Capital Structure, Asset Structure and Profitability of Rural Women Micro Enterprises in Kerala

Abstract

The article attempts to examine the financial management of women-owned rural micro enterprises (RWMEs), set-up primarily for self-employment generation and poverty alleviation in Kerala. The key aspects of financial management such as capital structure, asset structure and profitability of RWMEs are examined. The study found that, on an average, the capital structure of RWMEs comprises of Owners’ Fund (26.65 per cent), Loan from formal financial institutions (30.55 per cent), subsidy from government/local bodies (34.11 per cent), Revolving Fund (1.26 per cent), loan from informal sources (2.93 per cent) and loan from owner members (4.5 per cent). The total assets of the enterprises comprise of Land and Building (9.95 per cent), Plant and Machinery (41.02 per cent), Furniture and Fixtures (17.37 per cent), Long-term Investments (2.72 per cent), Inventory (15.51 per cent), Receivables (8.35 per cent), and Cash and Bank (5.04 per cent). The average net profit ratio is found to be 12.75 per cent/per annum. The Kudumbashree-linked enterprises have made considerable asset accretion over the years as compared to their initial investment in assets (Index 100 to 131). The SGSY-linked units could not make any asset accretion as their index of investment in total assets diminished to 65. The NGOs-linked enterprises could not make any asset accretion and at the same time, they were not prone to any erosion in assets over the years.