Pre and Post Disinvestment Performance Evaluation of Indian CPSEs

Mandiratta, Priya; Bhalla, G. S.

doi:10.1177/0258042x17716601

Cited by 7 publications

(5 citation statements)

References 21 publications

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“…The study revealed momentous augment in the overall operational effectiveness in relation to sales and net income [21]. On the other hand, profitability recital showed unimportant results [8].…”

Section: Literature Reviewmentioning

confidence: 83%

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BEHAVIOUR OF INVESTMENT RETURNS IN THE DISINVESTMENT ENVIRONMENT: THE CASE OF POWER INDUSTRY IN INDIAN CPSEs

Ghosh¹,

Aithal²

2022

Int. J. TIM

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Investment return may be defined as a recital gauge through which profitability of an investment is evaluated. It helps to assess the effectiveness of dissimilar investments at a particular point of time. Hence, return on investment is an attempt to straightforwardly compute the income of a fastidious investment with respect to its investment cost. The CPSEs in India were set up to serve the extensive macro-economic objectives of fiscal augmentation, independence in manufacturing, surfeit equilibrium of payments, and managing the inflationary and deflationary situations. In the backdrop of our earlier research published in IJSSP, USA, vol.10, no.10, 2022, the present study is an attempt to assess the behavior of investment returns with a view to assess their impact in the disinvestment environment with reference to power industry in Indian CPSEs during 2010-11 to 2019-20. On the whole, both the industries (i.e., power generation industry and power transmission industry) have generated optimistic earnings on their investment in all the years under cram. Thus, power industry notably drives the Indian economy. Though mean investment earnings of power generation industry have decreased marginally, there has been enhancement in mean investment earnings of power transmission industry in vocabulary of ROCE and ROE. For further enhancement in investment returns of power industry, steps should be taken to ensure best likely use of installed capacity, minimization of interest cost and effectual utilization of inner resources produced by the power industry. The study is based on secondary statistics at aggregate level. Besides, the study considered only accounting based measures of investment returns. Hence, future research may be carried out at micro level i.e., at company-wise level within each power industry in Indian CPSEs. Key Words: CPSEs, Disinvestment, Investment Returns, Power Industry, ROA, ROCE, ROE.

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Section: Literature Reviewmentioning

confidence: 83%

“…The basic rule of disinvestment is to boost capital, encourage civic participation on a wider basis and to achieve improved marketplace answerability [7]. Thus, disinvestment seeks to ensure optimal use of nationalized capital and to boost industrious effectiveness of the CPSEs [8].…”

Section: Introductionmentioning

confidence: 99%

BEHAVIOUR OF INVESTMENT RETURNS IN THE DISINVESTMENT ENVIRONMENT: THE CASE OF POWER INDUSTRY IN INDIAN CPSEs

Ghosh¹,

Aithal²

2022

Int. J. TIM

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“…The study further observed that the reform measures adopted so far had a positive effect on the performance of CPSEs in India. Mandiratta and Bhalla (2017) investigated the monetary and working performance of fifteen CPSEs that were disinvested in India in the period 2003-2012. The sample of the study represented four cognate groups, i.e., the manufacturing, mining, energy, and service sectors.…”

Section: Literature Reviewmentioning

confidence: 99%

Do Industry-Wise Investment Returns Influence the Aggregate Investment Returns of CPSEs in India?

Ghosh

Aithal

2022

IJSSP

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The term “investment return” may be defined as a gauge used to calculate the efficiency or profitability of an investment. It also helps to assess the effectiveness of different investments at a certain point in time. In this context, the focal objective of the study is to examine whether industry-wise investment returns influence aggregate investment returns of Central Public Sector Enterprises (CPSEs) in India during the period 2010-2011 to 2019-2020. The study concerns all the in-service CPSEs in India, aside from public enterprises that run departmentally, indemnity companies, and banking organizations. Moreover, the selected sample is classified into 20 different industries, including 13 industries within the manufacturing sector and 7 industries within the service sector. The findings of the study reveal that few industries positively drive the performance of CPSEs’ aggregate investment returns. Hence, the performance of aggregate CPSEs in terms of investment returns is mainly driven by the performance of COI, OMMI, SI, TVEI, ICGI, PGI, CCTCSI, and FSI. In terms of overall profitability (i.e., ROCE), PGI has the highest positive influence (0.85), while ICGI has the lowest positive influence (0.04) on the overall profitability of the aggregate CPSEs – values which are found to be significant at the 5% level.

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“…In India, privatization has been a part of government policy for almost more than 2 decades now, leaving enough time for academic researchers to generate a wide range of empirical studies examining the effect of divestment. As explained by Mandiratta and Bhalla (2017), most of the privatization literature in India presents a thorough view of Indian disinvestment policy, related concepts and various emerging issues. A few researchers have also examined the issues like post disinvestment financial performance and operating efficiency of privatized PSUs.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…This method of divestiture persisted till the year 2004. Afterward, disinvestment through public offering/offer for sale gathered momentum, and has remained a trend (Mandiratta and Bhalla, 2017).…”

Section: Introductionmentioning

confidence: 99%

Analyzing the stock market performance of central public sector enterprises disinvested through public offering mode: Indian evidence

Mandiratta

Bhalla

2022

BIJ

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PurposeThe present study aims to examine the short-term effect of disinvestment oriented IPOs and FPOs on the stock market performance of Indian central public sector enterprises (CPSEs), which divested their equity between 2000 and 2017.Design/methodology/approachThe analysis of stock price reaction is conducted for listing dates only in the case of IPOs and three different dates in the case of FPOs through the event study methodology. The three-event dates related to FPOs are public notification date (PND), issue announcement date (IAD) and price band date (PBD).FindingsOverall empirical analysis indicates that investor sentiments are generally insignificant prior to and posts the PND (first date). The second major date of announcement that is (IAD) is new information in the market and returns are found to be significantly negative across both the periods that is before and after IAD. Thus, the analysis depicts strongly negative investor sentiments in the case of IAD. These results are further substantiated by negatively significant CAR (cumulative abnormal returns) values for both the pre and post-event windows of PBD as well.Research limitations/implicationsEmpirical analysis concludes that investors do not stand a chance to gain abnormal returns through initiating positions in the stocks of CPSEs during the alternative event dates analyzed.Originality/valueSince the year 2000, disinvestment through public offering has gathered momentum, and this mode accounts for approximately 62% of the collective disinvestment funds generated by the government of India till now. But there have been very limited research studies on the market performance of disinvested CPSEs. This analysis provides new empirical evidence for the market reactions of retail investors in response to the sale of equity by the Indian government in CPSEs.

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Pre and Post Disinvestment Performance Evaluation of Indian CPSEs

Cited by 7 publications

References 21 publications

BEHAVIOUR OF INVESTMENT RETURNS IN THE DISINVESTMENT ENVIRONMENT: THE CASE OF POWER INDUSTRY IN INDIAN CPSEs

BEHAVIOUR OF INVESTMENT RETURNS IN THE DISINVESTMENT ENVIRONMENT: THE CASE OF POWER INDUSTRY IN INDIAN CPSEs

Do Industry-Wise Investment Returns Influence the Aggregate Investment Returns of CPSEs in India?

Analyzing the stock market performance of central public sector enterprises disinvested through public offering mode: Indian evidence

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