The present study aims to unveil the status of capital budgeting in India particularly after the advent of full-fledged globalisation and in the era of cutthroat competition, where companies are being exposed to various degrees of risk. For the above objective a comprehensive primary survey was conducted of 30 CFOs/CEOs of manufacturing companies in India, so as to find out which capital budgeting techniques is more preferred, discounted or non-discounted. The study also aims at examining the capital budgeting methods used for incorporating risk in investment proposals. It further endeavours to evaluate the impact of different factors or variables on the selection of a particular capital budgeting technique. For example, it was investigated that whether there exists any relationship between a size of company's capital budget and the method of capital budgeting adopted by it. Similarly it was discovered that is there any systematic relationship between different company related factors like age of a company, CEO education/qualification and the capital budgeting method adopted by it.

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Today, the economic scenario has become highly turbulent and competitive, with the companies being exposed to multitude of risks. Increasingly, companies are in a twirl of shrinking profits and diminishing market capitalization. The question as to why some firms succeed while others fail to compete and evolve through chaotic times is today one of the most important issues of organization studies. The present research addresses the value and impact of firm-specific factors on the corporate profitability. It aims at understanding and analyzing the pervasive relationship between the firm-specific factors of firm size, liquidity and capital structure (financial leverage). A sample of 50 Indian companies was selected randomly from the companies listed on Bombay Stock Exchange. Correlation and multiple regression technique were used to analyze the relationship among these firm-specific factors and corporate profitability. Correlation and regression results reveal a significant positive relationship between firm size and corporate profitability. With an increase in the scale of investment, the company’s profits showed an upstream. Capital structure exhibits a significant negative relationship with corporate profitability, consequently with an increase in debt-equity ratio, the company’s profits showed a downstream. However, liquidity had an insignificant negative association with profitability. The value of this research lies in highlighting those specific firm factors that need to be revamped to augment corporate profits. The research has strong implications for industry practitioners. Increasing the scale of the business can act as an added boon to the firm. However, increasing leverage and liquidity to higher degrees may be a big bane. The pervasive relationship that exists between different firm-specific factors and corporate profits highlights the need to revamp, redesign and rebuild the firm size, capital structure and working capital management.

In today’s highly turbulent and volatile business environment where companies are exposed to a multitude of risks, only globally competitive and professionally managed companies can thrive and grow. In such a competitive environment, the capital budgeting decisions made by a company are critical to a firm’s long-term survival. Is the Indian corporate sector using theoretically sound and sophisticated capital budgeting techniques for decision making purposes? Are the Indian firms adopting risk analysis techniques for handling various risks in investments? These issues have been the focus of research studies over the past so many years. The most prevalent emphasis of previous capital budgeting surveys continues to be mainly on financial analysis and project selection stage of capital budgeting. The article reviews the past capital budgeting survey literature till the year 2012 and brings to light some of the neglected areas of capital budgeting. It is noticed that project definition and cash flow estimation (identification and development) (Stage I), project implementation (Stage III) and project review (post audit and control) (Stage IV) are the specifically neglected areas of the capital budgeting process. Further Indian studies encompassing the overall stages of capital budgeting process still remain relatively unexplored. The main aim of the present study is to not only provide an insight on the past literature, but also explore the CFOs opinions and perceptions about the relative difficulty and significance of different stages of capital budgeting in India, particularly in an era of full-fledged globalization and cutthroat competition, where companies are being exposed to various degrees of risk. The study is based on a primary survey of CFOs of 77 Indian companies listed on Bombay Stock Exchange. The study further endeavours to evaluate the impact of different company related variables of size of capital budget, nature of industry, company age, CEO education and CEO age on the level of difficulty of different stages of capital budgeting.

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