Performance Evaluation of Development Financial Institutions - A Case Study of KSSIDC

Abstract

This research carries out an extensive assessment of the financial performance of the Karnataka State Small Industries Development Corporation Ltd. (KSSIDC). This study exclusively uses secondary data from the company's annual reports covering eight years, from FY 2015-16 to 2022-23, and applies ratio analysis to evaluate profitability, operational efficiency, and financial stability. The research presents two aims: to examine the patterns in essential financial ratios and to assess the company's general financial well-being. A key hypothesis is evaluated, suggesting that there is no notable trend in KSSIDC's profitability throughout the study period. The approach includes computing essential financial ratios and using simple linear regression to assess a meaningful trend in the Return on Capital Employed (ROCE). The results show a statistically significant downward trend in profitability, even with strengths in operational turnover. The hypothesis testing results in rejecting the null hypothesis, suggesting that the decline in profitability over the eight years is substantial and not merely due to random variation. The research ends with recommendations for decision-makers and management to adopt strategic measures aimed at improving financial sustainability.