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Profitability and Growth in Indian Automobile Manufacturing Industry

Author

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  • R. N. Agarwal

    (Institute of Economic Growth)

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

Suggested Citation

  • R. N. Agarwal, 1991. "Profitability and Growth in Indian Automobile Manufacturing Industry," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 26(1), pages 81-97, January.
    • Handle: RePEc:dse:indecr:v:26:y:1991:i:1:p:81-97
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    Cited by:

    1. Dharmaraj Arumugam & Ashok Kumar M & Preetha R, 2016. "Factors Determining Profitability in Indian Automobile Industry," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 7(2), pages 64-69, May.
    2. Katrak, Homi, 2002. "Does economic liberalisation endanger indigenous technological developments?: An analysis of the Indian experience," Research Policy, Elsevier, vol. 31(1), pages 19-30, January.

    More about this item

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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