Efficiency Measurement of Indian Steel Industry Using Data Envelopment Analysis

Abstract

Data envelopment analysis (DEA) has been used to calculate the technical and scale efficiency measures of the public and private steel firms of the Indian steel industry (2006 to 2010). Within DEA framework, the input- and output-oriented variable returns to scale (VRS) and constant returns to scale (CRS) model is employed for the study of decision making units (DMUs). A representative sample of 17 public and private firms which account for major portion of the total market share is studied. The selection criterion for the inclusion of a firm in the analysis has been total sales of INR 500 crores or more in the year 2010. No study has been done in the context of Indian steel industry in the post-liberalisation era which motivates us to initiate the study. It was found from the result that the Tata Steels Limited has showed high efficiency over a period time than remaining steel producing firms in India.