Source Of Finance And Financial Structure Of Msmes – A Study Of Granite Industry In Chittoor And Prakasam Districts
European Journal of Molecular & Clinical Medicine,
2021, Volume 8, Issue 1, Pages 1777-1788
AbstractAt present the state is producing about 10 lakh cubic meters of black and colored granites. According to the Central Government, Chittoor and Prakasam Districts are Industrially Backward Districts in Andhra Pradesh. Granite industry plays a pivotal role in the economic development of these Districts. A sound capital structure leads to increase the value of the firm, proper utilization of available funds, minimization of cost of capital, maximization of returns, etc. Majority of granite enterprises are suffering with heavy losses as per my first hand observation in Chittoor and Prakasam Districts of Andhra Pradesh. The enigma pertaining to the status is that whether the people are sufficiently strong enough invest required financial structure. So the present study is undertaken to know the source of finance and financial structure of micro, small and medium enterprises in granite industry in Chittoor and Prakasam Districts of Andhra Pradesh. The objectives of the present study are to know the ability of the granite entrepreneurs by attending campaign programmes to get financial assistance, to identify the purpose of loan taken, met financial requirement and subsidy availed by the granite entrepreneurs, and to study the financial structure of the granite enterprises and offer suggestions to maintain an optimal capital structure in Chittoor and Prakasam Districts of Andhra Pradesh during the study period. The granite enterprises were not maintaining an optimum capital structure and Small and medium enterprises did not maintain the standard debt-equity ratio (1 to 1.5) in the study area. It is suggested that small and medium enterprises should try to increase the debt to maintain the standard debt-equity ratio (1 to 1.5) and optimum capital structure, if there is a possibility to utilize this debt, and then they will get tax-benefit. Otherwise an additional debt will be cause for financial risk.
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