CHAPTER 4

RESEARCH METHODOLOGY

4.1 Introduction

4.2 Meaning of Research

4.3 Significance of Research

4.4 Significance of the Study

4.5 Identification of Problem

4.6 Objectives of the Study

4.7 Hypotheses of the Study

4.8 Scope of the Study

4.9 Sources of Data Collection

4.10 Duration of the Study

4.11 Tools and Techniques of Data Analysis

4.12 Scheme of Chapterisation

4.13 Limitations of the Study

4.14 Likely Contribution of the Study

4.15 Scope for Future Research

References

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4.1 Introduction

Research is an inseparable part of human knowledge. Its role in human life is as

precious as that of salt in a vegetable. Life would lose its taste without research
exactly in the same manner as a vegetable without salt. Modern academics just cannot
stand and meet the aspirations of a matured society, if it does not provide for research
and investigation.

Research is an important pre-requisite for a dynamic social order. The society has
marched on to its present form with the help of constant research and investigation.
As far as man‟s inquisition has been able to go, so far has his society progressed. A
long march from Stone Age to computer age has been the result of research and as
long as man‟s inquisitive pursuits do not end, the onward march of human society to
more advanced achievements will not stop. The deepest ocean is the ocean of
knowledge and the depth of which is unknown. Shall man reach this depth is a big
question, but that man has dived deeper and deeper is certainly a reality and the
manifestation of his ingenuity, dexterity and determination and hence the optimism
that man shall strive hard and continuously to reach the bottom of the ocean. The
shape of things and the order of the society shall continuously change. New
innovations and inventions shall be received with greater excitement and applause and
process shall continue forever. The fittest shall adjust and the rest shall walk their
way.

“Research is as old as the academic consciousness of human mind. Man has all along
tried to look back at his history for better understanding of evolutionary process
leading to the present stage of mankind. He has also endeavored to re-examine and
whenever possible to re-interpret the things he has already gone through. The present
has its roots in the past and the seeds of future are sown in the present itself. Man‟s
urge to understand the present has obviously induced him to look into his past more
carefully and present his interpretations more scientifically in order to give purposeful
direction to his intellectual efforts in pursuit of diverse ends to which the human
activities are devoted. The concept of research is thus closely linked with human
endeavor for better understanding of his evolution, environment and growth through
diverse stages of human history.

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Research, therefore, has been an integral part of academic pursuits in the past. It has
served two-fold purpose of intellectual sharpening and evolving new theories to
explain diverse phenomena through which the mankind has survived to its present
form.”

4.2 Meaning of Research

What is research ?

When we analyse the word „Reseach‟ the meaning of it becomes clear to us.

Re + Search = Research

That means whatever material is already present or available to us, we have to trace it
again and afresh, in the light of which we have to establish our own findings/ facts or
thesis.

According to its dictionary meaning, “Research is an investigation undertaken in

order to discover new facts.”

Robert Burns (2003) describes it as, “a systematic investigation to find solution to a

problem.”

Redman and Mory define research as, “a systematized effort to gain new knowledge.”

According to Clifford Woody “Research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organizing and evaluating
data; making deductions and reaching conclusions; and at last carefully testing the
conclusions to determine whether they fit the formulating hypothesis.

Research is, thus, an original contribution to the exiting stock of knowledge making
for its advancement. It is the pursuit of truth with the help of study, observation,
comparison and experiment. In short, the search for knowledge through objective and
systematic method of finding solution to a problem is research.

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Social Science Research:

Social science research is a systematic method of exploring, analyzing and

conceptualization of human life in order to extend, correct or verify knowledge of
human behavior and social life.

In other words, social science research seeks to find explanations to unexplained

social phenomena, to clarify the doubtful, and correct the misconceived facts of social
life

4.3 Significance of Research

“All progress is born of inquiry. Doubt is often better than over confidence, for it
leads to inquiry, and inquiry leads to invention” is a famous Hudson Maxim in
context of which the significance of research can well be understood. Increased
amounts of research make progress possible. Research inculcates scientific and
inductive thinking and it promotes the development of logical habits of thinking and
organization.

Life would be substantially different were it not for research. Again the diet you
follow, the car you drive, and the medications you take are the result of someone
else‟s research. Without it, your life would probably be shorter, less pleasant, and
substantially more hazardous.

Put quite simply, research is important because it keeps us from making incorrect
decisions or behaving in ways that are nonproductive. The researcher avoids the waste
of time, money and efforts.

Research in management is basically meant for a specific purpose; and that is why
management researches are by and large, result oriented.

Research provides an analytical framework for the subject matter of investigation. It

establishes the relationship between the different variables, especially the relationship
of the dependent variables with the independent variable. The cause effect
relationship between different variables can also be identified, leading to valuable
observations, generalizations and conclusions.

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4.4 Significance of the Study

The Working Capital Management is one of the most attended issues in the area of
Commerce and Management. A large number of studies have been undertaken on this
topic in various industries. In this particular study an attempt has been made to focus
on the management of working capital in the selected pharmaceutical units of Gujarat.

The primary purpose of the study is to obtain a true picture of the working capital
management of the selected units. An analysis of financial and operational
performance has been done with a view to assessing the effectiveness of working
capital of the units under study. The researcher also seeks to appraise the overall
performance and study the changes, if any, that have taken place in the units under
study during the tenure.

The management of working capital of the units for ten years have been measured,
and conclusions have been derived which will provide guidelines to the management
and other related parties i.e. government, investors, creditors, workers and consumers
to take decisions related to their own sphere of interest. Besides, this study would
certainly prove to be of immense help to academicians, other researchers, the industry
itself and the society at large.

4.5 Identification of Problem

Probably no step in developing and conducting a research project is as important, yet

difficult, as selecting a topic / problem. We are all familiar with the adage “A house
built on a weak foundation will not stand”. In a very real sense, the research topic
serves as a foundation for the entire effort. A proper statement of the research
problem is the primary step in any research design.

The selection of a topic/ problem for research is only half a step forward. The problem
defines the goal of the researcher in clear terms. It is obvious that without a clear- cut
idea of the goal to be reached, research activities would only become a meaningless
exercise. A research like any other human activity is goal directed. If the goal itself is
unknown or ill-defined, the whole rigmarole of research operations will lead us
nowhere. Thus, without a problem research cannot proceed. The formulation of the
topic into a research problem is, really speaking the first step in a scientific enquiry.

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The selection of the research topic for the study has been undertaken after a brief
review of literature available on the working capital management in industry. Some of
the past researchers have worked on working capital in various types of industries.
Other researchers have worked on the pharmaceutical industry with regard to the
other aspects of financial management. After reading, reflecting and pondering over
the subject, and after further consultation and discussion with the guide the researcher
finalized the topic.

The primary purpose of the present study “Working Capital Management of Selected
Pharmaceutical Units in Gujarat” is to obtain the true picture of the working capital
management of the selected units under study. An analysis of financial and
operational performance has been done with a view to assessing the effectiveness of
working capital of the units under study. It also seeks to study the changes, if any, that
have taken place in the units under study during the stated period.

4.6 Objectives of the Study

After the initial period of familiarization with the problem, its subject scope, nature
and the motives which underline it, the researcher is in a position to formulate the
objectives. It is worth repeating that this is an extremely important stage in the
process and any temptation to hurry matters should be resisted.

Once the project/research work has begun it is very difficult to slow things down or to
speed them up. It is often impossible to go back and repeat something or to try again
in a different way. Once the ball starts rolling it develops a momentum of its own. A
clear objective should at least ensure that the ball begins travelling in the right
direction and gives the researcher a fair chance of keeping it on course.

The need for a research project/work to have a clear objective cannot be over-stressed.
It is the key to the success of the whole venture. A clear objective provides the basis
for the design of the project, for the selection of the most appropriate methods and for
the management of the project once it has begun. The objective is also the key factor
in giving shape and purpose to the final report. Without a clear objective a research
project can easily start on the wrong foot, become side-tracked along the way and end
with an inconclusive report.

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The purpose of research is to discover answers to the questions through the
application of scientific procedures. The main aim of research is to find out the truth
which is hidden and which has not been discovered as yet. Each research study has its
own specific purpose.

The research study is based on certain objectives which are mentioned below:

1. To make an in-depth study of the pharmaceutical industry of India in general and

Gujarat in particular.

2. To study the theoretical aspects of working capital management.

3. To study the sources and applications of working capital of the selected units.

4. To study the working capital policies of the selected pharmaceutical units in

Gujarat.

5. To study the management of cash and bank of the selected units.

6. To study the management of receivables of the selected units.

7. To study the management of inventory of the selected units.

8. To study the liquidity and working capital position of the sample units.
9. To suggest ways and means for the effective management of working capital of
the selected units.

4.7 Hypotheses of the Study

Once the problem to be tackled in the course of research is finally instituted, the
researcher advisedly proceeds to formulate tentative solutions or answers to it. These
proposed solutions or explanations constitute the hypotheses that the researcher would
need to test on the basis of facts already known or which can be made known.

The formulation of the hypothesis is a central step in good research and it is important
to give it a great deal of thought.

The formulation of hypothesis is equally important for meaningful research.

Hypothesis is an assertion that is sought to be proved or disproved. A well laid

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hypothesis keeps the researcher on the right track and saves his/her time and effort by
not going astray. It facilitates the collection of adequate facts, and helps one to arrive
at appropriate conclusions, suggestions and observations.

During the process of research the following hypotheses were tested:

H0 There is no significant difference in the Working Capital of selected

Pharmaceutical Units.

H1 There is a significant difference in the Working Capital of selected Pharmaceutical

Units.

H0 There is no significant relationship between Working Capital and Profitability of

selected Pharmaceutical Units.

H1 There is a significant relationship between Working Capital and Profitability of

selected Pharmaceutical Units.

H0 There is no significant difference in liquidity position of selected Pharmaceutical

Units.

H1 There is a significant difference in liquidity position of selected Pharmaceutical

Units.

H0 There is no significant difference in the Profitability of selected Pharmaceutical

Units.

H1 There is a significant difference in the Profitability of selected Pharmaceutical

Units

H0 There is no significant relationship between Management of Cash and Bank and

Working Capital of selected Pharmaceutical Units.

H1 There is a significant relationship between Management of Cash and Bank and

Working Capital of selected Pharmaceutical Units.

H0 There is no significant relationship between Management of Receivables and

Working Capital of selected Pharmaceutical Units.

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H1 There is a significant relationship between Management of Receivables and
Working Capital of selected Pharmaceutical Units.

H0 There is no significant relationship between Management of Inventories and

Working Capital of selected Pharmaceutical Units.

H1 There is a significant relationship between Management of Inventories and

Working Capital of selected Pharmaceutical Units.

4.8 Scope of the Study

Ten pharmaceutical units of Gujarat were selected for the study which are as follows:

1. Alembic Pharmaceuticals Ltd (Alembic)

2. Cadila Healthcare Ltd (Cadila)
3. Dishman Pharmaceuticals and Chemicals Ltd (Dishman)
4. Glenmark Pharmaceuticals Ltd (Glenmark)
5. Intas Pharmaceuticals Ltd (Intas)
6. J B Chemicals and Pharmaceuticals Ltd (J B Chemicals)
7. Lupin Ltd (Lupin)
8. Sun Pharmaceuticals Industries Ltd (Sun Pharma)
9. Themis Medicare Ltd (Themis)
10. Torrent Pharmaceuticals Ltd (Torrent)

4.9 Sources of Data Collection

The task of data collection begins after a research problem has been defined and
research design chalked out.

The search for answers to research questions is called collection of data. Data are
facts and other relevant materials, past and present, serving as bases for study and
analyses. Statistical information collected, compiled and presented for the purpose of
establishing relationship between variables can be included in the data which play a
very vital role in the research and analyses of management problems, as they do in
any other area of investigation. This is the rationale of data collection in research.

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The data serve as the bases or raw materials for analysis. Without an analysis of
factual data no specific inferences can be drawn on the questions under the study.
Inferences based on imagination or guess work cannot provide correct answers to
research questions. The relevance, adequacy and reliability of data determine the
quality of the findings of a study.

The research work is mainly based on secondary data. The secondary data related to
the research work had been collected from the following sources:

1. Annual Reports of the Selected Pharmaceutical Units

2. Websites of the Selected Pharmaceutical Units
3. Trade and Financial Journals and Magazines
4. Government and non-government publications, Indian Pharma Reference Guide,
etc.
5. Websites

4.10 Duration of the Study

This research work had been undertaken for a period of ten years i.e. from 2003-04 to
2012-13. The major players of pharmaceutical units of Gujarat as mentioned earlier
were selected for the study.

4.11 Tools and Techniques of Data Analysis

After collection of data, the next step is the classification and analysis of the data.

“An analysis of the data is equally important. A careful planning of the analytical
framework should, therefore, be envisaged by the researcher. The approach adopted in
the study is basically analytical and descriptive in nature.

On the basis of the objectives of the study and according to the Hypotheses, the
collected data was tabulated. On preparation of the tables, accounting tools and
techniques - like percentages, ratios, averages, trend analysis, etc. were calculated.

For the statistical analysis of the data, the following tools and techniques were used:

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1. Mean, maximum, minimum, median, standard deviation (sd), co-efficient of
variation (cv), co-efficient of correlation (corr)
2. Application of ANOVA Test, t-test and Chi-Square test for Hypotheses testing

4.12 Scheme of Chapterisation

The present study has been divided mainly into nine chapters. A brief introduction of
each chapter is given below:

Chapter 1 titled “The Indian Pharmaceutical Industry - An Overview” deals with the
evolution and growth of the pharmaceutical industry since its inception till the date of
the study. It also includes the profile of the selected pharmaceutical units of Gujarat.

Chapter 2 titled “Theoretical Aspects of Working Capital” includes basic concepts,

importance, types, principles, approaches and sources of working capital; factors
determining the requirements of working capital, operating cycle, etc.

Chapter 3 titled “Review of Literature” comprises the review of literature available

on the topic. This chapter also covers some observations of research on the topic
under study which has been carried out in the past.

Chapter 4 titled “Research Methodology” gives an account of research methodology

used for the present study. It includes the scope, objectives and hypotheses of the
study, data collection, classification and analysis of data, likely contribution of the
study, limitations of the study, etc.

Chapter 5 titled “Management of Cash and Bank in the Selected Pharmaceutical

Units in Gujarat” deals with the analysis and interpretation of relevant details
pertaining to the management of cash and bank.

Chapter 6 titled “Management of Receivables in the Selected Pharmaceutical Units

in Gujarat” includes the analysis and interpretation of relevant details with regard to
the management of receivables of the units.

Chapter 7 titled “Management of Inventories in the Selected Pharmaceutical Units in

Gujarat” includes the analysis and interpretation of relevant details related to the
management of inventories.

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Chapter 8 titled “Working Capital Management of the Selected Pharmaceutical Units
in Gujarat” includes the analysis and interpretation of relevant details pertaining to the
working capital management and working capital finance.

Chapter 9 titled “Findings and suggestions” comprises a number of findings based on

the analysis and interpretation of the data. It also includes a few suggestions for the
effective management of working capital in the units.

4.13 Limitations of the Study

There are a number of constraints and assumptions under which a researcher has to
work. Hence, a social science research study has its own limitations.

Such a study involves selection of a sample and collection of data. And more often
than not these pose various problems which are beyond the control of the researcher.

The major limitations of the study are as under:

1. As the study of the selected pharmaceutical units of Gujarat has been confined to a
period of ten years only, the picture prior to and after this period of time may not
be available.

2. The research study is mainly carried out in a few selected pharmaceutical units in
Gujarat. Hence, the research work does not reflect the picture of the entire
pharmaceutical industry of Gujarat.

3. As the study is based on secondary data taken from published annual reports, the
findings of the study depend on the accuracy of such data.

4. The study is based on various accounting and statistical tools which suffer from
certain limitations which may be reflected in the findings of the study.

5. The study was restricted to selected pharmaceutical units in Gujarat only. It will
not provide the information about the position of working capital of other
industries in Gujarat.

6. The scope of the study is limited only to the analysis, to know the position and
policies of working capital in the selected units. Other aspects of financial

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 management i.e. capital structure, capital budgeting, cost of capital etc have not
been touched upon under the study.

4.14 Likely Contribution of the Study

1. The research work will be helpful to future researchers of related topics.

2. The research will be helpful in observing the working capital management in the
selected pharmaceutical units.
3. This study will help the future researchers in better understanding of various
concepts/aspects and components of working capital.
4. It can provide understanding about the practices, policies and position of working
capital in the selected Pharmaceutical units.
5. This research is based on an in-depth analysis of some selected pharmaceutical
units, and hence it would provide invaluable information and contribute
substantially to the knowledge in this area of financial management.
6. The research will be helpful in deriving new policies related to working capital in
the selected pharmaceutical units.
7. The study will be helpful in providing direction to the selected units – for
enhancing the overall efficiency of the units with the help of proper management
of working capital in these units.
8. This study will provide guidelines to the management and other related parties i.e.
government, investors, creditors, workers and consumers to take decisions related
to their own sphere of interest. Besides, this study would certainly prove to be of
immense help to academicians, other researchers, the industry itself and the
society at large.

4.15 Scope for Future Research

1. The present study includes working capital management of the selected

pharmaceutical units in Gujarat only. There is scope for conducting a similar
study in other states as well.
2. Comparison of working capital management of pharmaceutical units in Gujarat
with that of the other states.
3. Comparison of working capital management of pharmaceutical units with that of
other industries in Gujarat.

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4. Comparison of working capital management of pharmaceutical units in Gujarat
with that of other industries of other states.
5. Comparison of various components of working capital management among
various industries of the state of Gujarat.
6. Comparison of various components of working capital management among
various industries of different states.
7. A study can be conducted on the working capital management of pharmaceutical
companies across the border.

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References:

 Sadhu, A. N., and Amarjit Singh, (1983) Research Methodology in Social

Science, Himalaya Publishing House, Mumbai, p. 1
 Ibid p. 7
 Dr Pancholi A. L., and Mali Kundan, (1988), The Fundamentals of Research
Methodology, Publication Scheme, Jaipur, pp. 4-5
 Ibid p. 5
 Denscombe Martyn , (1999), The Good Research Guide, (For Small Scale Social
Reseach Projects), 1st Edition, Viva Books Private Limited, New Delhi, p. 19
 Kothari C. R, (1999), Research Methodology – Methods & Techniques, 2nd
Edition, Wishwa Prakashan, New Delhi, pp. 1-2
 Krishnaswami O. R. , and Ranganatham M, (2008), Methodology of Research in
Social Sciences, Revised 2nd Edition, Himalaya Publishing House, Mumbai, pp.
22-23
 Kothari C. R., Op. Cit., p.6
 Schloss Patrick J, and Smith Maureen A, (1999), Conducting Research, Prentice -
Hall, New Jersey, p. 2
 Michael V. P., (1985), Research Methodology in Management, Himalaya
Publishing House, Mumbai, p. 4
 Moore Nick, (1988), How to Do Research, 2nd Edition, The Library Association,
London, p. 1
 Schloss Patrick J, and Smith Maureen A, Op. Cit., p. 31
 Michael V. P., Op. Cit., p. 114
 Wilkinson T. S., and Bhandarkar P. L., (1982) Methodology and Techniques of
Social Research, Himalaya Publishing House, Mumbai, p. 53
 Moore Nick, Op. Cit., p. 6
 Ibid p. 2
 Ibid p. 1
 Kothari C. R., (2007), Research Methodology – Methods & Techniques, Revised
2nd Edition, New Age International (P) Limited Publishers, New Delhi, p. 2
 Wilkinson T. S., and Bhandarkar P. L., Op. Cit., p. 65
 Sadhu, and Amarjit Singh, Op. Cit., p.40

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 Ibid p. 12
 Michael V. P., Op. Cit., p. 109
 Kothari C. R., Op. Cit., p. 95
 Krishnaswami O. R., and Ranganatham M., Op. Cit., p. 163
 Michael V. P., Op. Cit., p. 72
 Krishnaswami O. R. , and Ranganatham M., Op. Cit., p. 164
 Michael V. P., Op. Cit., p. 91

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