Public Sector Enterprises in Indian Economy: Challenges Faced & Major Reasons for Failure

Ing. Madhuparna Datta, BA

Master's thesis

Abstract:

The goal of the thesis is to understand and examine the major reasons for failure of many public sector enterprises in India, leading to insolvency or closure. It also brings evidence from several case-studies of loss making public entities which are operating in different sectors of Indian economy. The first part of the thesis concentrates on examining the major reasons for their failure and the second part takes up case-studies, using the Altman Z-Score model, to predict bankruptcy of the sample entities. The result shows that eight of the top ten loss making public entities were facing financial distress and would require corrective actions to help improve their performance. The study covers the period 2013-2017. My thesis contributes to the literature by enlarging its scope to include other critical sectors of the Indian economy, such as telecommunication, mining, services and transportation in addition to manufacturing.

Abstract:

The goal of the thesis is to understand and examine the major reasons for failure of many public sector enterprises in India, leading to insolvency or closure. It also brings evidence from several case-studies of loss making public entities which are operating in different sectors of Indian economy. The first part of the thesis concentrates on examining the major reasons for their failure and the second part takes up case-studies, using the Altman Z-Score model, to predict bankruptcy of the sample entities. The result shows that eight of the top ten loss making public entities were facing financial distress and would require corrective actions to help improve their performance. The study covers the period 2013-2017. My thesis contributes to the literature by enlarging its scope to include other critical sectors of the Indian economy, such as telecommunication, mining, services and transportation in addition to manufacturing.

Keywords

India, Public Sector Enterprises, Performance, Altman Z-score, Financial Distress, Failure

Language used: English

Date on which the thesis was submitted / produced: 15. 5. 2019

Thesis defence

• Date of defence: 25. 6. 2019
• Supervisor: Mgr. Martin Guzi, Ph.D.
• Reader: Ing. Eduard Bakoš, Ph.D.

Masaryk University

Faculty of Economics and Administration

Master programme / field:
Economic Policy and Administration / Public Economics and Administration (Eng.)