Performance of Indian Cement Companies: A Super Efficiency DEA Study

Abstract

The cement industry of India is a major contibutor to its economy and generates huge employment opportunities. In the present study, the cement operating in India has been evaluated using Data Envelopment Analysis (DEA) and Super Efficiency Data Envelopment Analysis (SDEA) for measuring its operational efficiency, productivity and profitability. Data have been obtained on 17 Indian cement companies for the financial year 2017-18 on 4 input and 1 output variables which are Raw Material Cost, Power and Fuel Expenses, Salary &Wages, Total Assets and Total Revenue respectively. Most of the big players like UltraTech, ACC Ltd. and Shree cement were both technical and scale efficient as expected but Super efficiency DEA analysis gave away surprising results. The less known and a small-scale company namely; OCL India Ltd. emerged as the most efficient cement producer followed by Prism Cement. It is evident from the study that the big players are not able to take the advantage of economies of scale.