DOC-20180830-WA0000ghgfhdfghdfgdfgdfgdgdgdgd

aaa

1. IMPACT OF DISINVESTMENT ON FINANCIAL AND OPERATING PERFORMANCE: A CASE STUDY OF NTP C PRESENTED BY:- SIKHA MADHULAGNA M.PHIL SCHOLAR, F.M. UNIVERSITY, BALASORE

2. INTRODUCTION New economic Policy 1991 Brainchild of late Atal Bihar Bajpayee Disinvestment Types of disinvestment Minority disinvestment Majority disinvestment Privatization

3. CONCEPT OF DISINVESTMENT DISINVESTMENT MEANING In the ongoing discourse, ‘Disinvestment’ is conceived as a holistic term having different contextual connotations. It stands as an antonym of ‘Investment’. Investment is acquisition of earning asset with the help of money. For example if bonds are purchased or shares of companies are purchased by spending money. In the case of investment money is converted into earning asset to earn income. On the other hand in the case of disinvestment an earning asset is converted into liquid cash. In the context of this research, we shall use the term disinvestment in a special sense. By Disinvestment we mean the sale of shares of public sector undertakings by the Government. The shares of government companies held by the government are earning assets at then disposal of the government.

4. To meet the budgetary needs. To improve overall economic efficiency. To reduce fiscal deficit. To diversify the ownership of PSU for enhancing efficiency of individual enterprise. To raise funds for technological up gradation, modernization and expansion of PSUs. To reduce the financial burden on the Government. To improve public finances. To introduce, competition and market discipline. To encourage wider share of ownership. OBJECTIVES OF DISINVESTMENT

5. RESEARCH PROBLEM Public Sector Enterprises tends to react adversely with characterizing as over invested capital with poor return, over employed with low yields and productivity, excessive capital equipment with underutilized capacity, bearable controls with lower efficiency and abandoned assets with low growth. That’s why it is necessary to analyze whether disinvestment decision of government impacted in a positive way or not.

6. RESEARCH GAP From the literature review, it is found that many studies have been conducted on the disinvestment of public sector enterprises in India whereas very little work has been found which shows the impact of disinvestment on financial performance taking parameters like Profitability, Liquidity, Solvency and Operating Efficiency. Moreover there is no such research which has been carried down on impact of disinvestment on NTPC ltd by taking profitability, liquidity, solvency and efficiency parameter for the period 2001-02 to 2017-18.

7. The following objectives have been visualized for the present study: To compare the financial and operating performance of NTPC Ltd between pre and post disinvestment period. To study the impact of disinvestment of NTPC Ltd in terms of operating performance based on sales, and investment; as well as financial performance based on profitability, liquidity and solvency . . OBJECTIVES OF THE STUDY

8. HYPOTHESES In the light of the overall objectives of the study, the following hypotheses have been developed for the purpose of testing: Disinvestment has improved the financial performance of NTPC Disinvestment has improved the operating performance of NTPC

9. RESEARCH METHODOLOGY Nature of the study : The study is descriptive in nature. Sources of Data: The data used for the present study are secondary in nature and were obtained from various issues of Public Enterprise Surveys published by “The Bureau of Public Enterprises”, Ministry of Finance, Government of India, New Delhi, and the audited Balance Sheets and Income and Expenditure Statements of the reported enterprises, as compiled by Bureau of Public Enterprises and periodicals . Period of Study: The present study covers a period of 17 years from 2001-02 to 2017-18, splitting 2001-02 to 2008-09 as pre disinvestment period and 2010-11 to 2017-18 as post disinvested period taking 2009-10 as the base. The significance of choosing 2009-10 as the base year lies with fact that in this year Government achieved highest disinvestment receipt as compared to the target. The target amount was 25,000 crore where it was able to achieve 23,553 crore in that year. The achievement is 94.21%. ) Tools to be used : Keeping in view the nature of study and data collected, (a)Mathematical Methods like; simple average and percentage; (b) Statistical Methods like; Mean, Standard Deviation, Co-efficient of Variation, t-test, and finally (c) Accounting Tools like; ratio analysis were used. Software such as SPSS, MS Excel are also used for data analysis purpose

10. FINDINGS By taking the mean average of both pre and post disinvestment era it is found that liquidity position of NTPC decreased in post disinvestment period. in terms of profitability only EPS of company increased while RONW,ROA,ROCE and net profit ratio is decreased. In terms of solvency debt equity is increased in post disinvestment era and in terms of efficiency inventory turnover ratio is increased and there is no impact of disinvestment in capital turnover ratio.

11. CONCLUSION AND SUGGESTION From the above analysis we can conclude that neither profitability nor liquidity nor operating efficiency increased very much after disinvestment of NTPC .It seems that the decision to disinvest was taken as a part of the general reform measures of the government and not on the basis of sound economic considerations from the standpoint of the enterprises concerned. As already explained by Boycko et al. (1996), one of the major explanations behind enhanced profitability may be the transfer of both control and cash flow rights from the government to private sector. But in Indian context, government is more interested in partial privatization rather than complete privatization in which complete transfer of rights from government to private sector takes place. Most of the Indian PSUs have been disinvested by selling small percentage of ownership and that too in parts. Hence the present study implies that, improvements coupled with major changes are necessary in the present Indian policy on disinvestment. So that, as the efficiency levels have improved significantly as implied from the results of the study, profitability of these PSUs also gets enhanced considerably. In order to improve profits of divested PSUs, the present study supports the suggestions given by advisory panel of NITI Aayog . In order to get the desired effect disinvestment should be increased beyond 50% so that these enterprises become privatized. Then they will be run by private management and private management will be trying to improve performance. It has suggested bringing down the governments holding to less than 50 per cent in one stroke instead of selling them in batches ( Ranjan , 2016). Proactive government efforts are required to achieve optimum targets in terms of leverage and employment in Indian PSUs.