Capital structure decisions: An empirical evidence from POL, power generation & transmission industry of the Indian corporate sector Dr. Warne D.P.*, Rasoolpur Gurnam Singh** *ASsociate Professor, Department of Commerce, Chaudhary Devi Lal University, Sirsa **Assistant Professor, P.G. Department of Commerce & Business Management, Guru Nanak College, Sukhchainana Sahib, Phagwara, Punjab, India Online published on 4 September, 2013. Abstract This empirical paper attempts to study the capital structure decisions of POL, power generation & transmission industry of the Indian corporate sector. The study is limited to top 15 firms from POL, power generation & transmission industry out of top 500 manufacturing firms selected on the basis of the turnover for the year 2004–2005 which covers the time span of eleven years commencing from 1995–96 to 2005–06. The study reveals that three-fifth (59.63 percent) companies of this industry are following high degree conservative approach of financing through debt in their capital structure during the period under study. It is found that slightly more than one fifth (21.74 percent) companies in this industry are in 100–200 percent capital structure range during the period under study. So, in this industry such companies are using more amount of debt in their capital structure than their own capital but less than the well-established standard range of 200 percent (2:1) during the study period. It has also been observed that 18.63 percent companies are lying in more than 200 percent capital structure ranges during the study period which means that such companies are using debt beyond the well-established standard range of 200 percent (2:1). It is observed that the only a few (1.86 percent) companies in this industry are in 190 to 210 percent (1.90:1 to 2.10:1) capital structure ranges which are approaching to the well-established standard range of 200 percent (2:1) during the study period. Thus, it is concluded that companies under POL, power generation & transmission industry are following low degree conservative approach of financing through debt during the study period. However, debt capital is a cheaper source of finance, thus, the use of debt may maximize the value of wealth of shareholders. Top Keywords Ethical Issues, Capital Structure, Debt, Shareholders. Top |