( ISSN 0971 - 1856 ) The Journal of Institute of Public ...

Th

e J

ou

rna

l of In

stitu

te o

f Pu

blic

En

terp

rise

July – D

ec, 2014Vol : 37, N

o : 3&

4

July – Dec, 2014Vol : 37

( ISSN 0971 - 1856 )

Institute of Public EnterpriseThe Journal of

No : 3 & 4

Linkage between Efficiency of Assets Management and Profitability during the Post-Liberalization Era : A Study on Select Companies

of Indian Public SectorKaushik Chakraborty

Examining the Profitability of Value Stocks in Indian Stock Market � An Empirical Analysis

Empirical Testing of CAPM for Central Public Sector Enterprises in India

Performance Evaluation of Micro-insurance Activities : An Empirical Study

Trends in Asset Management Efficiency in Maharatna Central Public Sector Enterprises :

A Cross-Sectional Analysis

Jaspal Singh & Kiranpreetkaur

Employee Empowerment in Indian Banks : An Empirical Study

Sheelam Jain & Ravindra Jain

Pawan Kumar Avadhanam, Vineela Mamidi & R.K.Mishra

Ram Pratap Sinha

Debasish Sur & Sunil Kumar Yadav

Talent Development Process of CPSEs : A Reflection on Practices and Requirements

Dipak Kumar Bhattacharyya

This Journal is

Indexed in

Cabell’s Directory

EBSCO Database

Jawaharlal Nehru University

(New Delhi)

ProQuest

Ulrichsweb

Legal Issues in Payment and Settlement System : Implication for Banking Industry

Kulpreet Kaur & Rajinder Kaur

Productivity Analysis of Public Sector Banks and the Regional

Rural Banks in India Govinda Prasad Bhandari

Vol : 37 July – Dec, 2014 No : 3 & 4

Content

Research Papers★ Linkage between Efficiency of Assets Management and Profitability

during the Post-Liberalization Era : A Study on Select Companiesof Indian Public SectorKaushik Chakraborty .............................................................................1

★ Examining the Profitability of Value Stocks in Indian Stock Market –An Empirical AnalysisJaspal Singh & Kiranpreetkaur ..........................................................18

★ Employee Empowerment in Indian Banks : An Empirical StudySheelam Jain & Ravindra Jain ...........................................................32

★ Empirical Testing of CAPM for Central Public Sector Enterprisesin IndiaPawan Kumar Avadhanam, Vineela Mamidi & R.K.Mishra .............50

★ Performance Evaluation of Micro-insurance Activities : An EmpiricalStudyRam Pratap Sinha ................................................................................65

★ Trends in Asset Management Efficiency in Maharatna CentralPublic Sector Enterprises : A Cross-Sectional AnalysisDebasish Sur & Sunil Kumar Yadav ...................................................78

Perspectives★ Talent Development Process of CPSEs : A Reflection on Practices

and RequirementsDipak Kumar Bhattacharyya ...............................................................91

Research Note★ Legal Issues in Payment and Settlement System : Implication for

Banking IndustryKulpreet Kaur & Rajinder Kaur ........................................................100

★ Productivity Analysis of Public Sector Banks and the RegionalRural Banks in IndiaGovinda Prasad Bhandari ......................................................................... 110

The Journal of Institute of Public Enterprise

Linkage between Efficiency of Assets Management and Profitability during thePost-Liberalization Era : A Study on Select Companies of Indian Public Sector

1

Introduction

The Public Sector Enterprises (PSEs)have been playing an important role inmaking a strong foundation of indus-trial development of the country andcontributing significantly towardsthe growth of the Indian economyespecially during the post-independencescenario. In fact, the PSEs have beenperforming a significant role towardsthe development of infrastructureespecially in economically backward

areas of the country. But with the adventof liberalisation, privatisation andglobalisation the PSEs have been forcedto reorient their strategies for managingthe turbulence arising out of tremendouscompetition in the post-liberalizationera. Some of them have been able to adapt

* Dr.Kaushik Chakraborty, Assistant Professor,Department of Commerce, Netaji Mahavidya-laya, Arambagh, Hooghly, West Bengal & GuestTeacher, Department of Business Admini-stration, Vidyasagar University, Midnapore,West Bengal, India.

Linkage between Efficiency of AssetsManagement and Profitability during

the Post-Liberalization Era : A Studyon Select Companies of

Indian Public Sector

Kaushik Chakraborty*

The public enterprises being an integral part of the Indian economy have been facingchallenges during the post-liberalization era relating to deregulation, globalization andliberalization adopted by the central government. In fact, public sector undertakings haveto reorient their strategies to survive in the highly competitive environment of present dayscenario, when the matter of designing appropriate strategies for improving efficiency of assetsmanagement in accomplishing the wealth maximization objective of corporate is of utmostimportance. The way in which assets are managed can have a considerable impact onprofitability of the company. The efficiency with which assets are managed is gleaned fromturnover ratios. In fact, it is an empirical question whether a high value of turnover ratiohas a positive influence on the company’s earning capacity. In this backdrop, the presentstudy seeks to analyze the linkage between efficiency of assets management and profitabilityof ten selected public sector enterprises during the period from 1997-98 to 2011-12.

Keywords : Public Sector, Liberalization, Efficiency, Assets Management, Profitability.

The Journal of Institute of Public Enterprise, Vol. 37, No. 3&4© 2014, Institute of Public Enterprise


18

Introduction

The basic aim of any investor is tomaximize its return and minimizing therisk involved. In order to maximize thereturns of the investors, Graham andDodd (1934) introduced an approachtowards investing, whereby the securi-ties that have higher intrinsic value thantheir market price are bought and heldby the investors. The basic premise ofvalue investing is to invest in stocks thatare trading below their true value (orintrinsic value). The difference betweenthe stock’s intrinsic value and the market

value is called as margin of safety. Theinvestor must invest in the stocks whichhave significant gap in its market priceand the intrinsic value so that the mar-gin of safety can protect him in the eventof a huge downturn. According to Gra-ham and Dodd (1934), “A company’sintrinsic value is assessed through thetangible book value of the company and

* Dr. Jaspal Singh, Associate Professor, Departmentof Commerce and Business Management, GuruNanak Dev University, Amritsar.

** Kiranpreet Kaur, Research Fellow, Departmentof Commerce and Business Management, GuruNanak Dev University, Amritsar.

Examining the Profitability of ValueStocks in Indian Stock Market –

An Empirical Analysis

Jaspal Singh* & Kiranpreetkaur**

Using the data on stocks listed on Bombay Stock Exchange for the period spanning from1996 to 2010, the present paper intends to examine the relevance of stock selection basedon tangible book value rule of Benjamin Graham in Indian capital market. This valuationmetric is aimed at buying the securities whose prices are lesser than the tangible book valueof the assets of the company. The returns derived from the stocks meeting the criterion areanalyzed using one sample T-test, capital asset pricing model (CAPM). The results revealedthat the portfolio selected on the basis of this criterion provided significantly positive meanmarket adjusted returns in maximum number of years when the holding period of theportfolio is extended from 12 months to 24 months. The significant abnormal returnsderived through CAPM model, however, cannot be considered conclusive due to lesserexplanatory power of the model. Nevertheless, the portfolio showed lesser volatility than themarket portfolio thereby implying that the fund managers can also use it as an investmenttool for risk management due to lesser risk and positive market adjusted returns.

Keywords : Value investing, Benjamin Graham, Net Current Asset Value Rule, OneSample t-test, Capital Asset Pricing Model.



32

Introduction

In today’s highly competitive market-place, HR professionals and managersmust ensure that ‘people practices’ oftheir organizations are designed to giveemployees the skills, capabilities andmotivation to win over in every situation.One way to achieve this objective is toempower employees for optimum per-formance and job satisfaction. Employeesshould be empowered because it isthrough empowerment that an orga-nization will develop a culture whichreflects employee commitment in orderto survive, grow, compete and facechallenges posed by globalization withconfidence (Sahoo, Behera & Tripathy,2010). When employees experienceempowerment and see the impact their

jobs are having on the organization, theyidentify more with the goals of the orga-nization and as a result are more com-mitted to it (Elloy, 2012). Empower-ment allows employees to assume diffe-rent roles and responsibilities in theorganizations and thus exert a greaterinfluence at work while enjoying increa-sed autonomy. Empowerment is thoughtto leave employees optimistic, involved,committed, able to cope with adversity,and willing to perform independentlyand responsibly (Hardy & Leiba-O’Sullivan, 1998). According to Kanter

* Sheelam Jain, Research Scholar, Faculty ofManagement Studies, Vikram University,Ujjain (M.P.) India, Career Mentor, MahakalInstitute of Technology, Ujjain (MP).

** Dr.Ravindra Jain, Professor in Business Mana-gement, Faculty of Management Studies,Vikram University, Ujjain (MP).

Employee Empowerment in IndianBanks : An Empirical Study

Sheelam Jain* & Ravindra Jain**

The aim of the present study is to assess and compare the level of employee empowermentamong managers of public sector, private sector and foreign banks operating in India.Employee empowerment was measured with respect to two dimensions viz., ‘participativedecision making’ and ‘self-efficacy’. The results of the study revealed that the level of overallemployee empowerment were found at moderate level in the three banking sectors that toowithout significant variation. The same is the case with ‘participative decision-making’.‘Self-efficacy’ was also found at moderate level but with significant difference between thethree banking sectors. It was found at significantly higher level in private sector banksfollowed by public sector banks and foreign banks operating in India.

Keywords : Employee Empowerment, Participative Decision-making, Self-efficacy,Indian Banks.



50

Introduction

Central Public Sector Enterprises(CPSEs) in the 1970s and 1980s weredirected towards achieving the goals ofthe government at the helm and ignoringthe concept of business and profit motive.Dictated by the pragmatic compulsionsof the Liberalization, Privatization andGlobalization (LPG) in the post-libera-lisation scenario, PSEs are being subjec-ted to the forces of market discipline whichhas a loaded message to perform orperish. Ever since the deterioratingfiscal deficit followed by the gradualwithdrawal of budgetary support of the

government during the 1990s compel-led the PSEs to generate its own resourcesfor its sustenance and to provide returnson the investment made by the govern-ment. Additionally, crippled by the lackof timely upgradation in technology sansthe requisite manpower talent, the PSEs

* Dr.Pawan Kumar Avadhanam, AssistantProfessor, Institute of Public Enterprise, O.U.Campus, Hyderabad, India.

** Vineela Mamidi, PGDM Student (2011-13),Institute of Public Enterprise, O.U. Campus,Hyderabad, India.

*** Prof.R.K.Mishra, Senior Professor & Director,Institute of Public Enterprise, O.U. Campus,Hyderabad, India.

Empirical Testing of CAPM for CentralPublic Sector Enterprises in India

Pawan Kumar Avadhanam* , Vineela Mamidi** & R.K.Mishra***

This paper focuses on the estimation of the Central Public Sector Enterprises (CPSEs) returnfor the period of 1993-94 to 2012-13 using the Capital Asset Pricing Model (CAPM)framework and also to compare the CAPM return with that of the annual return. The PSEsare selected on the basis of the companies consistently quoted in the BSE stock exchange forthe period of 1993-94 to 2012-13. The paper attempts to compare the select public enterprisereturns with that of the private enterprises operating in the same line of activity. Further,this study uses the stock market price index, BSE Sensitive Index to represent the generalmarket. In literature, the test of CAPM was carried out by using ‘realized’ return of stock onthe assumption that the expectations are on average and assumed to be constant. Further,the paper points out that by a suitable reformulation, the test of CAPM based on realizedreturn coincides with the test of CAPM based on expected values of stocks. Hence this studyattempts to carry out the tests of CAPM on realized stock return. The analysis shows that themajority of the PSE stocks under analysis have not rewarded investors appropriately.

Keywords : Annual Return, Capital Asset Pricing Model, BSE Sensex, Realized StockReturn, Central Public Sector Enterprises.


Performance Evaluation of Micro-insurance Activities : An Empirical Study

65

The background

In the Indian economy, a substantialsection of the population is excludedfrom the benefits of financial systemdue to poverty, illiteracy and a host ofrelated factors. It is generally agreed thatprovision of micro-insurance can enablethe weaker section of the society toshield themselves from the income/wealth loss shocks in a significant manner.Micro-insurance can be defined as afinancial arrangement made by a serviceprovider for protecting the low incomesegments of the society against specificrisks like loss of life/income/propertyetc. at an affordable cost. While micro-insurance activities in India were presentsince the nineties because of initiativestaken by NGOs/trusts/hospitals, a com-prehensive approach to develop themicro-insurance market was not seendue to the absence of any market regu-lator in the insurance sector. The

vacuum was sought to be filled up bythe Insurance Regulatory DevelopmentAuthority (IRDA) through the intro-duction of rural social sector obligationin the IRDA Act, (2000) and later onby promulgating the IRDA Regula-tions on Micro-insurance. In the sub-sequent years, the life insurance com-panies active in the Indian market intro-duced a slew of products to promotethe growth of micro-insurance marketin India. Against this backdrop, theobjective of the present study is tobenchmark the performance of lifeinsurance companies engaged in micro-insurance activities through Data Enve-lopment Analysis - a non-parametricapproach. However, the present studyalso seeks to provide a statistical inter-pretation of the results through the use

* Dr.Ram Pratap Sinha, Associate Professor ofEconomics, Government College of Engineering& Leather Technology, Block-LB, Sector-III, SaltLake, Kolkata-700098.

Performance Evaluation of Micro-insuranceActivities : An Empirical Study

Ram Pratap Sinha*

Consequent on the introduction of a regulatory framework for the development of a micro-insurance market in India by the IRDA in 2005, the life insurance companies have startedoffering micro-insurance products. The present study, on the basis of information availablefor 2012-13, tried to evaluate the performance of six life insurers in respect of their micro-insurance activities. The efficiency estimates have been calculated using bootstrap DEAwhich enables the comparison of both point and interval estimates of efficiency.

Keywords : Micro-insurance, DEA, Bootstrap, Performance Evaluation.



78

Introduction

A company usually utilises its funds intwo ways : (a) by making investmentin fixed assets and (b) by making invest-ment in working capital. So, the valuegenerating capability of the companylargely depends on the efficiency withwhich fixed assets and working capital

* Dr.Debasish Sur, Professor, Department ofCommerce, The University of Burdwan,Burdwan, West Bengal.

** Sunil Kumar Yadav, Single Window Operator,Canara Bank, Jorethang Branch, Jorethang,Sikkim.

Trends in Asset Management Efficiencyin Maharatna Central Public Sector

Enterprises : A Cross-SectionalAnalysis

Debasish Sur* & Sunil Kumar Yadav**

The Central Public Sector Enterprises (CPSEs) have been a strategic lever for Indian economicdevelopment in post-independence periods. Since liberalisation, CPSEs have been exposedto competition from domestic and multinational corporations and has to reorient businessstrategies and benchmark their performance with the best practices prevailing in the globalenvironment. A large number of studies have been carried out on the analysis offinancial performance of Indian public sector enterprises in which along with other aspectsof financial performance the efficiency of asset management has been considered. However,in the post-liberalisation period the issue connected with the efficiency of asset managementof the companies belonging to the Indian public sector has not been addressed with dueimportance. Moreover, the outcomes derived from the studies so far made on the topic arecontradictory in nature and therefore, the studies have not been able to provide any definiteconclusion. Further, no significant study has so far been conducted to deal with the samematter relating to the Maharatna CPSEs in India in the recent times although theseenterprises have been making remarkable contribution towards developing the Indianeconomy. In this backdrop, the present paper attempts to make a cross-sectional analysis ofthe Maharatna CPSEs in respect of the efficiency of their asset management during theperiod 2004-05 to 2013-14.

Keywords : Maharatna, Asset Management Efficiency, Value Generating Capability.


are managed. In other words, the suc-cess of a company stems from the skil-ful utilization of its funds. Generally,

Talent Development Process of CPSEs : A Reflection on Practicesand Requirements

91

Introduction

Human capital concept per se is a transi-tion from control to commitment app-roach in human resource managementliterature. Organizations invest inhuman capital to get incremental changein their business results. Often organi-zations use the term human capital

* Dr.Dipak Kumar Bhattacharyya, Professor, XavierInstitute of Management, Bhubaneswar-751013, Odisha, India.

Talent Development Process of CPSEs :A Reflection on Practices

and Requirements

Dipak Kumar Bhattacharyya*

Globally organizations are now facing the challenge of competition and sustainability.Operating environment in organizations, across the globe is also getting increasingly complexfor continuous change in technology, and business processes. To manage such complex operatingenvironment, organizations now leverage their talent pool. But talent pool need not representall cross-sections of employees of the organization, it may consist of those few employees, whoare more productive, efficient, and contribute even at exceed expectations level of performance.In India, developing the talent pipeline for ensuring continuity of talent supply within theorganization is always an integral business practice for Tata, HUL, ITC, and public sectorenterprises like SAIL, ONGC, NTPC, BHEL, etc. Other organizations followed the practiceof lateral hire for meeting their time to time talent requirements. However, with increasedspate of competition particularly after global mobility of talents, many organizations havenow changed their traditional practices, and focus on incubating talent in-house for buildingtheir talent pipeline. This paper tries to focus on talent development practices of Indianorganizations and then suggest the ideal talent development practices with more inclusiveapproach. This study is based on direct compilation of information through successive visitsand interaction with the HR team members of two CPSEs, who are operating for morethan fifty years. No standard questionnaire was used, rather understanding of theorganization specific issues were through structured discussions.

Keywords : Human Capital, Talent Retention, Talent Acquisition, Talent Development,Talent Pipeline, Talent Management.


management interchangeably withtalent management. Viewing people asa resource for the organization embedswith our mindset of exploitation.Contrarily viewing people as capital


100

Introduction

Banks play an important role in theeconomic prosperity of a nation. Thehealth of the economy is closely relatedto the soundness of its banking system.Indian banking structure has undergoneremarkable changes since the beginningof financial reforms in 1990. Afterreforms, the Reserve Bank of India (RBI)has laid special emphasis on technologyinfusion in the day-to-day operationsof banks. Technology has enabledbanks to overcome the barriers of time

* Ms.Kulpreet Kaur, Research Scholar, Departmentof Commerce, Punjabi University, Patiala.

**Dr.Rajinder Kaur, Professor, Department ofCommerce, Punjabi University, Patiala.

Legal Issues in Payment and SettlementSystem : Implication for

Banking Industry

Kulpreet Kaur* & Rajinder Kaur**

Banks play an important role in the economic prosperity of a nation. The health of theeconomy is closely related to the soundness of its banking system. Indian banking structurehas undergone remarkable changes since the beginning of financial reforms in 1990.Technology has enabled banks to overcome the barriers of time and space in extending theirservices to the customers which had an impact on Indian payment and settlement systems.The present paper make an attempt to study the legal aspects of payment and settlement actand to analyse the performance of different types of payment systems in India and its overallimpact on the banking sector. It is found that the RBI is taking significant steps towardsensuring the smooth progress of the payment system in India and the Payment and SettlementSystems Act, (2007) and the Payment and Settlement Systems Regulations, (2008) framedthereunder are providing the necessary statutory backing to the RBI for undertaking theoversight function over the payment and settlement systems in the country. The study furtherfound increase in different types of e-payments in the country. But still more efforts arerequired to encourage the use of e-payments.

Keywords : Bank, Payment, RBI, System, Technology.


and space in extending their services tothe customers. By and large, banks inIndia are using Information Techno-logy (IT) not only to improve their owninternal processes but also to increasefacilities and services to their customers.IT has transformed the Indian bankingby opening new cost saving, risk redu-cing and profit-making strategies.


110

Introduction

The Government of India entered inthe banking business after the nationa-lization of the Imperial Bank of Indiawhich is presently known as State Bankof India. The major phase of banknationalization took place in 1969when 14 major banks were broughtunder the control of the government.The straightforward motive behind thebank nationalization was to expandbanking branches and to provide finan-cial services throughout the nook andcorner of the country. It was thought that,to develop rural India banking sectormust reach to all classes of people in thecountry, although till then banking

* Dr.Govinda Prasad Bhandari, Assistant Professor,School of Business, Kaziranga University, Jorhat,Assam.

Productivity Analysis of Public SectorBanks and the Regional Rural

Banks in India

Govinda Prasad Bhandari*

The paper is an attempt to understand the comparative productivity picture of Public SectorBanks (PSBs) and the Regional Rural Banks (RRBs) in India. The study unveils thatPSBs position is better in branch productivity, staff productivity, employee and branch-wiseincome and expenditure in comparison to Regional Rural Banks in the country. Comparativeprofit scrutiny of the two banks signifies that PSBs average per branch profit is more than10 times of the RRBs in the country. Similarly, the average profit per employee in PSBs is3.75 times more than the profit per employee of RRBs. Overall, it focuses that RRBs arelagging behind in comparison to Public Sector Banks in the productivity performance andit needs more understanding of banking business operations in the rural and backwardareas. Productivity in PSBs and RRBs has a huge gap and RRBs need to think explicitly toreduce the existing gap of yield.

Keywords : PSBs, RRBs, Productivity, Staff, Branch, Income, Expenditure, Profit.


facilities were highly concentrated inthe urban and city areas and were pri-marily adored by the rich section of thesociety. It was a major step in the Indianbanking history especially in the expan-sion of commercial banking branchesin rural areas and the strengthening ofrural economy through financial mobi-lization. Simultaneously along with thealready existing co-operative banks andcommercial banks in the country, govern-ment also contemplated the need forestablishing a new kind of financial insti-tution primarily targeting the bottom

( ISSN 0971 - 1856 ) The Journal of Institute of Public ...

Documents

Transcript of ( ISSN 0971 - 1856 ) The Journal of Institute of Public ...