An empirical study on profitability performance of disinvested central public sector enterprises of Indian manufacturing sector

The aim of this paper is to investigate the profitability performance of the disinvested CPSEs of Indian Manufacturing sector. A sample of 12 firms is drawn from various cognate group viz., Fertilizer, Heavy Engineering, Medium & Light Engineering, Petroleum (refinery & marketing) and Transportation Equipment of Indian CPSEs (Central Public Sector Enterprises). The period of analysis covers 5 years before and 5 years after disinvestment. To test our predictions, the technique of Megginson et al. (1994) was followed in order to determine post disinvestment performance changes. The analysis is based on Ratio analysis, mean, median, CV, CAGR value of each variable for each firm over pre and post disinvestment periods are calculated. Paired t-test, Wilcoxon Signed-rank test and proportion test are used as principal methods for testing significant changes in variables. To test the significant differences among the group Kruskal Wallis test is applied for the subsample based on approaches to disinvestment (Minority, Majority and complete Privatization) and based on cognate group (Fertilizer, Heavy Engineering, Medium & Light Engineering, Petroleum (refinery & marketing) and Transportation Equipment). To test the significant changes between the listed and unlisted disinvested CPSEs at Bombay Stock Exchange (BSE) Mann-Whitney Rank-Sum Test is adopted. Results obtained from this study are mixed. Whereas some of the sample CPSEs shows improvement in some indicator other sample CPSEs have shown decline in some indicator after disinvestment. However, in spite of mixed results the overall picture shows improvement in profitability for at least more than 58 per cent of the sample.