Energy Use Patterns and Firm Performance: Evidence from Indian Industries

This paper is an attempt to understand the relationship between firm performances based on energy use patterns of Indian manufacturing industries. Determinates of firm performances are estimated for the full sample and for the sample of firms using similar energy sources. Econometric analysis of the data collected from the CMIE PROWESS at firm level from 2005-2013 reveals that the determinants of profitability vary across groups. Energy intensity is positively related to profitability for three models except for the firms using natural gas as primary source of energy. R and D intensity is positively related to profitability for the full sample and for the firms using petroleum. For the firms using coal as primary source of energy, less R and D intensive firms are found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. In the policy front, shifting primary energy source from coal and petroleum to natural gas; firms can become energy efficient and profitable.