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Working Papers | 1997

Working Capital Management in Sri Lanka

Pandey I M and Perera K L W

The study provides an empirical evidence of working capital management policy and practices of the private sector manufacturing companies in Sri Lanka. The information and data for the study were gathered through questionnaires and interviews with chief financial officers of a sample of manufacturing companies listed on the Colombo Stock Exchange. The main conclusions of the study are summarised below: · Most companies in Sri Lanka have informal working capital policy. The managing director plays a major role in formulating formal or informal policy. Company size has an influence on the overall working capital policy (formal or informal) and approach (conservative, moderate or aggressive) and review period. · Finance manager is the responsible for managing working capital components. Stretching of credit payment and ageing schedule are the primary tools of managing disbursement float and controlling debtors respectively. Material requirement planning (MRP) and perpetual inventory control (PIC) system are key techniques of inventory management. Company profitability and working capital policy influence the payable management and working capital finance respectively. Most of the companies take cash discounts, but their annual cost of working capital funds is high that ranges between 15-20%. · Current and cash budget are major techniques of working capital, planning and control. Company profitability has an influence on the methods of working capital planning and control. Companies sometimes consider working capital changes when they evaluate capital budgeting. Most of the companies in this study use bank interest rate as a hurdle rate for evaluating the working capital changes. · A comparison of the working capital practices of the Sri Lankan companies with the USA companies reveals a lot for similarities. The basic difference is in terms of the use of computerised system and the opportunity to invest surplus cash in the money market instruments.

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Working Papers | 1997

Need for Back-up in Box Solar Cooker

Girja Sharan

Systematic efforts to promote box solar cookers in Gujarat (India) began in 1979. Gujarat is characterised by high insolaiton, high ambient temperatures, clear sky and in most parts, sever shortage of fuel-wood. In short, a region with high potential for use of cooker. In addition it has good entrepreneurial climate, an added positive feature. Yet, only about 35,000 units have so far been sold and sales are levelling off. The first-purchase-volume curve, often used by market research professionals to study product life cycle, indicates that cooker is past maturity and is in decline. Significant improvement would be essential for further diffusion. A survey of users in and around Ahmedabad city indicated that they would like the present cooker made less vulnerable to climatic factors. Conjoint analysis indicated two other features desired-doneness indicator, and stainless steel vessels. In this paper we present an analysis of back-up required in Ahmedabad region, which can make the cooker less vulnerable to climate.

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Working Papers | 1997

Linear and Non-Linear Budget Sets

Lahiri Somdeb

In this paper we show that every choice problem in a finite-dimensional Euclidean space can be viewed as the budget set corresponding to an economic environment (possibly non-linear) in consumer choice theory.

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Working Papers | 1996

The Focal Faculties of the Firm: Using Knowledge Power for Global Leadership

Thomas P S and T. Madhavan

There is indubitably more to the sources of sustained competitive advantage of corporations than meets the eye. Among the most promising of these are the focal faculties of the firm, the areas of expertise ingrained in organizations over long periods of time. If properly developed and managed these focal faculties can be mixed and matched, both internally as well as externally, to pioneer promising lines of business that can sustain the firm from one generation to the next. Previously many firms succeeded by combining the best features of the family, the school and the military which minimizing bureaucratic proclivities. In future, firms may also have to adopt the recognized strengths of the collegiate approach, fundamental to which is knowledge creation, dissemination and use in a truly democratic manner. What a firm produces will always be important. Increasingly, what it knows will be even more important. This knowledge will basically be about its environment, about itself and about creative strategies which combine the two for success over the long term. If crystallized meaningfully into focal faculties, the foregoing knowledge may help the firm not only to perform well currently but also to adapt to changing circumstances and to seize the opportunities which appear from time to time on distant horizons.

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Working Papers | 1996

Axiomatic Characterization of Solutions for Rationing Problems

Lahiri Somdeb

Situations abound in the real world, where aggregate demand for a commodity exceeds aggregate supply. When such situations of excess demand occur, what is required is some kind of rationing. The literature on rationing problems has an interesting origin in the Babylonian Talmud. The purpose of this paper is to characterize axiomatically and analyze some Talmudic Solutions for rationing problems.

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Working Papers | 1996

Rewarding Creativity for Conserving Diversity in Third World: Can IPR Regime Serve the Needs of Contemporary and Traditional Knowledge Experts and Communities in Third World

Anil K. Gupta

Regions of high biodiversity are often inhabited by the poorest people. The irony is that many of local healers and other herbal experts do not even charge for their services to the community. They conserve biological diversity despite remaining poor themselves. Their superior ethics cannot be a reason for our inferior ethics. The fact that the younger people are no more inclined to acquire and improve this knowledge further increases the risk of knowledge erosion. The contemporary innovations suffer even worse fate compared to traditional knowledge. In the absence of any institutions to recognize, respect and reward the grassroots creativity, the intellectual properties are exploited by national and multinational corporations inviting charge of biopiracy. The projected losses to third world on this account could be many times more than the suspected loss to developed countries due to copyright and IPR piracy in third world. A registry will prevent any firm or individual to seek patent on community knowledge as well as on knowledge and innovations produced by individuals without some kind of cross licensing. It will be possible to achieve the following results from such a registry: (i) acknowledgment of individual and collective creativity, (ii) grant entitlements to grassroots innovators for receiving a share of any returns that may arise from commercial applications of their knowledge, innovations or practices with or without value addition, (iii) linking the golden triangle of entrepreneurshipby linking investments, enterprise and innovations. Small scale investors in north and south cannot afford to go to various countries, scan diversity of knowledge and resources, negotiate contracts and invest up from huge investments for value addition, (iv) an autonomous authority of which local community representative will be the majority members could be entrusted with the responsibilities of having access to all the contracts, (v) each entry in the register will be coded according to an universal system like ISBN. The postal pin code of the habitat of the community or individuals registering innovations will be incorporated in the indexation system so that geo-referencing of innovations can be done, (vi) the entry in the register will in the first stage be mere acknowledgment of creativity and innovations at grassroots level. Essential purpose of this innovation also is to enable the potential investors (a cooperative of consumers, producers, an entrepreneur, or a large firm in private or public sector) to access the innovations and explore opportunities of joint ventures or licensing of innovations for research and commercialization. The transaction costs of both the investors and innovators will be reduced through the registry, (vii) the award of certificate will also increase entitlement of innovator/s for access to concessional credit and risk cover so that transition from collector, or producer of herbs to developer and marketer of value added products can take place in cases where innovators deem that fit, (viii) the registration system will also be part of knowledge Network linking problem solving people across the world at grassroots level. The patentees in the case of innovations like the ones based on neem trees should agree to share part of their profits with an International Innovations Support and Biodiversity Conservation Fund. The paper makes a case for adapting patent systems to not only accommodate the creative urges of local communities but also ensure that this vibrant and dynamic laboratory for developing sustainable technologies and products does not die down just because a community of IPR experts could not fathom its long term potential.

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Working Papers | 1996

International Trade and Long Term Economic Growth: A Few Issues on Growth Strategies for India

Patibandla Murali

For developing economies, technological change and micro level efficiency is as important as capital accumulation as a source of long term economic growth. International trade is an important source of incentives in generating both intentional and by-product technological change by increasing aggregate economic activity (market size) and competitive conditions. In the present context, selective policy intervention on the production side may provide cutting edge in realizing dynamic gains through trade.

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Working Papers | 1996

Non-Rationalizability of Utilitarian Consistent Choice Functions by Continuous Social Welfare Orderings

Lahiri Somdeb

In much of the applied welfare economics, one finds the recurrent use of utilitarian objective functions, in arriving at social decisions. Apart from being completely insensitive to distributional issues, the utilitarian rule does not make single valued choices. The purpose of this paper is to show that choice functions which are utilitarian consistent (i.e. formed by selecting a point from the set of maximizers of a utilitarian objective function) cannot be rationalized by a continuous social welfare ordering. This would imply espousing kinds of objectives for capital budgeting problems other than the usual utilitarian one, if one desires to have a rational basis for investment planning decisions. A further result noted in the paper is that if a choice function is utilitarian consistent and symmetric then it cannot be rationalized by a social welfare function. This strengthens considerably the earlier result.

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Working Papers | 1996

Rethinking Policy Options for Watershed Management by Local Communities: Combining Equity, Efficiency and Ecological - Economic Viability

Anil K. Gupta

The policy environment for management of land-use in India has been quite mud-died. Part of the reason is lack of accountability among senior level public administrators, policy planners and various constituents of the existing institutions who decided not to complain even when institutions strayed away from their goals. In this paper, I argue for certain basic re-thinking in the policy options for viable watershed management by combing local knowledge with the formal science through rejuvenated or revitalized traditional institutions. In part one, I review the policy environment in the light of some of the recent reports in India which have a major bearing on watershed development programs. I argue that natural scientists have committed a fundamental error when they assumed that major challenge in watershed management was transfer of technology instead of development of technology on people's lands and in their neighborhoods. Given the ecological heterogeneity evident to soil scientists and people working in these regions, there was no way standard solutions could have been replicated over large areas. The need for action research in generating viable options through collaborative thinking is necessary. Various other weaknesses of the existing programs are identified in this section. In part two, I discuss the theory of portfolio options which can provide an effective alternative to the current approaches to watershed management. I also suggest that people's knowledge about biodiversity, historical land-use and various conservation measures needs to be supplemented with modern science and technology in an experimental manner so that limits of both the knowledge system – formal and informal become opportunities for innovation rather than constraints. In part three, I discuss various policy changes in research, public administration, decentralized system of self governance, and interface with voluntary organizations and people's institutions. I conclude that large scale efforts in restoration of productivity of eroded regions have to be appreciated without ignoring the fact that spreading resources thinly may give political advantage but would not generate any durable change in the resource management situation.

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Working Papers | 1996

Accessing Biological Diversity and Associative Knowledge System: Can Ethics Influence Equity

Anil K. Gupta

The bio-diverse regions have been known to be inhabited by the poorest people all around the tropical world (Gupta 1981). It is obvious that we cannot conserve diversity by keeping people poor. Studies have also shown that many of the indigenous innovators whether individual or communities. Their ethical values often motivate them to share their knowledge uninhibitedly with the outsiders without expectation of material reward. In the process while they remain poor, the extractors of their knowledge accumulate which justifies the extraction. Apart from the dilemma that arise through mismatch between the ethical values of conservators of biodiversity and the dominant institutions of extractions, there arise questions about the continued validity of values underline discourse in the mainstream. For instance it is an accepted professional value in academics that any communication oral, visual or written having a substantive implications for one's ideas should be acknowledged. Accordingly, personal communications find place in the academic discourse. However, this accountability is generally observed only towards one's professional colleagues. The farmers, indigenous people, artisans etc. are almost never acknowledged in any discourse on their knowledge in a manner that they can be identified. Why should people remain nameless and faceless in discourse on their knowledge and institutions has never been explained adequately? So much so that the whole discipline of ethno-botany/biology has gained legitimacy through extraction without acknowledgment. The wealth accumulated out of value addition in this knowledge is seldom shared with the providers. In a recent paper, I had identified seven dimensions of ethical responsibility such as: accountability of (1) researchers and biodiversity prospectors, engaged by Public/Private Sectors in National/International Organisations towards providers or biodiversity resource from wild, domesticated and public access domains; (2) Researchers and prospectors towards the country or origin; (3) Professionals towards academic communities and professional bodies guiding the process of exploring or extracting biodiversity; (4) International UN or other organizations possessing globally pooled germ plasm collections deposited in good faith but accessible to public or private institutions without reciprocal responsibilities; (5) Institutions of governance legitimizing various kinds of property right regimes and consequent ethical and moral dilemmas; (6) Civil society and consumers of products derived from prospected biodiversity or competing alternatives; (7) Present generation towards future generations and other living non-human sentient beings. In pursuant of Convention on Biological Diversity (CBD) and International Convention on Combating Desertification (ICCD), various ethical guidelines followed by private/public obligations were reviewed (Gupta 1994, Nietschman and Churchur, 1994) for discussion in a workshop organised by Pew Conservation Scholars last year. Several other scholars were also invited in the discussion to develop Ethical Guidelines for Accessing/Exploring Biological Diversity (See Annexure 1). These guidelines were endorsed in principle by all the Pew Conservation Scholars and are now being circulated for wider debate. Only three out of seven issues were covered comprehensively in these guidelines. In this paper I summarize some of the important issues not covered by the guidelines and offer suggestion for the remaining issues. It is hoped that Conference of Parties (COP) will reflect on these suggestions so that a global accord can be reached on general ethical principles. It is recognized that there may be culture specific differences in the perfection of moral issues. However, I submit that it should be possible to have an universal consensus on at least some basic ethical principles governing access to biodiversity.

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