Financial Performance Comparison Pre And Post Disinvestment Of Mishra Dhatu Nigam Ltd.- An Empirical Study

Abstract

Purpose: The purpose of the study is to represent an attempt to empirically capture the impact of disinvestment on the financial and operating performance of Mishra Dhatu Nigam Ltd. listed central public sector enterprises in India which got divested through stock market mechanism.

Design/methodology: The study is the descriptive study and based on the secondary data. Through ratio analysis different ratios such as profitability ratios, efficiency ratios, solvency ratio and liquidity ratios have been computed. Five years pre-and five years post-disinvestment financial performance of the firms during 2013 to 2022 is examined through mean value and paired t-test.

Findings: The financial performance of MIDHANI is compared in four terms of ratio, which are, profitability ratio, efficiency ratio, liquidity ratio and solvency ratio. The descriptive statistics mean value, standard deviation and paired T-test shows that there is no significant improvement in the financial ratios post-disinvestment. Only three ratios that is return on equity, earning per share and debt/equity ratio shows positive effect after disinvestment. The decline in the return on capital employed ratio and return on asset ratio indicate the firm is not utilizing its capital efficiently. The results reveal that there is improvement in debt/equity ratio which means the equity of company shareholder is bigger and it does not require any money to finance its business and operation to growth. 

Originality/Value: This study will be helpful for researcher seeking information on impact of disinvestment on PSU Mishra Dhatu Nigam Ltd.