Evidence on the Existence of Inter-industry Differences in Capital Structure of Leading Indian Companies

The objective of this paper is to provide additional evidence on the inter industry differences in the Capital Structure of leading Indian companies in terms of market capitalization. Comparisons in the capital structure of 15 industrial groups namely Pharmaceutical, Non-Metallic Mineral Products, Power, Electric Equipment, Automotive, Chemical, Construction, Information Technology, Food-Beverages-Tobacco-Alcohol, Consumer Goods, Textile, Service, Metal, Retail/Wholesale and Others identified from 333 companies are made using three gearing ratios i.e. Total Debt to Net Worth ratio (TDNW), Long Term Debt to Net Worth ratio (LTDNW), Short Term Debt to Net Worth ratio (STDNW). One way ANOVA and Post hoc tests are employed for statistical analysis. Construction and Textile industries have a higher level of debt in their capital structure. However, Information Technology and Service industries are identified as least levered ones. Overall, the finding indicates IT and Service industry to be significantly different from other industry groups in case of all the debt ratios.