Authors: Dr.D.Anjaneyulu, Kundana Gowri B
Abstract: This project aims to explore the role and impact of financial leverage at the Rayalaseema Power Project. Financial leverage refers to the use of debt financing to fund business operations with the objective of increasing shareholder returns. The study focuses on analyzing the capital structure of the project and understanding how debt influences its financial performance, profitability, and risk profile. By evaluating key financial ratios such as the debt-equity ratio, interest coverage ratio, and return on equity over a span of five financial years, the study provides insights into the level of financial risk undertaken by the project. The research adopts both qualitative and quantitative methods, using data collected from the company’s annual reports and secondary financial sources. The analysis reveals that while leverage has contributed to higher returns during certain periods, it has also increased financial vulnerability due to interest obligations. The project concludes with strategic recommendations for maintaining an optimal leverage ratio that balances risk and return, ensuring the project's long-term financial health and operational efficiency. This study is significant for stakeholders, financial analysts, and policymakers involved in infrastructure and energy sectors, particularly those considering the implications of debt financing in capital-intensive projects.
