The main purpose of this research is to determine empirically the impact of disinvestment on the financial performance and operating efficiency of central public sector enterprises (CPSEs) in India which got divested through public offering with government retaining the controlling stake during the period of 2009 to 2017. This study also tries to determine the role of CPSE size, CPSE industry and CPSE control in determining post disinvestment financial performance. This study has sampled 22 CPSEs listed on S&P BSE Index and disinvested in a period from 2009 to 2017 through public offer. The performance of CPSEs is measured through ratios analysis employing financial and operating ratios of return on assets, return on equity, return on net worth, net income efficiency, asset turnover ratio and sales to capital ratio. The significance of difference between pre- and post disinvestment performance is determined through Wilcoxon signed-rank test. The findings of the study indicate an overall decrease in profitability however the decrease was found to be statistically insignificant. It was also found that two of the operating efficiency decreased significantly. The role of CPSE size, CPSE industry and CPSE control was found to be very limited in determining post disinvestment financial performance. The results do not find the positive impact of disinvestment on financial performance of CPSEs as against the commonly held notion the probable reason may be the mode of disinvestment in which the only minority shares are disinvested while government retaining controlling stake, poor pre disinvestment financial state of CPSEs, negative rate of return on capital employed by CPSEs and inefficiency which need explored by the future researchers. The original value of the research comes from the fact that this study is the first which tries to determine the impact of disinvestment on the financial performance of CPSEs in disinvested through public offering with government retaining the controlling stake.

Keywords: Disinvestment, Financial Performance, Operating Efficiency, Indian CPSEs, Publc Offer.