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Comparing & Analysing the Efficiencies of the Top 5 Cement Companies in India Using Data Envelopment Analysis

Authors: Avtar Singh Arora, Chetan Panse

Journal: TEST Engineering & Management

Publication date: 2020 May / June

Publisher: TEST Engineering & Management

URL: click here


Abstract:

Data Envelopment Analysis (DEA) is a non-parametric approach applied to analyse & compare the performance of various organisations in the context of multiple input and output. This paper aims at evaluating and analyzing the production efficiencies of the top market players in the Indian cement manufacturing sector. The period of study spans from 2014 to 2019, where the data has been collected from moneycontrol.com website as well as from the annual reports of these companies. The paper analyses the efficiency of these companies during the period based on certain input and output factors. The factors considered as the input are the raw material expense, power & fuel expenses and compensation to employees. Whereas the output factors are profit before tax & net sales. The factors have been decided based on secondary research. These factors have been analyzed using BCC-O/P & CRS-O/P DEA models. The technical as well as scale efficiency has been determined to analyze and compare the companies. The study establishes that the 3 out of the 5 cement companies are efficient, whereas 2 companies are inefficient. Slacks of these companies have also been studied.