A Relative Study of Average Investment Returns between Manufacturing Sector and Service Sector of CPSEs in India

Ghosh, Sudipta and Aithal, Sreeramana (2022): A Relative Study of Average Investment Returns between Manufacturing Sector and Service Sector of CPSEs in India. Published in: International Journal of Management, Technology, and Social Sciences (IJMTS) , Vol. 7, No. 1 (4 February 2022): pp. 71-78.

Abstract

Purpose: In India, CPSEs were established to achieve socio-economic objectives of the nation. Both manufacturing sector and service sector occupies an important position in the development process of an economy. In this context, a comparative study is performed between manufacturing sector and service sector of Indian CPSEs from 2010-11 to 2019-20. Design/Methodology/Approach: Based on resultant data, investment ratios are employed to compute investment returns of the CPSEs. Moreover Fishers ‘t’ test judge the differences (if any) in investment returns between manufacturing sector and service sector. In addition, linear regression equations are employed to inspect the impact of sector-wise investment returns on the aggregate investment returns. Findings/Result: Based on average investment returns, no noteworthy difference is observed between manufacturing sector and service sector in terms of ROCE and ROE. However, there exists important distinction among the same for ROA which implies that manufacturing sector has better utilization of their total assets in generating returns than that of the service sector. ROCE of the manufacturing sector contributes positively to the overall profitability of the CPSEs, while ROCE of the service sector contributes negatively to the overall profitability of the CPSEs. It further observed that the rate of negative influence by the service sector is more than that of positive influence by the manufacturing sector, thereby reducing the overall profitability of the CPSEs at aggregate level. Originality/Value: To identify the important sector in the liberal economic environment, the present study compares average investment returns between manufacturing sector and service sector of the CPSEs in India through ROA, ROCE, and ROE.

• Item Type: MPRA Paper
• Language: English
• Keywords: Investment Returns, CPSEs, Manufacturing Sector, Service Sector, ROA, ROCE, ROE.
• Subjects: A - General Economics and Teaching > A1 - General Economics; A - General Economics and Teaching > A1 - General Economics > A19 - Other; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights

References

[1] https://www.investopedia.com (retrieved on 24.01.2022).

[2] Kumar, S. (1992). Public Enterprise Policy and Reform Measures in the 1990s. Management in Government, 22(2-3), 433-439.

[3] Galal, A. et al. (1994). Welfare Consequences of Selling Public Enterprises: An Empirical Analysis. Oxford University Press for the World Bank, Washington D. C., 527-589.

[4] Magginson, W. L. and Netter, J. M. (2001). From State to Market: A Survey of Empirical Studies on Privatization. Journal of Economic Literature, 39(2), 321-389.

[5] Ray, K.K. and Maharana, S. (2002). Restructuring PSEs through Disinvestment: Some Critical Issues. Pratibimba, Journal of MIS, 2(2), 56-62.

[6] Mathur, R. and Mathur, B. L. (2010). International Conference on Applied Economics – ICOAE, 505-513.

[7] Rastogi, M. K. and Shukla, S. K. (2013). Challenges and Impact of Disinvestment on Indian Economy. International Journal of Management & Business Studies, 3(4), 44-53.

[8] Singh, G. (2015). Disinvestment and Performance of Profit and Loss Making Central Public Sector Enterprises of India. Paripex – Indian Journal of Research, 4(4), 4-7.

[9] Mandiratta, P. and Bhalla, G. S. (2017). Pre and Post Disinvestment Performance Evaluation of Indian CPSEs. Management and Labour Studies, 42(2), 120-134.

[10] Richard, P. V. and Kalyani, B. (2019). Empirical Analysis of Financial Distress of Selected Public Sector Undertakings in India. International Journal of Business and Management Invention (IJBMI), 8(4), 30-38.

[11] Bansal, R., Misra, S.K., and Tandon, D. (2020). Working Capital Management of Central Public Sector Enterprises (CPSEs) in India during the Post-Financial Recession Period: Empirical Evidence on Aggregation. Journal of Critical Reviews, 7(15), 1455-1462.

[12] Published Annual Reports of Public Enterprises Survey (2010-11 to 2019-20), Department of Public Enterprises, Government of India, New Delhi.

[13] Khan, M. Y. and Jain, P. K. (1994). Financial Management – Text and Problems. 2nd Edition. Tata McGraw-Hill Publishing Company Limited, New Delhi. pp. 103-106.

[14] Das, N. G. (1990). Statistical Methods (Vol. II). M. Das & Co., Kolkata, 256-257.

[15] Ghosh, R. and Saha, S. (1987). Business Mathematics & Statistics (Book – I). 5th Edition. New Central Book Agency, Kolkata, 305-307.