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The given report contains a review of 5 research papers
on capital structures. First we look at the factors and composition of capital
structures of Public Ltd companies in India.It is then followed by analysis of
capital structure across various industries in India.

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Ltd Companies and their capital structure

Capital structure refers to what frames the capital
employed,which simply is the composition or mixture of debt and capital.One of
the most important and basic aims of a firm is to strengthen shareholder`s
wealth and capital structure decisions aim at achieving this fundamental.There
are certain theories associated with capital structure such as the MM
approach,Operating,Net Operating and traditional approach.All theories have
certain assumptions and merits and demerits since any country or the real word
has factors such as bankruptcy and agency costs and also the presence of
taxes.In today`s India,firms usually follow the given order of raising
finance-internal,external borrowed finance and finally external equity
finace,this is commonly known as pecking theory.Firms might also go ahead with
the signalling theory to send positive messages about themselves or to maintain
their flexibility when it comes to raising debt.Calls related to capital
structure have bearing on both risk and return associated with a share,which in
turn affects the market price of a share and thus these decisions are of
mammoth significance.Using interest bearing bonds,increases the financial
leverage which increases the EPS due to the benefit of tax shield as a reason
of interest.At the same time financial leverage means fixed payments which
makes it more risky.Therefore it has a two fold counterveiling impact.A general
notion states a high DFL should be accompanies by a low DOL and vice versa.The
profits which a firm makes,scale at which they operate,the size of their assets
play a major role in determing the leverage structure of a firm.

A number of factors determine the capital structure
which include cost of funds,cost required to raise such funds,the control or
ownership pattern,the threat associated with that source,agency cost and tax
advantage.Usually debt turns to be cheaper due to tax advantage and the benefit
of gearing which it provides.However,lenders may look at several factors before
subscribing to debt such as firm`s credit rating,number of defaults if
any,interest rate offered,interest-coverage and debt-equity ratio,gross profit
margins and cashflows which the firm has,which means that firms having good
financial statements not only enjoy ease of raising loans but also enjoy
flexibility as well.In India,it has been observed that after the 1990`s the
firms have also started to pay focus on raising money through equity as
compared to previous years where a major source of finance used to be debt.This
is attributed to development of new financial products,awareness among
consumers,advancements in financial markets and certain other legal
requirements and compliances.It has also been observed that large firms having
a huge pool of assets and high credit ratings are in a better position to
negotiate with banks which helps them crack better deals when it comes to debt
financing.Thus,we see a wide array of factors affecting capital structure of a

structure of the FMCG Sector in India

Over the years,the fmcg
sector has grown with a huge boom across the world and specially in India.The
companies undertaken for the study include P and G,Emami Ltd,Colgate
Palmolive(India),United Spirits Ltd.Though the FMCG sector has grown with
leaps,the studies suggest that there is still a need to improve the way
operations are conducted to achieve effectual usage of resources which in turn
will ensure optimisation of resources and increase overall effectiveness and
productivity leading to sustained growth.One more thing which has been noticed
is that these companies have been able to maintain a very good debtor turnover
ratio which clearly indicates that their receivable management has been
absolutely to the mark.One striking fact was observed was that financial
leverage showcased adversarial effect when it came down to valuation or
performance of the company due to Eva and Roa indicators and thus the benefit
of increased EPS was set off from the firm`s perspective.The debt-equity ratio
which was initially high has now seen a downward trend since firms have made
considerable profits in the recent past,and have made debt repayments and used
internal as well as equity source of financing.The increased profits also meant
higher interest coverage ratio,thus providing a secure environment to
lenders.Due to decreased debt,the debt-asset ratio also gives a positive
signal,giving firms further flexibility to raise additional funds in the form
of bonds and debentures.The GPR and NPR have also been increasing since
operations have gone up and sales have increased.We see that colgate and emami
were able to fetch higher returns on long term funds showcasing that
disbursement of funds in these two companies was much better than other companies.We
see that profitability has had a positive impact in Colgate even when the firms
uses very less amount of debt.All in all we see that capital structure has
played an important role in FMCG sector,however different firms within the
industry have used varying strategies keeping in mind their strengths and

Structure Of Automobile Industries(2010-14)

This review contains an overlook of capital
structure of Automobile industries with the examples of Tata Motors,Maruti
Suzuki and Mahindra and Mahindra.There was a specific focus on debt,equity and
leverages of these companies during the analysis of capital structure.In the
automobile sector,the firm`s value of productive assets,monopoly franchise has
an impact on the value of capital which in turn determines the value of the
firm and the value of its`s securities.Thus,a chain is involved when we look at
the value of a company specifically in the automobile sector and each component
plays a major determinant.We see that over the years,the equity has gone up in Tata
Motors majorly due to convertible debentures and since the market price of
shares was very high,the company found it better to raise funds through equity
rather than debt.In the other two companies,the figures have been relatively
stable.We see that debt has constantly increased in Mahindra and Mahindra since
the gearing instrument helped them take the benefit of leverage as well as
increase the EPS,making the shareholders happy.The Debt of Maruti Suzuki has
seen huge fluctuations indicating that proper management was debt was highly
missing in this particular case.Tata Motors reduced debt till 2012 through huge
profits used for redemptions as well as using it`s market price of shares and
the conversion policy to it`s advantage.We see that all companies saw
fluctuations in the DOL,which can be attributed the market environment as well
as internal positions of the company,however Tata and Suzuki have made a
constant effort in recent years improve their DOL.Tata is the only company
which was also able to maintain a decent range of DFL as compared to other
two.The impact of both DOL and DFL has been reflected in DCL for each of the

Tata Motors and Maruti Suzuki showed a clear
realation between capital indicators and MPS.However,for Tata motors an inverse
relation was found between MPS,debt and equity.

structure of IT sector(special focus on TCS)

The following 

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