Equity divestment and profit rate performance for sustainable development: a study of central public sector enterprises in India

Abstract

Disinvestment can be described as a way of action whereby the Government withdraws its equity capital either in part or in full in public sector enterprises. From 1991-92, the Government of India undertake the process of divesting its equity shares in CPSEs.

The present study has inspected the impact of equity divestment on profit rate performance in terms of ROCE of the CPSEs in India during the period 1998-99 to 2017-18. The study concluded that CPSEs have a proficient negative impact of equity divestment on their overall profit rate performance during the study period. However, the CPSEs have been able to sustain satisfactory average ROCE in the competitive market economy.

Key Words: Equity Divestment, Profit Rate, CPSEs, ROCE.