A Study on

Disinvestment

A Mini Project Report in Business Environment Submitted to JNTU,

Kakinada in Partial Fulfilment for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted ByAnusha Gopisetty

(Reg. No. 13491E0007).

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATIONQIS COLLEGE OF ENGINEERING & TECHNOLOGY

An ISO 9001: 2008 Certified Institution and Accredited by NBA (Affiliated to JNTU, Kakinada and Approved by AICTE)

Vengamukkapalem, Pondur RoadONGOLE –523 272.December – 2013.

Content:

S.NO PARTICULARS PAGE N1. Abstract

2. Introduction

3. Keywords

4. Definition

5. Need to study

6. Scope of study

7. Objectives 8. Methodology

9. Dis investment

10. Conclusion

11. Reference

Abstract:

Contributions to the development of fixed asset theory made by Glenn Johnson are highlighted along with concern and development of a theory of investment and disinvestment. A review of the development of investment and disinvestment theory highlighting the work of Johnson is presented. Empirical applications as the theory has evolved are examined. Comments regarding the current status of investment/disinvestment theory and associated empirical applications are presented.

Keywords: Dis-investment; policy;

Introduction:

The term Indian economy is the outcome of two words. Indian refers to those concerning India. Economy refers to these refers to all actives and arrangements which the citizens of a country.

Definition: it means to take return of equities from government public sector units. Means the process

of reducing the amount of money in government sectors that was replaced y public and private sector.

The government of India has been decided to with drawal their money from industrial sector in accordance with this decisions the government has adopted the root of disinvestment.

Need of study:

The disinvestment is use full to the public sector peoples. The strategies scale of public sector units to pvt sector. The government has done the strategic sale of public sector units to pvt sector process of composite bidding after 2004,2005 in disinvestment realized that the total sale of shares to pvt sector units.

Scope of study:

The government has the entire process of disinvestment which will offer to development of Indian nature resources and their proper consumption and also reduce fiscal deficiency. The government has the entire process of disinvestment which will offer to development of Indian nature resources and their proper consumption and also reduce fiscal deficiency.

Objectives:

To know about Dis-investment

Methodology:

The project is descriptive & exploratory but constructive in nature.

The secondary data is collected through books, journals, magazines

The primary data is collected through descriptive with acumination expect.

Review of literature:

The Indian industry structure is introducing the disinvestment. The disinvestment era Indian economy was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking,

interventionist policies and import. The disinvestment means returns of equities from government public sector units.

Dis-investment:

It means to take return of equities from government public sector units. Means the process of reducing the amount of money in government sectors that was replaced y public and private sector.

The government of India has been decided to with drawal their money from industrial sector in accordance with this decisions the government has adopted the root of disinvestment.

Objectives:

To strengthening of public sector units. To increase competition. To promote the growth of Indian companies.

Features:

Under utilization of resources. Lack of price planning and construction. Low price of government shares. Methods followed by Indian government for disinvestment was not effective. Lack of finance minister supervision. Labour problems Lack of autonomy.

Methodologies & process of disinvestment:

For the disinvestment process the government has adopted two types of methodology. They are

Sale the shares in selected public sector units in strategic way. Non-strategic sales of public units for a pvt company.

The government has done the strategic sale of public sector units to pvt sector process of composite bidding after 2004,2005 in disinvestment realized that the total sale of shares to pvt sector units.

Initially in 1991-92 government offers share in the form of bundle a combination of equity from poor and good performance. In bundling method the results for government are a very low average price for each bundle

o After 1991-93 the government has follow the abundant of bundling shares and sale the share of each

company separately by following action.o In 1994-95 the NRI and other persons were involved in auction process.

o In 1996-97 the globalization of disinvestment is implemented.

o In 1998-99 the disinvestment is spread throughout the universe by the transfer of ownership.

o In 1999-2000 as started units to pvt sector. The government resorted to strategy sale of a number of

companies.

Utilization for failure of disinvestment process:

By the following programme of disinvestment was initiated in 1991-92 the finance minister of central as well as the state as announced that the disinvestment money should be used in the form of NRF and also for

various schemes like non-inflationary position, employment scheme and for the development of back ward people.

The government has the entire process of disinvestment which will offer to development of Indian nature resources and their proper consumption and also reduce fiscal deficiency.

Action for failure of disinvestment process: The different reason for disinvestment process failure is explained below.

The govt carried out the exercise of disinvestment process in a hasty and un planned and hesitated way.

The govt launched the disinvestment process without creating the required positions or conditions its takeoff.

The gvt has not adopted suitable methods for disinvestments process as for supervision.

Actions required in Dis investments:

o Dilution of minor share to navarthnas.

o Strengthening of PSU’s

o Restructuring of PSU’s

o Formation of a board for Dis-investments.

o Selling and closing of sickness industries

Conclusion:

On the account of all these factors there was considerable under pricing of public enterprises shares and resulting in considerable loss to the government.

Reference:

1. Mitanni D.M.: Business environment, Himalaya Publishing House, Mumbai

2. Dwivedi, D.N.: Business environment, Vikas Publishing House Pvt. Ltd, New Delhi

3. Misra: Business environment, Himalaya Publishing House, Mumbai