The energy sector is perpetual in human development and economic development both. The purpose of this chapter is to provide an efficiency score to Indian firms (constituents of the NSE energy index) that are renowned for adopting best practices in carbon-emission control in the environment and then to rate such companies. The chapter is unique as it has attempted to identify efficient and benchmark units in the energy sector in India through an integrated model based on DEA-TOPSIS. The findings of the chapter have extensive implications for all these stakeholders along with companies belonging to the energy sector, investors, and academia. The managers taking strategic financial decisions in the target units need to consider the practices followed by benchmark companies for improving their financial viability.
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For the sustained growth of an economy, the power sector plays momentous role in the development of infrastructure and stimulating the quality of life of citizens (Yuan et al., 2008). The sources of power generations encompass, new, conventional, and renewable and hybrid sources. The wind power, solar power, gas, oil, coal, hydropower and nuclear power etc. collectively contributing to the expansion of energy sector in any economy. The renewable energy is recognized as a need for the sustainability of an economy (Abu-Rayash and Dincer, 2019). The researchers have empirically examined the performance of energy sector in various countries. In a recent study by Zhou et al. (2019), the researcher focused on energy extraction industry in China using DEA model. Understanding the appositeness of energy sector, Sueyoshi et al. (2017) performed an embracive research based on critical examination of 693 articles where the researchers addressed the research akin to energy and environment using DEA approach. The power sector in India placed fourth in Asia Pacific region in May 2018. The alternative sources of power and energy will play nucleus role in the development of new India. The government is also solicitous about efficient performance of major players in this segment. The energy sector is one of the foundation stanchions in the excrescence and development of any country. The sector has distinct relevance due to galactic investment requirement and professed capability to affect the pace of economic growth and quality of life. Also, this sector is typically one of the uttermost regulated sectors in the economy. And from industry perspective, it has strategic pertinence too (Bunea et al., 2019). The impact of liberalization can also be discerned in case of energy sector, viz., electricity and natural gas etc. With the opening of a marketplace, it becomes essential to measure the financial performance of companies belong to energy sector too. In a research based on 90 Italian energy companies, it was found that the opening of the economy brings new challenges and managerial skill is required to be advanced. With the transformation in the competitive place, the financial performance of the companies also gets modified. The study used various financial indicates like leverage ratio, return on sales, cash flow, ROI and ROE to measure the financial performance of energy companies (Capece et al., 2013). Although the privatisation and liberalization happened in energy sector across the world has resulted in enormous development of this segment but still government in many countries austerely regulates this sector (Ruggiero and Lehkonen, 2017; Bacon and Besant, 2001). Each household and industry is consumer of energy in form or other. Therefore, the prices of final output by energy sector are always under the reconnaissance of government.
Power sector is a part of energy sector and is considered vital not just because of fundamental to economic growth but also because it sources huge amount of carbon emission. Several policy initiatives like tax imposition etc. by developed countries are based upon carbon footprints by such companies. Any kind of taxes levied by government affect the financial performance of that corporate segment. Hence, it is imperative to ensure sound financial position of companies belongs to energy sector in general and specifically to power sector (Wang, 2010; Zhu et al., 2019).
The connotation of energy sector is perpetual in human development and economic development both. The financial viability of this sector is essential to make it sustainable. In continuation to this discussion, the present chapter has provided empirical evidences regarding efficiency of energy sector of India. The chapter under consideration has provided ranking on energy companies in India on the basis of their financial performance. These top-ranking energy companies can be pondered as a benchmark to other companies in the energy sector to mend their technical efficiency. The objective of the current chapter is to give efficiency scores followed by the ranking of the companies of the NIFTY Energy index. This index is the most important inputs for economic growth as all segments of India’s population should get energy in efficient and cost-effective manner while safeguarding long-term sustainability. Further, the current chapter is also intended to yardstick a company for the finest functioning based on selected alternatives amid the peer group.