Abstract

"This study investigated the extent to which capital budgeting practices and procures are employed by unsung entrepreneur of Delhi work in this area has been focusing on corporate firms, paying little attention to non- profit organizations. The study design adopted is the survey design. The study focuses on primary data as well as secondary data. Primary data were obtained from employees of individual firms using self-designed questionnaire, while secondary data were obtained from financial reports of the same firms. Data were analysed using computer software. The findings in this study indicate that the initial stages of capital budgeting process are being followed in firms, but minimal implementation follows. This is supported by: - proportion of participants who showed that they normally divert funds, presence of stalled and idle projects in firms and an indication that modern appraisal techniques of capital budgeting are not highly applied. A number of capital budgeting techniques find place in basic as well as advanced text books on Financial Management and Corporate Finance. Each technique has its pros and cons as a decision making tool. The research paper investigates the decision making practices of unsung entrepreneur with respect to Capital Budgeting the techniques employed. The paper also examines the linkage between the techniques employed and various factors such as; size of investment outlay, nature of investment, firms size, and growth rate and capital structure. Also probed is the extent of delegation of decision making authority in respect of capital budgeting decisions. Further, the respondents’ views on relative popularity/significance of the techniques and reasons for the same have also been studied. Furthermore, the differences in techniques and decision making practices of unsung entrepreneurs and popular companies operating in India have also been looked. The information/data for the above stated purpose was collected through a secondary data from some companies. The main findings extracted from the responses to the questionnaire are, that key decision makers of unsung entrepreneurs are quite aware of and practically using sophisticated capital budgeting techniques. The study shows that bigger size companies give greater preference to IRR, while unsung entrepreneurs rely more on NPV. Also unsung entrepreneurs are keener in estimating the payback period (PP) as compared to larger companies. Consciously or unconsciously the unsung entrepreneurs relying more on debt financing or with high growth rates give more preference to the NPV technique, while low leverage and low growth colleges rely more on IRR. Unsung entrepreneur account for big percentage of Indian jobs and yet most of the studies on capital budgeting techniques have been focused on large firms. A mistake in their capital budgeting process could lead to disastrous consequences as they do not have the financial clout to recover from them. The purpose of the paper is to investigate where small unsung entrepreneurs stand in regard to the use of capital budgeting techniques and risk analysis. "

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