A Relative Study of Average Investment Returns between Manufacturing Sector and Service Sector of CPSEs in India

Abstract

Purpose: In India, CPSEs were established to achieve socio-economic objectives of the nation. Both manufacturing sector and service sector occupies an important position in the development process of an economy. In this context, a comparative study is performed between manufacturing sector and service sector of Indian CPSEs from 2010-11 to 2019-20.

Design/Methodology/Approach: Based on resultant data, investment ratios are employed to compute investment returns of the CPSEs. Moreover Fishers ‘t’ test judge the differences (if any) in investment returns between manufacturing sector and service sector. In addition, linear regression equations are employed to inspect the impact of sector-wise investment returns on the aggregate investment returns.

Findings/Result: Based on average investment returns, no noteworthy difference is observed between manufacturing sector and service sector in terms of ROCE and ROE. However, there exists important distinction among the same for ROA which implies that manufacturing sector has better utilization of their total assets in generating returns than that of the service sector. ROCE of the manufacturing sector contributes positively to the overall profitability of the CPSEs, while ROCE of the service sector contributes negatively to the overall profitability of the CPSEs. It further observed that the rate of negative influence by the service sector is more than that of positive influence by the manufacturing sector, thereby reducing the overall profitability of the CPSEs at aggregate level.

Originality/Value: To identify the important sector in the liberal economic environment, the present study compares average investment returns between manufacturing sector and service sector of the CPSEs in India through ROA, ROCE, and ROE.

Paper Type: Empirical Research.