A Research Paper on Size and Growth Opportunity as Determinants of Leverage: Evidence from Indian Textile Industry

The Indian Textile Industry is coming of ages since 2005. Be it proactive Government policies, or global free trade, there is tremendous set of opportunities for the Indian Textile Industry to mark its presence at a global level. Free trade on one hand has opened up opportunities to participate in world trade while on other hand has thrown open the textile companies to challenges of maintaining good quality at a competitive price thereby squeezing the profit margins. It has thus become imperative that, these companies invest in modern technology. In the given scenario, authors thought it pertinent to find out to whether growth rate of investment in modern technology and size are determinants of leverage. Using t test, authors concluded that both size and growth is not a significant factor in determining the level of leverage for Indian Textile Industry. Further analysis also showed that, companies, when classified on the basis of their ownership and size also does not significantly affect the level of leverage.