half of the women enterprises in the state 58.5 per cent of the total investment was financed by borrowings. In Food and allied Products 67.4 per cent and in Repairs and services 51.6 per cent of the investment was financed by loans. In Miscellaneous group 71.4 per cent of the requirements were financed from borrowed funds. 'Table 5.16 Percentage of Borrowed funds in total investment Proportion of borrowed funds to total investment N borrowed funds o 0- 20 per cent 2 1-40 41-60
p -

At Commencement At present No of per cent Units 62 48 44 115

32

No of per units cent

18.8
14.8 13.8 34.9 9.8

83
22 68 61

25.5

6.6
20.5 18.4 17.8

6 1-80

59

Source: Survey data.

Exhibit 12

Investment pattern in sample units

Borrowed funds 120

100

m
W
C1

80

0
0

4 a

a l
C

60

c l
L) L

40

20

product group

Table 5.16 provides a comparison of borrowed funds and owners at the time
of commencement and at present. Out of 330 units 115 units (34.85 per cent) started

their unit with 40-60 per cent of the required investment mobilized from borrowed funds, 32 units (9.67 per cent) were borrowed 60-80 per cent of their investment requirements, and 23 units depend on borrowed funds to finance above 80 per cent of
their financial requirements. After operating for 5-10 years their financial position has

been significantly changed. Analysis of the present financial conditions provides a distinct picture. Out of 330 sampled units 84 units (25.4 per cent) have no loans outstanding to repay. This indicates that about 5.7 per cent of the units have refunded their borrowings. When 79.2 per cent of the units where used to borrow funds to start their unit, a t present the number of units borrowed for running their units have reduced to 74.6 per cent. But the number of units indebted for more than 60 per cent of the total investment increased from 16.7 per cent to 29 per cent. This shows that more units are operating with large amounts of borrowings. Entrepreneurs who started their units with a major share of total investment from own funds have refunded their loans. But the own equity of those who started with 60-80 per cent of their requirements from borrowed funds has been considerably declined. The study shows that women entrepreneurs to a large extend depend on borrowed funds to launch their enterprise.
Capacity Utilisation

Utilisation of capacity of units not only considered for assessing

the level of its overall efficiency but also to evaluate the condition of the

sector. For various reasons women enterprises were found working below fifty per cent of their installed capacity, on a n average.

This shows the presence of idle resources in this sector as well a s an indication of ailments of the sector. The study made an attempt to assess the level capacity utilisation in this sector and examine the reasons if the capacity is not fully utilised. Table 5.17 Average Capacity utilisation per cent to total 50.30 30.9 1
I

60 and Above

18.79

Average

44. per cent

Source: Primary data. Note: * Actual operation capacity The informant units were classified in to three groups viz. working below 40 per cent, between 40:to 60 per cent, and above 60 per cent of installed capacity. The data collected has been tabulated in the table 5.1 7.
A s revealed by the table 5.17 and exhibit 13 out of 330 units in the

/ production a s a percentage of installed

sample 165 Units (50.0 per cent) were working below 40 per cent of their capacity. 103 units (31.21 per cent) were working a t 40-60 per cent of their capacity and only 62 units (18.79 per cent) were utilising

Exhibit 13
--p

Average Capacity untilisation

Product groups

Garments

Food

Services

Rubber'

Mfg.

Electronics

Printing

Construction materials

Furniture

Chemicals

Misce
l
l

Product group

above 60 per cent of their installed capacity. When many of the Garments units found functioning nominally some of the units in this sector found working a t their full capacity. It was also the case in most of the product groups. Average capacity utilisation in all the women units was estimated a t 44.06 per cent with a Standard deviation of 14. Table 5.18 Product wise distribution by Capacity utilization Capacity utilisation S1 N o Product group below 4040 S9
NO

60 Total Average and Above INO. (No lper cent(

(NO.

1 1

IOarments d Readymade 1Food & allied products / ~ e ~ a i r Services and Rubber& plastics Manufacturing I~lectrical, electronics & computel /Furniture & wood Paper & printing bonstruction materials

1 2
(3
4

/6
(7
-

8 9

per cent to total Source: Survey

Table 5.18 reveals the average capacity utilisation' in different product groups for the last 3 years. In 'Garments and readymade' sector which represents more than 50 per cent of the women sector, the average capacity utilisation is found only 41.26 per cent. In food and allied products, the capacity utilisation is 43.81 per cent and in Service sector, it is 49.28 per cent. 'Electrical and electronics' sector utilising only 50 per cent of their capacity. In Rubber and Plastic industries' average capacity utilisation was 45.05 per cent and in 'Wanufacturing industries' it was 46.25 per cent, and in 'Construction Materials it was 43.88 per cent. Average capacity utilisation in the women sector was 44.06 per cent with standard deviation of 14. Sixty two units utilised 60 per cent or more than 60 per cent of their installed capacity. While 103 units (31.21 per cent) were working at 40 per cent or above but below 60 per cent of their capacity, remaining 166 units (50.30 per cent) were working below 40 per cent of installed capacity. Reasons for under utilisation of capacity Lack of demand, Shortage of Working capital, Shortage of materials, Shortage of Power Supply, Labour problems, Breakdown of machineries, Competition in the market, Management Problems or dispute among Partners etc. were the responded reasons for under utilisation of capacity in this sector. Table 5.19 shows the main reasons for under utilisation of capacity in the opinion of respondents in the sample. Exhibit -14 also depicts the reasons for under utilisation of capacity in women enterprises,

Note. In the case of units there were no projects, the probable maximum out put they muld produce had been considered as the i s a l d mpacity. ntle ..

155

Exhibit 14
E Shortage materials E Breakdown of

Reasons for underutilisation of Capacity in sample units

Economic Recession ,
I Domestic problems / El Labour problems I Shortage of power

C Inadequate marketing l

I of demand Lack

100

200

300

400

500

600

700

800

900

Weighted scales

Table 5.19 Main reasons for under utilisation of capqcity in sample units

Reasons for under utilisation of capacity

Percentage to

I
1

Total units

l
1
l

per cent

l
I

Shortage of working capital Competition Lack of demand for the product Inadequate marketing Shortage of power Labour problems Domestic problems 294 197 193

88.8
60.0 58.3

Dispute

I I

45

Economic Recession Breakdown of machinery Shortage of materials Source: Survey data Out of 330 units, 294 (89.09 per cent) units had to face severe

competition in the market and for 280 units (84.8 per cent) affected
by shortage of working capital being one of the main reasons of under

utilisation of capacity. When

197 units

(60 per cent) had the

problem of lack of demand' for the line of product in the market,

Limitations of marketing arrangements debilitated 193 (58.48 per cent)units and Shortage of power affected 81 (24.55 per cent) units and Labour problems was the reason impaired 67 (20.3 per cent) units .When General Economic recession is the prominent reason for 45 units (14.20 per cent), 51 units (13.60 per cent) were working affected by Domestic problems of the entrepreneurs or dispute among partners, 10 units (3.02 per cent) affected by frequent breakdown of machinery or equipments and another 9 units ( 2.72 per cent) found shortage of materials responsible for low level of performance. Entrepreneurs were asked to give their reasons for under utilisation of capacity in the order of significance. The preferences of entrepreneurs were given weight age of 4,3,2 & 1 respectively and tabulated the results to rank the order of significance. The result had been tabulated in the table 5.20 below. According to the weighted scores Shortage of working capital is the first prominent reason for under. utilisation of capacity. The competition in the market is the next important problem faced by women entrepreneurs. Lack of demand for the product, inadequate marketing arrangements, and shortage of power are the next important problems in the order of preference. Even at a small rate Labour Problems, Domestic problems of entrepreneurs, General Economic recession, Shortage of materials and breakdown of machinery are also adversely affecting the smooth functioning of women enterprises. The study shows that 'Shortage of Working Capital', Lack of Demand for the Product', High Level of Competition , Inadequate Marketing arrangements are the important reasons for the poor performance of women enterprises,

Table 5.20'

Women have to face a plethora of problems in starting and

running their unita. Many of them are general problems being

applicable to men entrepreneurs as welt Some o the problems have f uniqueness in nature or dimension. Some of the problems generated

frrrm the patriarchal presumption on the position of women in the society. While m e o the hindrances are created from lack of f accessibility to nsources many of them engendered from shortage of resources. As a part of the study information had been gatherwl from
the entrepreneurs on their pmblems relating to starting and running
theunit

Rdrloms i lroPchfng the unit n

Women entmpreneurs in the sample had to fkce several
d i f f k ~ i n s t a r t i n g t h e u n i Maay ofthemwere prejudicetowards t

the formalities and s l c e their line of activity on the basis of eetd

easiness to start.

The response of the sampled entrepreneurs to t e question h

ngarding probLuns and d%fm&ka in promotion of their u i has nt been tabulated below in Table 5 2 .1

As revealed in the Exhiit 15 the most prominent problem QLced by them was to mobilize funds. In the sampled units, for 6.3 promoters of 209 ( 3 3 per cent) units rising own fund was the major problem to start the u i . While promoters of 178 units (53.94 per nt cent) had to face d ~ u l t i e in getting ban to launch their units, 143 s ifcl o (43.33per cent) entrepreneurs found it was too d f i u t t deal with the department formditiai and to get consents and licenses to start their units. Many of them told that it was rather difficult to get

consent or no abjection certificates of neighbours in order to get clearance and license. Table 5.21 Problems of women entrepreneurs in launching the unit

!1

7
Nature of problem Units Mobilising own funds

Ranking

l
I

209 178
143

1
I

63.33 53.94 43.33

1
l

429 344 284

1
l

Delay/ difficulty in getting

2
3 4 5 6 7 8

Deal with govt. departments To comply formalities

141 106 72
I

42.73 32.16 .2 1.85

I

271 207 143 114

I/

To get power connection Installation of machinery Procurement of materials

57

17.23 10.30

Apathy of family members

Source: S w e y data

34

87

When promoters of 141 units (42.73 per cent) observed that fulfilling the official formalities to get license or to get the benefits declared by the government was tiresome, another 106 entrepreneurs

(32.15 per cent) found much difficulty in getting power connection. In

cooperative societies and partnership firms, lack of assistance from other members in the organization was disappointing. Delay in getting machinery and equipments and shortage of materials were problems at the initial stage. Even a t a small rate, apathy of family

Exhibit 15

Problems of women entrepreneurs to start new units

er members in

To comply with formalities

D Deal with govt. departments and to get licences/ consents

W Deiayi difficulty in getting loan

Mobilising own funds

.-p--

--- --- --

- - p .

50

100

150

200

250

300

350

400

450

500

Weighted scales

160 A

members

was

the

problem

for

34

(10.4

per

cent) women

entrepreneurs.

The main resistance from family members was in

offering properties as security for getting loans. Since the entrepreneurs had to face different problems in starting their unit, they were told to assign rank for three of their problems in the order of significance. Weights of 3, 2 and 1 respectively were given for the preferences of respondents. The result again showed that mobilizing own funds was the first major problem for women followed by getting loans. Fulfilling official formalities for getting licenses were also created problems for women in promoting their units. Difficulty or delay in getting power connection and installation of plant and machineries, procurement of materials also generated problems a t the initial stage. Apathy of family members generated difficulty only a t a n insignificant scale. The analysis showed that women had to address manifold problems in the phase of launching their own units. Raising funds is the foremost problem followed by legal formalities, getting power connection, installation of machinery and procurement of materials.

Problems in running the enterprise

Women get so many assistance and encouragement to start a business unit. Once started the unit they have to face all the problems slmilar to male entrepreneurs in addition to the impediments engendered from their responsibility a s a housewife. In

majority cases women get the support of family members to manage the business. During the survey, the sampled entrepreneurs were asked on their problems in running their business unit. The respondents were directed to allocate ranks for the significance of each problem that they had to face in running their unit. The ranks assigned by entrepreneurs were given weights of 3, 2 and 1

respectively for ranks 1, 2 and 3 assigned by the entrepreneurs. The tigures thus obtained are presented in the table 5.22 below-

Table 5.22
Roblems of women entrepreneurs in running t e enterprise h Weighted Ranking Nature of problem Total

Units
Shortage of funds Marketing of products Collection of
289 177

percent
87.58 53.64

Scores
548 372 1 2
I

ispute among partners/

24

1.2'7 4.85 4.55 3.33

49 38 25 21

8 9

Labour problems
Rocurement of materials Apathy of family members

16

15

10
11

ll

Total
Source: survey

As Been in the table 5.22, almost all the units face a number of

problems in the conduct of their business. The problems faced by -men

W

entrepreneurs are ranging from shortage of funds to apathy of

y members and from competition to labour problems. Exhibit 16

shows the Problems of women entrepreneurs to run their units.

Exhibit 16

Nature of problems of women entrepreneurs tin running their units

Apathy of family members

Procurement of materials, Labour problems

Dispute among partners/ members

Shortage of power

d
-

Apathy of department staff

d o compiy taxllegal Formaiities

L

Competition

Deiay in getting payments

Marketing of products Shortage of funds

Scores

Out of the 330 sampled units, for 289 units (87.58 per cent) Shortage of funds was one of the three crucial problems. In 177 units (53.64 per cent), Marketing was one of their main problems. Forty per cent (132) of the entrepreneurs found Competition in the market being the paramount problem. For 132 (40 per cent) businesswomen, Delay in collection of payments and mounting book debts was the one of the dominant problems Seventy one (21.52 per cent) entrepreneurs find that shortage or failure of power supply a s their leading problems. 6 7 (20.03 per cent) entrepreneurs found Apathy of department staff and 24(7.27 per cent) entrepreneurs experienced. Dispute among partners or lack of
cooperation members was the problem for 24 units. Labour problems

affected the working of 16 units and shortage of materials was one of the problems of 15 units. Out of 330 entrepreneurs interviewed, only
1 1 entrepreneurs had the complaint on Apathy of family members as

a problem in running the business.

'

To evaluate the significance of problem the ranks assigned by entrepreneurs were given weights. The weighted Scores revealed that Shortage of funds was the most crucial problem faced by women entrepreneurs followed by marketing of products, delay in getting payments, competition, fulfilling legal formalities, apathy of department staff, shortage of power, internal disputes, labour problems, procurement or shortage of materials and apathy of family members

Nature of Financial problems in women enterprises

Almost all the (289 out of 330 i.e. 87.58 percent) entrepreneurs met with financial problems in some or other way. The nature of the financial problems experienced by the respondents have been tabulated in the table 5.23

Table 5.23 Nature of Financial problems in the sample units

Shortage of working capital

Source: Survey data

A s revealed by table 5.23, in 186 units (56.36 per cent),

shortage of working capital is the leading financial problem. In 61 units (18.6 per cent), shortage of funds for expansion is the main financial problem. Out of 330 sampled units, in 92 units (27.9 per cent), the main financial problem is the repayment of loans overdue. Out of 330 units, 289 units (87.58 per cent) have incidents of financial problems whereas 42 units (12.42 per cent) found no financial problems in running the unit. It is depicted in exhibit 17. Most of the entrepreneurs believed that finance is their major problem. It is true that any unfavourable event in business will lead to financial crisis. If not managed well, even units running with fair margin will find financial exigencies. It is found that Shortage of working capital is the single major financial problem in women enterprises.

Nature of Financial problems in women entrepreneurs

U Shortage of working capital

ll
l
l

/l?!

Repayment of loans

~~
I

C Shortage of funds for 7

l

I
l

expansion

% to total units

Inadequate working Capital

Working capital is the Business's lifeblood and every manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it does not generate surpluses, the business will eventually run out of cash and expire. The magnitude of the problem of shortage of working capital has been analysed and tabulated in the table 5.24 below. Table 5.24 Shortage of working capital in the opinion of women entrepreneurs of working capital a s percentag requirements dunits
l

C r cent
l

bove 60

40 146

12.13
44.24 31.21 87.58 12.42

Up to 30

103 289 41

FN shortage o been taken.

Units experience shortage of W.C

Source: Primary data. Note: I . in majority cases the average period o cycle was found below f
1 month and therefore working capital requirements for one month has

As revealed by the table 5.24 out of 330 units in the sample

only 41 units had no inadequacy of funds. For 186 units the shortage of working capital was significant. magnitude of the problem. The exhibit 18 also shows the

Exhibit 18

Shortage of working capital in sample units

Shortage 31-60%

Shortage above 60%

In the sample out of 330 units, 41 units (12.42 per cent) have no problem of shortage of working capital. In 103 units, shortage was not so severe. But in 186 units, the shortage of working capital found crucial and it was above 30 per cent of the requirements. In 146 units (44.24 per cent), the shortage of working capital is 30-60 per cent of their requirements. In 40 units, it was above 60 per cent of requirements and the situation found extreme difficult. capital. REASONS FOR SHORTAGE OF WORKING CAPITAL Shortage of working capital might not be the cause but the consequence of several problems such a s continuous monetary loss, delayed collections of debts, accumulated stock of raw materials or finished goods, low turnover, inadequate investments etc. Reasons for shortage of working capital in the opinion of entrepreneurs has been given weightage and the result have been presented in the table. Out of the 330 sampled units, 289 (87.8 per cent). Units experienced shortage of working capital a t varying degrees. In 186 (56.36 per cent) units, the shortage of working capital was significant. Main reasons in the opinion of entrepreneurs were given ranks 1,2,3 and 4. The preferences given by entrepreneurs were assigned weightage of 4,3,2, and 1 respectively. The weighted scores are tabulated in the table 5.25.
A s revealed by the table 5.25, and exhibit 19 in terms of

In

these, unit's production has almost stopped for want of working

number of entrepreneurs and total scores, Inadequate Investment was

the main reason for shortage of working capital.

Table 5.25 Reason for shortage of working capital in the sample percentage Reason for shortage of working capital
I

No of units
I

Weighted Rank Scores

I I

In the sample
78.79 627 61 1 505 268
S

Inadequate investment Loss in business Collection of debts Lack of demand Delay/

260 75.15 69.39

718 61 54 53 32 21

I I1
I11

/ turn
get

62.73
37.27

IV
V

Difficulty to

Unsold stock of inventory

26.97

161

V 1

87.58

Source: survey Continuous loss, Low demand for the product and severe competition in the market compel them to extend credit in order to canvas customers that could not collect within a reasonable period. Majority of the Entrepreneurs who were belonging to middle income group could not raise additional funds a s working capital. In many of the women enterprises, it was the major and direct reason for shortage of working capital In the sample, 260 units (78.79 per cent) have the opinion that 'Inadequate initial investment' is the foremost reason for shortage of funds.
248 entrepreneurs

found

that

continuous loss in business lead to shortage of working capital

Exhibit 19

Reasons for the shortage of working capital

1 -

- -

l 4 Delay / Difficulty to get

loans

U Lack of demand

l
W -

Delay in collection of debts

El Loss in business
I

'I
l

Inadequate initial investment

100

200

300

400

500 Weightage

600

700

800

Out of 289 respondents having shortage of working capital 229 respondents believed that Delay in collection of debt is the major reason for shortage of working capital. When weightages is reckoned, Inadequate initial investment is the first reason and continuous loss in business is the next major reason. In 248 units (75.15 per cent in the sample) loss in business is the main factor lead to shortage of working capital. 'Delay in collection of debt' is the third prominent reason for shortage of working capital. Delay and difficulty to get (41.09 per bank loan lead to shortage of working capital in 123 units

cent) and accumulated stock of inventor'j is the reason for shortage of working capital in 89 units. Lack of demand or poor turnover is the reason in 207 units. The analysis above shows that women entrepreneurs are facing
a plethora of problems not only in launching their units but also in

running them. The ultimate result of all the unfavourable causes will be reflected by financial stringencies and these problems will finally lead to shortage of working capital.

Adequacy o initial investment o working capital f f

Most of the women enterprises are organized under self employment scheme of the government and opened with loans from commercial banks. The margin money and own fund stipulated by the project may vary from actual. The inadequacy of initial investment will have cumulative effect in creating shortage of working capital. The shortage of working capital due to inadequate initial investment is analysed in the table 5.26.

Table -5.26 Distribution of units by product groups qnd average Initial Shortage of Working Capital
I I -

Initial Shortage Average investment Shortage at increase at on present in Working Beginning Shortage
70 80 30 20
I

50

20 25
I

45
I

3Repair &Services
I

80

20 25

32

12 20

Rubber& plastics

75

45

Source: Primary Data.

A s revealed by the table 5.26 given below 260 entrepreneurs in

the sample have pointed out that inadequate initial investment is the main reason for shortage of working capital. On analysis of the project cost and initial investment pattern, it was found that initial investment in the worlung capital on an average is only about 20 per cent of the total investment, which may not be sufficient for a cycle. Competition

in the market compels entrepreneurs to allow credit to customers for a long period. This also leads to shortage of working capital. The table below shows the shortage of working capital a t commencement and a t present in all the units there was shortage of working capital even a t the commencement of unit. When the shortage was increased by 32 per cent of requirements in manufacturing units it has been increased by 25 per cent in Food, and 20 per cent Rubber, and 25 per cent Furniture units. The shortage increased by 18 per cent on an average when all the units are taken together.
A s shown by the table in all the product groups there was under

investment in working capital. But when compared to the shortage of working capital at present it is clear that the shortage of working capital a s a percentage of their requirements has been significantly increased after operating for 5-10 years. This leads to the conclusion that shortage of initial investment alone was not responsible for present situation in these units.

Shortage of working capital and Credit policy

There are two elements

Inventory and Receivables - that

absorb cash and generate the problem

- shortage of working capital in

business. In women enterprise 'Outstanding debtors' or 'Receivables' seems to be more prominent. Time and money are two dimensions of this problem.

Period of collection of debts.

Period of collection is too vital for micro units often started with a minimum amount of working capital. Table below shows the period of collection in the sampled units. For 74 units (22.42 per cent) there is no practice of extending credit as a policy

Product distribution customers Garments

wise Period of credit ( collection of debts) in 3 a a of units 3 3

3

-Q

.g k

%i
W

and period of credit to

m
W

a" g N 2'2 s * 4 o
d

Q6
17

eU <o
36

e
32

S
35

M 'Q

.S

C I

~d
0

3
l
I

2 2 o
0 .

57
I

177

3.25 3.00 3.60

4.00

l
Food products
l

I
11

l 5
4
I

4
I

8
I I

32

Repair& Services
-

5
5

3 6 5 3
I
I

2 3

10
4

21
18 12 12
I

Rubber& plastics Manufacturing Electrical, electronics

l

2
1
I

1 2
I

3.23 2.62
I

2 3

Furniture& wood Paper & printing Construction materials Chemicals Miscellaneous Total per cent Source: Survey data
-

3
l

2
3

12

3.20 3.30 2.30

2
1

1 1

9 9

1
7

1
l

1
1

6
22

3.20 3.00

36 11

98 30

I.

72
22

50 15

74
22

1 100.00

330

3.62

Slow payments from debtors have a crippling effect on business,

in particular on small businesses that can least afford it. Majority of

the women enterprises are promoted with minimum working capital

and often running with borrowed funds, which involves interest cost. Therefore extending credit will deeply affect the working capital in these units. Slow collection of debts will make the unit more vulnerable. The credit policy of the entrepreneurs has been studied in the context of working capital shortage and analysed in the following paragraphs. Table 5.27 shows the collection period of credit in the sample units. Out of the 330 units, in 36(110.8 per cent) units the average collection period is less than one month. In 99 units, (29.91 per cent) the period credit is between one and two months and in 72 units, (21.75 per cent) it is two to three months. In 50 units, the time taking for collection is more than 3 months'

Amount of outstanding debts.

Amount blocked with customers is an important element affect availability of funds in a firm. For the amount with debtors, the enterprise has to bear the cost. It is more relevant when the unit is functioning with borrowed funds. The significance of amount outstanding is assessed in the light of working capital requirements and shortage of funds. More period and more money in receivables will certainly run the business to working capital deficiency, compel them to take more loans hence lesser the net margin and ultimately to become sick and expire.
A s revealed in the table 5.28 on a n average 47.5 per cent of the

working capital in women enterprises is tied u p in Receivables.

' Note: In most of

the finns there were no well-designed books and no

practice o preparing proper accounts. Therefore, detailed analysis o f f working capital was not possible

Table. 5.28 Proportion of Outstanding debts to working capital Requirements

--

Receivables outstanding as percentage of Working capital

Product group

/ l . Garments & Textiles

1.Food 2
1 . Repair, & Services 3
14. Rubber & Plastics

1. Manufacturing Industries 5 6. Electronics & Computer

7.. Furniture & wood

8. Printing & Paper products

Construction Materials 110. Chemicals
1 1. Miscellaneous 1

Source: Survey data Note : * Average debts a s percentage to working capital, ** Shortage as percentage of requirements The average shortage of working capital was estimated to 48 per cent of requirements. In 74 units (22.42 per cent) in the sample, it

was not a policy to allow credit to dealers or customers. In 55 units (16.7 per cent), the outstaying receivables are less than 40 per cent of its required working capital. In 125 units it was between 40-60 per cent and in 55 units (16.6 per cent) 40-60 per cent of its working capital has out flown a s receivables. In 34 units 60-80 per cent of working capital is held up with debtors.
'

In 14 units a n amount almost equal to the working capital requirements are tied up with customers. In 28 units, (8.5 per cent) the amount of receivables were more than its estimated working capital requirements. Among different product groups, in Furniture and wood works, Printing and paper works, and Other Manufacturing industries the average amount of Account receivables is more than 60 per cent of their working capital requirements. In these industries, working capital available is less than requirements. 50 per cent of their Even though credit is unavoidable and amount

receivable becomes a part of fured investment, no provision is usually made in the projects for this ite'm. Therefore, new units with inadequate funds, limited equity background, and low margin are practically not in a position to extend credit facilities to their customers. However, competition in the market and policies of the rival units compel them to extend credit. Offering more credit and selling a t lower prices are found to be the two important strategies of women enterprises to face competition in the market. Majority of them allow credit a s a measure to attract dealers or customers.

Credit facilities available from suppliers

Creditors for supply of inputs are a vital source of working capital. Like receivables, it also has two elements viz. period of credit and amount. The credit policy of a firm seems to be healthy if the period and amount of credit available are almost equal to the period and amount of credit allowed to customers.

Table 5.29
r-

Distribution of sample units availing credit facilities. Period of credit in Months

I
I

mtal

/
/
4

/;:Garments & Textiles

1. 2
FOO~

1 . Repair, & Services 3

L p r i n t i n g & Paper products Construction Materials

.
Product group

I
2
I

120

44

177 2

1 2 3

1 8 1

1l7
8

1 3 1
5
2 2 2

/ I

I2l1
1 18 12 12 12 9

1 1

4. Rubber & Plastics

4 2 2 3 2
4

5. Manufacturing Industries

10

Elect, Elx & Computer

7. Furniture & wood

1
/

8 7

4
4

10. Chemicals

1
3

6
1 2 2 1 6

2
4

1 1. Miscellaneous 1

1 1 2

Total

222

79

23

330

1 1

percentage to total
. p

67.27

23.94

6.97

1.81 100.00

Source: Survey data

Table 5.29 provides the credit facilities enjoyed by women units in the sample.
A s revealed by the table 5.29 out of 330 units, 223 units (67.37

per cent) had to pay ready cash on their purchases. Only 108 units could receive credit from their suppliers. Out of them only less than 2 per cent (6 units) receive credit for more than 2 months. When 23 units (6.95 per cent) availed credit for more than one month 79 units (23.87 per cent) receive credit only for 2 to 4 weeks. Out of 330 units, 223 units (67.37 per cent) had to pay ready cash on their purchases Sundry creditors constitute an important item of working capital. A s revealed by the table 5.29, in the sampled 330 units, only 108 units (32.7 per cent) availed credit on their purchases. than 10 per cent of their working capital requirements. In 38 units, (11.8 per cent) get 11-20 per cent of thei~working capital requirements and another 39 units (11.8 per cent) get 21-30 per cent of their working capital requirements from suppliers as credit. The amount of credit availed by 5.4 per cent of the entrepreneurs is more than 30 per cent of their working capital requirements a t significantly influence. the cash requirements in a firm. Since the Receivables has a major role in working capital and payables have the counter balancing effect, managing both of them effectively forms the vital part of working capital management. When the payments are overdue, that will adversely affect the creditworthiness and reputation of the firm among the suppliers. Outstanding debts for larger periods will invite the danger of bad debts and inherent problems. Out of this, in 13 units (3.9 per cent) total amount payable constitute less

Table 5.30 Product wise distribution of units availing credit and amount payables in sample units Payables as percentage Working capital required.

S1 No

Product group

F*1. Garments & Textiles

I I
1 l2 l 1 l3 l1 l4
b1

2. Food

13. Repair, & Services

( 4 . Rubber & Plastics

117

Manufacturing. ~ustries
6. Elect

Computer

9. Construction Materials
1 0 Chemicals 11. Miscellaneous

1 per cent
Source: Survey data advantageous position.

Total

3.9

11.5 11.8 5.5

32.7

67.3

100

Considering the chief ingredients of credit policy and its impact on working capital it is found that women entrepreneurs are not in an

Table 5.30 below represents the chief features of credit policy in

ihe sample units.

Table 5.3 1 Some key Features of credit Policy in sample units

1
Description

Receivables

Payables received

I
(32.6 per

(Credit allowed to (Credit customers)

from suppliers)

I Units
credit

allowed/

received 257 cent)

(77.6 per

( 108
cent)

Period of Credit

2-4 months

% - l month

Amount outstanding a s per cent of working capital required Source: Primary data.

30-65 per cent

10-30 per cent

A s shown in the table 257 units (77.6 per cent) used to allow

credit to their customers but only 108 of them (32.6 per cent) received credit facilities from their suppliers. The women entrepreneurs had to take two to four months for the collection of their debts, where as they have to pay for creditors in two to four weeks. On an average 30-65 per cent of working capital (on the basis of average requirements) were tied up with 'Sundry Debtdrs', But they received support from suppliers for 10 to 30 per cent of their working capital requirements. Majority of women entrepreneurs used to allow credit to their

customers than they availed, both in t e p s of value and period, from their suppliers. This warrants additional amount of working capital. Majority of them who started their units with loans could not borrow further because either they had no collateral securities to offer or their property was already pledged for borrowing initial capital. Further, the

book debts outstanding for a period exceeding 3 months are likely to become bad.
A number of Women enterprises found it hard to survive for want

of cash (working capital) rather than for profit. It is found that since there is no accumulated stock of inventory it is the inadequate investment and indiscriminate credit policy are the causes that lead to the shortage of working capital in women enterprises.
I t is found that the Shortage of working capital is not the cause

but really the consequence of different causes. Hence, it is clear that shortage of working capital is not the single problem and financial assistance alone will not improve their conditions. K. Working status and Sustainability. Sustainability of any commercial enterprise has to be ascertained on the basis of its working results. An industrial or commercial undertaking cannot sustain without making reasonable profit margin. Cash loss of a unit will lead to shortage of working capital, erosion of net worth and weaken its borrowing ability. Since profitability is the ultimate test for long run sustainability, profit before depreciation has been taken to assess sustainability. Hence, a unit is considered unsustainable if it was working a t loss for the preceding three years out of the last five years. Table 5.32 shows the distribution sample units according to their working status.
A s seen in the table 5.32 out of 330 units, 135 units (40.9 per

cent) in the sample were found sustainable in the sense that they have made profit for a t least three years out of preceding five years. Remaining 195 units (59.1 per cent) were appeared unsustainable. Exhibit 20 depicts the working sustainability of women enterprises.

Working Status of Sample units

$ . ,
G O

" +0 &

8
\ 5 $ 5

+ 5
G~

e 0 +Q a

E l Unsustainable

[3 Sustainable

eeU

Product group

Table 5132 Working status of women enterprises

4 1 1 Miscellaneous Total Source: Survey data Calculated value of Chi-square d.f= 7; Level of significance
O u t 330 units,
=

66.67 2 40.91 13 40.9 195

33.33

6
22

100 100

9 135

59.09 59.1

330

0.935394; Critical value

14.06713

0.05

177 units are engaged in Garments and

Readymade where 6 5 per cent found unsustainable ... In garments

units 35 per cent were found sustainable while it was 40.6 per cent in 'Food and allied products. Sustainability is found maximum in 'Electrical & Electronics' where sustainability was found 75 per cent followed by 'Repair and services', where 57 per cent units found sustainable. The percentage of sustainability was found least among other manufacturing units and Printing and paper works. It is found that the rate of sustainability varies from product to product. The result of chi-square test shows that there found no significant difference in the sustainability of different product groups. It shows that sustainability has no direct and significant relation with product group.
Business Tradition and Sustainability

Entrepreneurs who had involvement in enterprise Management of their close relative were considered as second-generation entrepreneurs having some business tradition. Majority of the women entrepreneurs found first generation entrepreneurs who had no previous involvement in the working of business enterprises. Table 5.33 shows the distribution of entrepreneurs by business tradition.
A s revealed by the table out of 330 units, 82 entrepreneurs

(24.85 per cent) had some business background and all the 248 (75.

per cent) units were promoted by first generation entrepreneurs having no experience or involvement in the conduct of business. Out of the
248

units

promoted

by

first

generation

entrepreneurs, 92 (37.1 per cent) units were found sustainable and

156 units (62.9 per cent) were unsustainable.

Table 5.33 Distribution of units by business tradition and sustainability Working status Sustainable I Unsustainable

Total

Business radition

'i.1

generation Second generation potal

F m F p
52.44
40.9 39 195 47.56 59.1 82 330 24.85 100

Units per cent Units per cent Units

Per cent

Source: Survey data Chi- square Test result at 0.05 level of significance for d.f 1, Table value is 3.841455 and Observed value is 0.014302 shows that the difference in sustainability is not significant. Out of 82 units promoted by second-generation entrepreneurs 43 units (52.44 per cent) were found sustainable but 39 units (47.56 per cent) were found unsustainable. The analysis shows that second generation entrepreneurs are more sustainable a s compared to the first generation entrepreneurs.

Type of Organisation and sustainability

Proprietorship is the most common type of organisation in the women sector. Table 5.34 provides the distribution of women units according to their status and type of organisation.

A s shown in the table out of the sampled 330 units, 265 units

(80.3 per cent) were promoted as proprietorships. In 28 units (8.5 per cent) in the sample women shared the ownership as partners and remaining 37 units (11.2 per cent) were promoted in the co-operative sector. Working status of the units under different type of organisation is given in the table.
A s seen in the table 5.34 and exhibit 21 out of 266

proprietorships, 108 (40.75) units made success, and 158 units (59.25 per cent) were failed. In the partnership sector 39.29 per cent (16 units) attained success when 17 units 60.71 per cent of the firms were failure. Out of the Co-operatives 43.24 per cent (16 units) was sustainable but 56.76 per cent were unsustainable. It is found that sustainability is more among co-operative units. Table 5.34 Distribution of enterprises by working status and type of organisation

rSustainable pe of organization
I

Working status Unsustainable

I

Total
1
I

percenta Units
1

Units
I I I

per cen
I

Units
I

Proprietorship Partnership Cooperative society

--

108 40.75

157

59.25

265

80.3

56.76 135 40.9 195 59.1 330 100

Source: Survey data

Exhibit 21

Result of Chi square test: shows Critical value at 0.05 level of significance for d. f is no significant
=

2 is 5.991476 against the observed value of the. sustainability of different

0.943401 shows that the sample represent the population and there difference in organisational set up.

Educational qualification and Sustainability

Level education is considered as a component conducive for sustainable economic activities. Kerala state posses international standards in literacy especially for female literacy. Enrolment of girl students in universities and technical institutions for various advanced and modern courses illustrates the status of women in higher education. However, the number of high-educated women in the entrepreneurial sector was found less than proportionate. units by educational qualification of entrepreneurs. Table 5.35 shows the level of formal education of entrepreneurs and their sustainability. A s shown by exhibit 22 and by the table 5.35 among the sampled units, 41.2 per cent (136) entrepreneurs were possessed School level education, 37.6 per cent, and 124 entrepreneurs got College level education and 21.2 per cent, 70 entrepreneurs had professional or Technical qualifications. Out of the 136 units promoted by entrepreneurs having school level education, The table below shows the distribution of sustainable and unsustainable

52 units were found healthy while 84 units unsustainable.

Out of

124 units promoted by entrepreneurs having College level education,

51 units (41 per cent) were found sustainable and 59 per cent (72

units) found

unsustainable.

Among

the

units

promoted

by

entrepreneurs with professional and technical qualification, 32 (46 per cent.) units are found sustainable.

Table 5.35 Distribution of units by sustainability and education Working Status

-

Total
-

Level Education

of Sustainable
-

Unsustainable Units
84 73 38 195

Units School College

52 51
.

Per cent
38.2 41.13 45.7 40.9

'

Per cent
61.8 58.8754.3 59.1

Units
136 124 70 330

Per cent
41.2 37.6 21.2 100

Professional 32

F q i . 5 Total
Source: survey data

Calculated value of Chi square

0.5847, d.f = 2,

3 =

0.05, Critical

value= 5.99147. Hence the ~ y p o t h e i i s , Yhere is no significant difference in the sustainability o entrepreneurs with different levels o f f education" is true. The absolute figures and percentages show that sustainability is more among highly qualified entrepreneurs and educational qualification has some influence on the sustainability of the enterprise. However, the result of Statistical analysis by Chi-Square test proves that the difference in the rate of sustainability is not significant. This supports the hypothesis that formal education of the entrepreneur does not support sustainability of a business unit. .

Exhibit 22

Sustainability OF units and Education of Entrepreneurs .

- .-

School

--

,- - .pl

--

- -

School Level

College

Profess~onal

Education of Entrepreneurs

. Entrepreneurial Training and ~ustaihabilit~

Entrepreneurs selected for governmental assistance are often endowing with training (EDPs). It is expected that the training will inculcate management qualities and augment sustainability. entrepreneurs. Table 5.36 Distribution of trained entrepreneurs and status of sustainability Sustainability Sustainable Un sustainable Total Table
5.36 below shows the sustainability rate of trained and untrained

Source: Primary data. Calculated value o Chi-square f

=

0.43959. Table value = 3.841455 a t

0.05 level o significance for d.f-l. Hence the hypothesis "there is no f

signzjicant difference in the sustainability o trained and untrained f entrepreneurs" should be accepted.
A s revealed by the table among 330 women entrepreneurs

included in the sample 202 persons undergone EDP before they start their units, for various reasons 128 entrepreneurs did not attend any training programme. Out of the 202 units promoted by trained

Entreprenruial Training and Sustainability

Trained, 58%

Untrained , 62%

Unsustainable

Sustainable

Trained

Untrained

entrepreneurs 86 (42.5 per cent) units are found sustainable where as

116 units (57.5)found unsustainable.

Among

the

128

units

promoted

by

untrained

women

entrepreneurs 49 (38.3 per cent) units were sustainable and 79 units (61.7 per cent) were unsustainable. entrepreneurs Though the rate of sustainability is found higher among those who have attended the Entrepreneurial Development programmes, the result of test shows that the difference in the rate is not significant. The result of analysis has proved the working hypothesis that the present system of
EDP is

Table below presents the

distribution of sustainable units promoted by trained and untrained

not
'

significantly support the

sustainability of women entrepreneurs.

Nature of production and sustainability of the unit

Marketing is likely to be the most dificult task in any manufacturing unit where production is in anticipation of future market. The risk will be very low when production is carried out on the basis of order. Table below shows the distribution of unit by nature of production and their sustainability. As revealed by the table 5.37 out gf 197 units where production is continuous 65 units (33 per cent) are found sustainable where as 132 units (67. per cent) are unsustainable. Out of 112 Job order undertakings where production is carried out on the basis of order, 58 units (51.8 per cent) are found sustainable and remaining 54 (48.9 per cent) units are unsustainable. The sustainability is comparatively high

in service undertakings where 12 units (57.1 per cent) out of 21 units are found sustainable and 42.9 per cent are found unsustainable.

Table 5.37 Nature of Production and sustainability of the unit.

Nature of Production Manufacturing ob / Order Service

-

65 (32.9) 58 (51.8) 12 (57.1) 135 (40.9)

Total Source: Survey data

132 (67.1) 54 (48.2) 9 (42.9) 195 (59.1)

197 (100) 112 (100) 21 (100) 330

(Note Figures in brackets shows per cent to subtotals) Chi square test: Critical value 5.9914,Observed value 0.04569,
=

d.f

2, level o significance 0.05 f

The chi-square test result shows that there is no significant difference in the sustainability of units with different production schedule.

Summary of the result of Chi square test applied to test the hypotheses
C
W

0 Y
W

z '=
.H

F:

$ Q ,

2 (d
U

.4

b .

d 3
Level of Education
2

$ 6 :g+ u>
5.99147

0 >

0G .
Not

a ,

0.05

0.58471

Significant Not Significant Not Significant Not Significant

.-..
.-

2 C
d

Type of Organisation Business tradition Entrepreneurial Training

0.05

5.99147

0.9434

.d

0.05

3.84145

0.014302

0.05

3.841455 0.043959

The result of Chi square test applied to test the significance of variation revealed that "there is no significant difference in the sustainability of units with different types of organisation, levels of formal education, business tradition, or Entrepreneurial training "