This section deals with the study of investment behavior of sample firms taking into consideration two dependent variables namely Gross Block (Y1) and Plant and Machinery (Y2) in Chemical Industry of India. This study deals with eight explanatory variables, which influence the investment behavior in fixed assets (Y1 and Y2). This study is conducted on the basis of three models. They are Adding model, Constant model and Elimination model. In Adding model there are eight estimated equations. In Constant model there are six estimated equations and in Elimination model the estimated equations are not Constant but the number of equations depend on the significance of independent variables.

The following abbreviations are used in the tables (1-8):

NF – The number of firms, where the explanatory variable has shown an impact.

5% – The number of equations in which the explanatory variable is significant at 5% level.

10% -The number of equations in which the explanatory variable is significant at 10% level.

CI – Chemical Industry (The numbers indicate the number of equations that are estimated)

AM -Adding model

CM -Constant model

E M -Elimination model

*Y1- Gross Block*

From the table (1), it can be seen that, in Adding model, in 13 companies like, Clariant (India) Ltd., Excel Industries Ltd., Indian Oil Corporation Ltd., Monsanto Chemicals of India Ltd. et cetera, the explanatory variable that is, Change in Sales, shows an impact on investment in Gross Block in 29 estimated equations at 5% level of significance and in eight equations it is found to be significant at 10% level. At the sample firms’ aggregate level in the Chemical Industry, in Adding model this particular variable is found to be significant at 5% level in five equations and in two equations it is found to be significant at 10% level out of eight estimated equations.

In Constant model, Change in Sales as an independent variable is found to be significant at 5% level in 14 equations and in 12 equations it is found to have a significant impact at 10% level of significance in 12 firms like, Clariant (India) Ltd., Indian Oil Corporation Ltd., Rhone-Poulenc (India) Ltd. et cetera. When the equations in the Constant model are tested at the aggregate of firms’ level in chemical industry, this particular variable has shown an impact at 5% level in four equations and it is found to be significant at 10% level in one equation only out of a total of six estimated equations.

When the influence of Change in Sales as an independent variable is tested on Gross Block as a dependent variable under Elimintation model it is found to be significant in 18 equations at 5% level in 14 companies like, Clariant (India) Ltd., Excel Industries Ltd., Glaxo India Ltd., Gujarat State Fert & Chemicals Ltd., Nicholas Piramal India Ltd. et cetera. In the above companies, it is found to be significant in 18 equations at 10% level. Taking the aggregate of sample firms as a whole, it is found to be significant in two equations at 10% level out of a total of seven estimated equations under Elimination model.

In Clariant (India) Ltd., Excel Industries Ltd., Glaxo India Ltd., Gujarat Narmada Valley Fert. Co. Ltd., Gujarat State Fert & Chemicals Ltd., Monsanto Chemicals of India Ltd., in 54 estimated equations Change in Sales as an independent variable at either 5% level or 10% level under all the three models. In the case of Indian Oil Corporation, Pidilite Industries Ltd. and Rhone – Poulenc (India) Ltd., Chang in Sales as a variable is found to be significant in 18 equations under Adding and Constant models. Similarly in Excel Industries Ltd., Nicholas Piramal India Ltd. and Tata Chemicals Ltd., in nine equations it is found to be significant under Adding and Elimination models. In firms like, Cheminar Drugs Ltd. and Parke Davis (India) Ltd., this variable is found to be significant in eight equations under Constant and Elimination models. Where as in firms like, BASF India Ltd., Bayer (India) Ltd., Colour Chem Ltd. and Madras Refineries Ltd., in seven equations this variable is found to be significant under Elimination model only. In Zandu Pharmaceutical Works Ltd., in only one equation it is found to be significant at 10% level under Constant model. In Cipla Ltd. and Indian Petro Chemicals Corporation Ltd., in two equations it is found to be significant under Adding model only. In most of the estimated equations of 14 companies out of a total of 20 firms, this particular variable is found to be significant under Elimination model.