Abstraction
Disinvestment of Public Sector Enterprises was considered as an pressing necessity for the Indian economic system for the last two decennaries. The primary ends of disinvestment of Central Public Sector enterprises include raising gross for the province, advancing economic efficiency, cut downing authorities intervention, advancing wider portion ownership, supplying the chance to present competition, and to subject the Public Sector Enterprises to market subject ( Megginson and Netter, 2001 ) . Due to the popularity of such activities, disinvestment surveies are necessary to supply governmental establishments and investors with the background and cognition to do appropriate determinations ( Comstock, Kish, Vasconcellos 2003 ) . Unlike traditional method of mensurating fiscal public presentation this paper examines the public presentation of disinvested public sector endeavors utilizing the Data Envelopment Analysis attack.
Introduction
Disinvestment of Public Sector Enterprises was considered as an pressing necessity for the Indian economic system for the last two decennaries. The primary ends of disinvestment of Central Public Sector enterprises include raising gross for the province, advancing economic efficiency, cut downing authorities intervention, advancing wider portion ownership, supplying the chance to present competition, and to subject the Public Sector Enterprises to market subject ( Megginson and Netter 2001 ) . Due to the popularity of such activities, disinvestment surveies are necessary to supply governmental establishments and investors with the background and cognition to do appropriate determinations ( Comstock, Kish, Vasconcellos 2003 ) . Unlike traditional method of mensurating fiscal public presentation this paper examines the public presentation of disinvested public sector endeavors utilizing the DEA attack. It indicates a house ‘s place relation to other houses in the industry or to industry norms. The comparative efficiency of a house, within the industry, is interpreted as public presentation.
Reappraisal of the Literature
Empirical grounds on public presentation rating and efficiency of the State-owned Enterprises is much researched globally. However, there is famine of research in the Indian Public Sector Enterprises. As discussed earlier, the technique used to mensurate public presentation alterations is ratio analysis, which examines the fiscal statements of single houses and comparing them with a benchmark. However, Ratio analysis was frequently suspected on the evidences of subjectiveness, because an analyst must pick and take ratios when two or more ratios provide conflicting signals.
Charnes, Cooper and Rhodes ( 1978 ) introduced Data Envelopment Analysis ( DEA ) a nonparametric method of mensurating the efficiency of a decision-making unit ( house or a public sector endeavor ) . Banker, Charnes and Cooper ( 1984 ) extended the earlier theoretical account and subsequently Seiford ( 1994 ) , Tavares ( 2002 ) and several others have contributed to the literature. Akhtar ( 2010 ) paper contributes to literature by widening the analysis on efficiency appraisal of commercial Bankss across Pakistan for the old ages from 2001 to 2006 by utilizing Data Envelopment Analysis ( DEA ) . The variables used as inputs and end products help to develop some penetrations into the efficiency kineticss of the banking sector in Pakistan. The survey leads to some utile managerial deductions for developing states like Pakistan. AlKhathlan and Malik ( 2010 ) used basic DEA theoretical accounts i.e. CCR and BCR to measure the comparative efficiency of Saudi Banks utilizing one-year informations from 2003 through 2008. The consequences show that, on a comparative graduated table, Saudi Bankss were efficient in the direction of their fiscal resources. Malhrotra, Malhrotra and Russel ( 2010 ) paper explains how DEA can be used as a determination support system to test corporate bonds. The survey reveals DEA technique offers many benefits over traditional bond evaluation techniques. Agarwal and Mehrotra ( 2009 ) found out utilizing DEA how expeditiously some of the top organized retail companies in India have been executing comparative to each other over the old ages and thereby to place factors that aid increase the efficiency of a retail company. Min, Min, Joo and Kim ( 2009 ) proposed DEA for mensurating the fiscal efficiency of Korean Luxury hotels. Malhotra and Malhotra ( 2008 ) opines that DEA can supply a consistent and dependable step of managerial or operational efficiency and besides helps place countries in which a house has strengths or failings relative to competition. When betterment is needed comparative to equals, DEA shows by how much betterment is needed. Feroz, Kim and Raab ( 2003 ) have demonstrated that DEA can augment the traditional ratio analysis. They applied DEA to the oil and gas industry to show how fiscal analysts can use DEA as a complement to ratio analysis. Thanassoulis, Boussofiane and Dyson ( 1996 ) compared informations enclosure analysis ( DEA ) and ratio analysis as alternate tools for measuring the public presentation of organizational units such as bank subdivisions and schools. The survey shows that the two methods can back up each other if used jointly. Ratios do supply utile information on the public presentation of a unit on specific facets and they can back up the communicating of DEA consequences to non-specialists when the two methods agree on public presentation.
Methodology
Data Envelopment Analysis ( DEA ) ( Farrel 1957 ; Charnes A et.al. , 1978 ) is a non parametric technique used in measuring the comparative efficiency of decision-making units ( DMU ‘s ) . It identifies efficient production frontier and measuring the comparative efficiency of determination doing units ( DMUs ) which convert multiple inputs into multiple end products ( Wu et. al. , 2005 ) ( Min et. al. , 2009 ) . DEA is used to measure the productive efficiency of homogenous runing units. It is a powerful technique for mensurating comparative public presentation because of its objectiveness and ability to manage multiple inputs and end products that can be measured in different units. It does non necessitate any specifications of any functional relationship between inputs and end products ( Feng et. al. , 2007 ) or any anterior specification of weights of inputs and end products ( Malhotra D K and Rashmi Malhotra, 2008 ) . Weights are the comparative importance of each input/output variable to the overall input and end product of the house. DEA was successfully explored in mensurating the operational efficiency of Bankss ( e.g. , Oral & A ; Yolalan, 1990 ; Thanassoulis, 1999 ; Yeh, 1996 ) , infirmaries ( Valdmanis, 1992 ) , nursing places ( Kleinsorge & A ; Karney, 1992 ) , buying sections ( Murphy, Pearson, & A ; Siferd, 1996 ) , cellular fabrication ( Talluri, Huq, & A ; Pinney, 1997 ) , travel demand ( Nozick, Borderas, & A ; Meyburg, 1998 ) , information engineering investings ( Shafer & A ; Byrd, 2000 ) , client service public presentations of less-than-truckload motor bearers ( Poli & A ; Scheraga, 2000 ) , international ports ( Tongzon, 2001 ) , trucking houses ( Min & A ; Joo, 2003 ) , and container terminuss ( Min & A ; Park, 2005 ) .
The survey was done on a few selected disinvested public sector endeavors. Merely PSEs which had consistent information from 2000 to 2009 were selected. Companies were grouped into different industries based on their nature of operations and their fiscal statements were studied. The input variable was capital employed ( Rashmi Malhotra et. al. , 2008 ) and end product variables were gross gross revenues ( Min et. al. , 2009 ; Retti Agarwal & A ; Ankit Mehrotra, 2009 ) , PAT ( Seiford, L. M. and J. Zhu, 1999 ; Ronald K. Klimberg et. al. , 2009 ) , market capitalisation and EPS ( Fama and Gallic 1992 ; Kim and Kim 2000 ; Kim and Lee 2003 ) . There were in all 27 companies grouped into 7 industries. Medium and Light Industry had 4 companies Andrew Yule & A ; Company Limited, Bharat Electronics Limited, Hindustan Machine Tools Limited and ITI Limited. Conveyance Industry besides had 4 companies Bharat Earth Movers Limited, Container Corporation of India Limited, Dredging Corporation of India Limited and Shipping Corporation of India Limited. Petroleum Industry had 7 companies Bharat Petroleum Corporation Limited, Bongaigaon Refinery & A ; Petrochemicals Limited, Chennai Petroleum Corporation Limited, GAIL ( India ) Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited and Oil & A ; Natural Gas Corporation Limited. Trading and Marketing Industry had 3 companies CMC Limited, Mineral and Metals Trading Corporation of India Limited and State Trading Corporation of India Limited. Fertilizer Industry besides had 3 companies Fertilizers & A ; Chemicals Travancore Limited, National Fertilizers Limited and Rashtriya Chemicals & A ; Fertilizers Limited. Minerals and Metallic elements Industry had 4 companies Hindustan Copper Limited, Hindustan Zinc Limited, National Aluminium Company Limited and National Mineral Development Corporation Limited. Chemical and Pharmaceutical Industry has merely 2 companies Hindustan Organic Chemicals Limited and Indian Petro Chemicals Corporation Limited. DEA was attempted to happen out the comparative efficiency of the companies in each industry. A 100 % efficient house in an industry is said to be executing good.
Consequences and Discussion
From table 1 it can be seen that AYL and BEL seems to be efficient in their operations ensuing in a good public presentation with 100 % efficiency to input and end product while HMT and ITI seems to be less efficient in Medium and Light Industry class. AYL ‘s efficiency is due to holding engaged in the industry, gross revenues and service of assorted industrial merchandises. BEL is one of the pioneering endeavor in the fabrication of electronics constituents / merchandises for defense mechanism services & A ; ever lament on spread outing its operations by adding new merchandises to its portfolio which consequences in high efficiency. HMT Ltd public presentation eroded in the recent decennary due to miss of investing and technological up step. The public presentation of telecom equipment fabricating unit has been adversely affected since deregulating. The factors impacting the public presentation and profitableness of this company were, diminution in the monetary values of telecom equipment, excess work force, high cost of production, deficiency of modernisation and high involvement liability. ITI Ltd is ever listed in the top 10 loss doing Public sector units. In Transport Industry CONCOR is 100 % efficient while SCIL is least efficient with 20 % . CONCOR is a professionally managed Blue-chip Miniratna Public Sector Undertaking and has been awarded as the Top Indian Company in the transportation and logistics sector for the Dun & A ; Bradstreet-American Express corporate awards, 2007 & A ; 2008 consecutively. SCI is expected to stay hushed due to higher involvement and depreciation charges. Traveling on to the Petroleum Industry ONGC and Bongaigaon are 100 % efficient and seems to hold performed good after disinvestment, interestingly all the companies in this industry class are efficient and have performed good over the period. Most of the PSEs in the Petroleum industry have either Navratna or Miniratna position which had enhanced fiscal and operational efficiency. In Trading and Marketing Industry MMTC and STC are 100 % efficient but CMC is merely 40 % and seems to hold non done good over the survey period. MMTC is widely recognized as India ‘s largest international trading company and the first Public Sector Undertaking to be awarded Premier Trading House position in the state. It is actively involved in researching abroad markets for exports and sourcing stuff for domestic demands. STC has played an of import function in the state ‘s economic system by set uping imports of indispensable points of mass ingestion such as wheat, pulsations, sugar, comestible oils, etc. into India and developing exports of a big figure of points from India. This has helped MMTC & A ; STC achieve record breakage public presentations in the recent old ages. CMC ‘s borders took a large hit, due to disbursals turning at a higher rate than grosss and hapless public presentation of the Systems Integration section. In the Fertilizer Industry all the companies seem to be efficient with NFL being 100 % . Fertilizer industry in India has succeeded in run intoing the demand of all chemical fertilisers in the recent old ages. In Minerals and Metallic elements Industry HCL, HZL and NMDC are 100 % efficient with NALCO, the merely other company, to be relatively less efficient with 72 % . The minerals and metals industry forms the foundation of modern society. HCL is the major participant ruling Indian Copper Industry. It is a primary Cu manufacturer in the state holding its ain confined mines, and the dressed ores produced from these mines meets about 60 % of Company ‘s demand for dressed ore and the remainder is imported. Hindustan Zinc is India ‘s largest and the universe ‘s 2nd largest incorporate manufacturer of zinc & A ; lead, with a planetary portion of about 6.0 % in Zn. NMDC has made valuable and significant part to the National attempts in the mineral sector during the last five decennaries and India ‘s individual largest Fe ore manufacturer and exporter. NALCO is one of the lowest cost manufacturers of aluminum oxide and aluminum in the universe. The diminution in demand for aluminum and consistent autumn in metal monetary values leads to less efficient compared with other group of companies. Last industry studied was Chemical and Pharmaceuticals, here both the companies HOCL and IPCL are 100 % connoting a good public presentation over the survey period. HOCL and IPCL has accorded high precedence for efficient use of the scarce and dearly-won energy resources for cut downing the cost of production to stay competitory in the market.Thus DEA complements the traditional ratio analysis by supplying information about the operating and proficient efficiency of the house.
Decision
The populace sector in India holds huge potency and chances for growing and profitableness in the hereafter and will go on to play an of import function in the economic system. The growing and public presentation of the Public Sector Enterprises has been in line with the growing in the Indian economic system. DEA identifies that, most of the disinvested Public Sector Enterprises were efficient in the direction of their fiscal resources in a given set. Therefore to reason, this theoretical account has more deductions for investors, determination shapers and others to mensurate the efficiency / inefficiency of the populace sector endeavors based on their public presentation.
Table 1 Efficiency Scores of Disinvested PSEs
Medium & A ; Light Industry
Efficiency
Conveyance Industry
Efficiency
Petroleum Industry
Efficiency
T & A ; M Industry
Efficiency
Fertilizer Industry
Efficiency
Minerals & A ; Metallic elements Industry
Efficiency
C & A ; P Industry
Efficiency
AYL
100 %
BEML
50 %
BPCL
99 %
CMC
40 %
Fact
94 %
HCL
100 %
HOCL
100 %
Bel
100 %
CONCOR
100 %
BRPL
100 %
MMTC
100 %
NFL
100 %
HZL
100 %
IPCL
100 %
HMT
62 %
Director of central intelligence
36 %
CPCL
84 %
STC
100 %
RCFL
96 %
NALCO
72 %
ITI
22 %
SCI
20 %
GAIL
92 %
NMDC
100 %
HPCL
92 %
IOC
83 %
ONGC
100 %
Variables
Weights
Weights
Weights
Weights
Weights
Weights
Weights
Input 1
0.00056
0.00054
1.76E-05
0.00053
0.00055
0.00025
0.000159
Output 1
0
0
2.34E-06
6.24E-05
0
0.00017
8.77E-05
Output 2
0
0
0
0
0
0.00036
0
Output 3
0.00019
0.00018
8.04E-06
2.9E-06
0.00072
1.38E-07
0.000146
Output 4
0.00108
0
0
0
0
0
0
