A Study On Determinants Of Market Value Added Of Selected Oil And Natural Gas Companies In India

Abstract

Maximization of shareholders’ wealth has become the predominant goal of every industry in India. Indian companies are understood that the need to create shareholders wealth is paramount and they are responding to the pressure to create wealth by applying new models and metrics for managing their companies. The present research work tries to identify the factors which determine the market value added. For the study, a sample of six companies from oil and natural gas sector in India with a total asset more than 30,500 crores in the year 2013-14 has been selected. The study period is from 2004-05 to 2013-14. For ascertaining the determinants of Market Value Added, Market value added has been used as a dependent variable and Economic value added, Net operating profit after tax, Earnings per share, Leverage and Size have been selected as independent variables. This study concludes that GAIL ( India) Limited, Bharat Petroleum Corporation Ltd., Indian Oil Corporation and Hindustan Petroleum Corporation Ltd., have Net operating profit after tax as the stronger determinant of Market value added on the other hand Oil and Natural Gas Corporation Limited, and Oil India Ltd. have no strong determinants of Market Value Added. These companies are expected to reduce the operating expense and increase the profit. Earnings per share determine the value of share in the market so all the sample companies should make efficient policies to increase the earnings per share.