Analyzing technical and super efficiency of aluminium firms in India

Abstract

Purpose

The purpose of this paper is to evaluate the efficiency of aluminium firms in India.

Design/methodology/approach

Different data envelopment analysis (DEA) models have been employed to calculate the various efficiency scores of aluminium firms in India.

Findings

The major findings of the DEA analysis suggest that 62 per cent firms are found to be technically efficient. Overall, the industry shows good performance with mean technical efficiency levels of 0.936 and 0.911 for VRS and CRS frameworks, respectively. Further, five firms show decreasing returns to scale, signifying the overutilization of plant capacities. Six firms exhibit increasing returns to scale implying underutilization of plants. The results show that domestic firms are more efficient than the foreign firms, young firms are more efficient than young firms and small- and medium-scale firms are more efficient than large-scale firms.

Practical implications

The results of this study would help the aluminium firms to formulate an appropriate strategy to cautiously use their resources to increase their efficiency levels.

Originality/value

To the best of authors’ knowledge, no earlier studies seem to have ranked the aluminium firms based on their super-efficiency scores. Further, no previous studies seem to have examined the efficiency differences among aluminium firms across different size, age and ownership groups.

Citation

Kundi, M. and Sharma, S. (2017), "Analyzing technical and super efficiency of aluminium firms in India", Benchmarking: An International Journal, Vol. 24 No. 6, pp. 1729-1741. https://doi.org/10.1108/BIJ-03-2015-0026