Profitability and Growth in Indian Automobile Manufacturing Industry

R. N. Agarwal
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R. N. Agarwal: Institute of Economic Growth

Indian Economic Review, 1991, vol. 26, issue 1, 81-97

Abstract: The objective of this paper is to examine if firms have been making super normal profits since 1975 when price controls were removed. It also evaluates the impact of policy changes since 1981-82 on profitability and growth of firms in the industry using Tobin's q as a measure of profitability. The study finds no evidence to show that firms have made supernormal profits. Profitability is found to be explained mainly by age of the firms, vertical integration, diversification and industry policy dummy variables. Important determinants of the growth of firms are found as diversification, industry policy dummy variable, gross retained profits and expansion of capacities. Results also reveal differences in performance between car and non-car sectors as well a within the sectors of the industry

JEL-codes: L62 (search for similar items in EconPapers)
Date: 1991
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