Electrotherm (India) Limited — financial distress indicators
Financial-health summary
Electrotherm (India) Limited's reported numbers place it in the 'Weak' financial-health band (distress score 61/100). The main indicators are liabilities exceed assets (negative equity), market-implied default probability >20% and severe working-capital shortfall. Independently, the Ohlson accounting model puts its 1-year failure probability at 96% and the market-implied (Merton) default probability is 27.5%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.08× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of net-worth erosion; under the Companies Act 2013 it is a recognised sign of financial sickness.
Merton distance-to-default 0.60 σ → PD 28%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.53 (current assets cover 53% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
O-score 3.07 → model probability 96%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Short-term debt is 11.6× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- High insider/promoter ownership (72%) aligns management with survival.
📰 Recent news scan
⚖️ Indian legal pathway — the IBC, 2016
How insolvency starts
- A financial creditor (§7), an operational creditor after a demand notice (§§8–9) or the company itself (§10) can apply to the NCLT once a default of at least ₹1 crore occurs (§4).
- On admission a moratorium (§14) stops suits and recovery; the board is suspended and an insolvency professional runs the company.
- The Committee of Creditors approves a resolution plan with 66% of voting share (§30(4)) within an outer limit of 330 days (§12); otherwise liquidation (§33) under the §53 waterfall — equity ranks last. Defaulting promoters are generally barred from bidding (§29A).
Earlier warning stages
- RBI's Prudential Framework for Resolution of Stressed Assets (7 June 2019): lenders must review a borrower within 30 days of default and implement a resolution plan, or provide more.
- Listed companies must disclose loan defaults to exchanges under SEBI (LODR); a rating downgrade to “D” is a public signal.
- Auditors must report going-concern uncertainty (SA 570 / Ind AS 1).
Frequently asked questions
What do Electrotherm (India) Limited's financial-health indicators show?
As of 2026-10-09, Electrotherm (India) Limited's public financial data places it in the 'Weak' band with a distress score of 61/100, driven by liabilities exceed assets (negative equity), market-implied default probability >20% and severe working-capital shortfall. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Electrotherm (India) Limited's financial distress score?
61/100 ('Weak'). Ohlson O-score 3.07 (model 1-year failure probability 96%). Merton distance-to-default 0.6 σ (model default probability 27.5%).
What works in Electrotherm (India) Limited's favour?
Operating cash flow is positive over the latest 12 months. High insider/promoter ownership (72%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
Under the IBC the Committee of Creditors controls the resolution; the §53 waterfall pays secured creditors and workers first and equity last. In most resolution plans existing shareholders are wiped out or left with a token stake, and the company may be delisted.
Other Metals, Mining & Chemicals companies with distress indicators
- Andhra Cements Limited (ACL)Very weak 100/100
- Astron Paper & Board Mill Limited (ASTRON)Very weak 100/100
- Burnpur Cement Limited (BURNPUR)Very weak 100/100
- Shrenik Limited (SHRENIK)Very weak 100/100
- Thirumalai Chemicals Limited (TIRUMALCHM)Very weak 100/100
- Zenith Steel Pipes & Industries Limited (ZENITHSTL)Very weak 100/100
All Metals, Mining & Chemicals companies with distress indicators →
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.