Financial performance and capital structure of select hydropower companies in India: An Empirical Analysis

This research paper attempts to analyse the relationship between the capital structure and financial performance of two hydropower generation public sector undertakings in India. Secondary data sourced from the financial statements of the corresponding generating companies for the period from 2010-11 to 2016 is analysed using multi-correlation analysis. Results indicate that the capital structure negatively impacts profitability, consistent with the extant research on the subject matter as well as the underlying financial principle - more debt, more interest expenses, and hence lesser profitability. Moreover, in consonance with the MM hypothesis, the present research has revealed that the interaction of tax and capital structure results in the negative impact of tax on the capital structure.