A STUDY ON FINANCIAL LEVERAGE OF STEEL COMPANIES WITH SPECIAL REFERENCE TO SELECT STEEL COMPANIES IN KALYANA KARNATAKA, KARNATAKA

Abstract

Financial leverage is a central concern for capital-intensive industries such as steel, where large investments in plant, machinery, and infrastructure require a carefully balanced mix of debt and equity. This study examines the financial leverage and profitability of ten select steel companies operating in and around the Ballari, Vijayanagara, and Koppal belt of Kalyana Karnataka over the five-year period from 2020-21 to 2024-25. Using secondary data drawn from Capitaline, Moneycontrol, and company annual reports, the study computes and compares the Debt-Equity Ratio, Long-Term Debt-Equity Ratio, Interest Coverage Ratio, Return on Capital Employed (ROCE), and Return on Net Worth (RONW) across the sample firms. The analysis shows that companies which maintained a balanced capital structure, generally with a Debt-Equity Ratio below 1.00, achieved stronger interest-servicing capacity and more consistent returns to shareholders, while firms with comparatively higher debt dependence faced greater financial risk and earnings volatility. The study concludes that financial leverage, when maintained at an optimum level, is a valuable tool for improving shareholder returns, and recommends that highly leveraged firms strengthen their equity base and monitor leverage and profitability ratios on a continuing basis.