Critical analysis of unsecured and secured borrowings and its implications on the financial performance of Indian food and beverages sector
Keywords:
secured, unsecured loans,, return on equity , sustainable growthAbstract
A wide array of studies has been conducted on secured borrowings in the corporate sector but not much has been investigated on the unsecured loans. This study aims at the significance of unsecured and secured finance and its impact on the financial performance of Indian Food and Beverages sector.The Indian food and beverages industry comprises of 204 BSE listed companies available on the CMIE database for the period 1997 to 2007.The study finds out that in the capital structure of this sector the major source of funding is from internal reserves, followed by secured loans, unsecured loans, equity and lastly preference capital. The unsecured loan does not have any positive impact on the return on equity and growth of the sector. These results are consistent with the earlier findings that growth is not very high but mediocre as maximum funding is from internal reserves.
