Research Journal of Economics & Business Studies - RJEBS - The ...

Building on the Markowitz framework, Sharpe (1964), Lintner (1965) and Mossin (1966)
independently developed what has come to be known as the capital asset pricing model (CAPM). The
model equation can be written as:
(R j ) = R f + β j [R m - R f ] (1)
Where, R f = 10 year treasury bill rate
R m = Return from the market of individual security
β j = Systematic risk /Un- diversifiable risk of individual security
Section 4
Analysis of Economic Value Added (EVA) of PSUs equity shares
The PSU Oil & Gas Sector has shown a negative EVA throughout the study period other than in the
years 2000-01, 2006-07, and 2008-09 at the rate of Rs.713 crores, Rs.67,175 crores and 13,913 crores
respectively. On an average, the Oil & Gas sector has shown a negative EVA of Rs.-56000 crores. The
period 1998-99 has shown a negative EVA of Rs.-1820 crores which increased to Rs.-2314 crores in
1999-00 and then declined to show a positive EVA for the first time at the rate of Rs.713 crores,
followed by a negative EVA up to the year 2006-07 and then a negative EVA at Rs.-110871 crores for
the year 2007-08. The year 2008-09 has reported a positive EVA of Rs. 13913 crores.
4.2. The PSU Minerals & Metals sectoral average for the period 1998-99 to 2008-09 shows a negative
EVA of Rs.-19702 crores. For the period 1998-99 it was Rs.-7327 crores, which increased to Rs.-
9748 crores in 1999-00 and then to Rs.-8913 crores and Rs.-5889 crores in 2000-01 and 2001-02
respectively. It was at the rate of Rs.4041 crores and Rs.-6295 crores in 2003-04 and 2004-05
respectively. During the period 2008-09 it ended with a positive note with Rs.84818 crores.
4.3 The PSU Engineering sector has shown a better EVA for all the companies barring few years
including private sector company Siemens during the later part of the study period. Only HMT Ltd.’s
EVA was negative in the period 2004-05 to 2008-09. The Engineering sectoral average EVA has
varied between Rs. –30445 crores and Rs. 4585 crores, during the study period which indicates that
there is no consistency in creating value to the shareholders by the PSUs operating in Engineering
sector.
Table 2: Calculation of Economic Value Added (EVA) of PSUs Equity Shares for the period
1998-99 to 2008-09
1998-
1999-
00
2000-
01
2001-
02
2002-
03
99
OIL & GAS
BPCL -1973 -2160 -1241 453 -334 289 -696 -5066 22035 -20246 366
BRPL -1787 -1500 -1514 -1840 -890 -632 -594 19726 52081 -35799 -50
CPCL -1059 -1174 -913 -1270 -570 -486 -248 1372 6218 -17819 8706
GAIL -6373 -992 28598 -5569 -3644 -1021 -1676 - 35048 - 17574
78476
103443
HPCL -2470 -3315 -2848 -2166 -2002 -147 -312 81 20451 -4113 600
I B P Co. 667 849 927 598 1413 1802 1784 -83 1471 - -
Ltd.
IOC 16713 -3983 21460 -1010 -4735 -5810 -1171 - 94960 -31235 2764
20163
KRL 956 1276 1717 1793 5284 6255 49 -2089 - - -
MRPL -6784 -7682 -6937 -7360 -10498 -6422 -7049 -
10546
6
11249
4
-31754 26341
www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 48
2003-
04
2004-
05
2005-
06
2006-
07
ONGC -7958 -8141 -7808 -8531 -6447 -5892 6320 89831 33947
5
2007-
08
-
151510
9
AVERAGE -1820 -2314 713 -2692 -2246 -1366 -477 -1020 67175 - 13913
2008-
09
64999