Divestments in Public Enterprises: The Indian Experience

Sankar, T. L.; Mishra, Rahul; Mohammed, A. Lateef Syed

doi:10.1108/09513559410055242

Cited by 13 publications

(6 citation statements)

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“…Gouri (1996) has argued that the lack of a clear policy on privatization and public sector enterprise restructuring in India may favour considerations of political expediency in the short run but at the cost of sacri® cing sound economic management over the longer term. Some studies (Mishra et al, 1993;Sankar et al, 1994) highlight the large differences between the amounts actually realized through disinvestment and the amounts potentially realizable under the best value method. The argument is that shares were deliberately underpriced to ensure quick disposal.…”

Section: The Process Of Disinvestmentmentioning

confidence: 97%

The Disinvestment of Public Sector Enterprises: The Indian Experience

Arun¹,

Nixson²

2000

Oxford Development Studies

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This paper examines the disinvestment of shares of public sector enterprises (PSEs) in India since 1991. The poor performance of PSEs made reform increasingly urgent in the context of the broader strategy of the liberalization of the economy to deal with the perceived weaknesses of India's development strategy. The paper argues that the main aim of disinvestment has been to reduce the public sector borrowing requirement, at the cost of the restructuring and rationalization of PSEs in particular and the public sector in general. The process of disinvestment has been a complex one and has not been free of criticism. Alleged under-pricing of shares sold, lack of transparency, limited public support for disinvestment and the absence of a common set of objectives between the Government of India and the Disinvestment Commission have been major problems. In many respects, India provides a checklist of how not to disinvest.

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Section: The Process Of Disinvestmentmentioning

confidence: 97%

The Disinvestment of Public Sector Enterprises: The Indian Experience

Arun¹,

Nixson²

2000

Oxford Development Studies

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“…But the level of research in the country does not match with growing importance and acceptance of Indian disinvestment policy. Majority of the disinvestment literature in India present a thorough view of Indian Disinvestment Policy, related concepts and emerging issues (like Sachdev, 1976;Sankar et al, 1994;Gouri, 1996;Gouri, 1997;Arun and Nixson, 2000;Anshuman, 2003;Malik, 2003;Makhija, 2006;Koner and Sarkhel, 2014). As far as the impact of disinvestment on the overall performance Disinvestment in public sector enterprises in terms of profits, efficiency and other measures is concerned, two set of thoughts have come into light.…”

Section: Rationale Of the Studymentioning

confidence: 99%

Disinvestment in Indian central public sector enterprises: a performance improvement measure

Mandiratta

Bhalla

2020

JEAS

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PurposeThe purpose of this study is to represent an attempt to empirically capture the impact of disinvestment on the financial and operating performance of 26 Bombay Stock Exchange (BSE) listed central public sector enterprises (CPSEs) in India which got divested through stock market mechanism during the time period of 2000–2014.Design/methodology/approachThrough ratio analysis different ratios such as return on assets, return on equity, net income efficiency, debt equity, dividend payout and employment levels have been computed. Pre- and post disinvestment performance of these firms is examined through Wilcoxon signed-rank test. The present research endeavors to examine the impact of disinvestment through random effect panel data models in order to control the effect of other firm specific variables.FindingsThe overall results of the study indicate statistically significant fall in profitability ratios. The empirical results have not witnessed positive effect of disinvestment on the profitability of the CPSEs; rather, this effect has found to be negative. The possible reasons behind these negative results could be poor pre disinvestment financial health of CPSEs, negative rate of return on capital employed by PSEs and inefficiency which need to be tested empirically by future researchers.Originality/valueThe fact that government-owned firms are typically less proficient or at least less gainful than private-owned firms is widely hypothesized. Therefore, the disinvestment policy aims at dropping the participation of the public sector in the economic actions of the country in order to support the private sector. The present study is a first of its kind to study the impact of disinvestment on the profitability of the firms, which got divested through stock market mechanism since the year 2000 by applying both univariate and multivariate analysis.

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“…In Indian context, most of the privatization studies present a thorough view of Indian disinvestment policy, related concepts and various emerging issues such as Sankar et al (1994) studied the experience of disinvestments in Indian public sector enterprises (PSEs). Given the historical background and current scenario of Indian PSEs, the authors presented the profitability status of the same.…”

Section: Review Of Literaturementioning

confidence: 99%

“…The state level public enterprises (SLPEs) are owned and managed by the different state governments. Whereas local level government officials hold ownership and control rights in case of municipal level PEs (Sankar et al, 1994). As on 31 March 2014, according to the 54th annual report presented by the Government of India on the performance of central public sector enterprises (CPSEs), there were 290 CPSEs in India consisting of 234 operating CPSEs and 56 CPSEs under construction.…”

Section: Introductionmentioning

confidence: 99%

Pre and Post Disinvestment Performance Evaluation of Indian CPSEs

Mandiratta

Bhalla

2017

Management and Labour Studies

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The fact that government-owned firms are typically less proficient or at least less gainful than private owned firms is widely hypothesized. Therefore, the disinvestment policy aims at dropping the participation of the public sector in the economic actions of the country in order to support private sector. The research endeavour set out to empirically examine the financial and operating performance of 15 Central Public Sector Enterprises (CPSEs) disinvested in India through public share offering mode during 2003–2012. Sample firms represent four cognate groups, that is, manufacturing, mining, electricity and service sectors. Through ratio analysis, different ratios such as return on assets, return on equity, sales efficiency, net income efficiency, debt equity, dividend payout, real sales and employment levels have been computed. Using the traditional pre versus post privatization comparisons and panel data estimation techniques, researchers have found significant increase in sales efficiency and net income efficiency, that is, overall operating efficiency, whereas insignificant results have been witnessed in the case of profitability position. This study provides new empirical evidence about performance changes in CPSEs disinvested through involvement of retail investors, that is, public offering mode in Indian economy.

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Divestments in Public Enterprises: The Indian Experience

Cited by 13 publications

References 1 publication

The Disinvestment of Public Sector Enterprises: The Indian Experience

The Disinvestment of Public Sector Enterprises: The Indian Experience

Disinvestment in Indian central public sector enterprises: a performance improvement measure

Pre and Post Disinvestment Performance Evaluation of Indian CPSEs

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