Ganga Forging Limited — financial distress indicators
Financial-health summary
Ganga Forging Limited's reported numbers place it in the 'Very weak' financial-health band (distress score 72/100). The main indicators are operating profit does not cover interest, material debt with no ebitda and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 91% and the market-implied (Merton) default probability is 7.4%. 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.
Interest coverage (EBIT / interest) is -3.54×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Debt is 33% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
Operating cash flow negative in 2 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 2.32 → model probability 91%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Revenue changed -18% year over year.
Falling sales reduce cash available for debt service.
Merton distance-to-default 1.44 σ → PD 7.4%.
Investment-grade issuers typically have 1-year PD well below 1%.
Price is -61% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating margin fell from 4% to -9% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
📰 Recent news scan
- Ganga Forging (GANGAFORGE.NS) Slips to ₹1.58, Testing Key Support Near ₹1.50 - Parabolic SAR - https://www.siam.in/Google News · 2026-09-13
- Price Band Hitters, August 31, 2026 at 11:00 AM IST - HDFC SkyGoogle News · 2026-08-31
- Price Band Hitters, August 31, 2026 at 3:30 PM IST - HDFC SkyGoogle News · 2026-08-31
- Ganga Forging Share Price Target 2026: Rs 2.77 Analyst Forecast - UnivestGoogle News · 2026-06-11
⚖️ 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 Ganga Forging Limited's financial-health indicators show?
As of 2026-10-09, Ganga Forging Limited's public financial data places it in the 'Very weak' band with a distress score of 72/100, driven by operating profit does not cover interest, material debt with no ebitda and operations consume cash. 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 Ganga Forging Limited's financial distress score?
72/100 ('Very weak'). Ohlson O-score 2.32 (model 1-year failure probability 91%). Merton distance-to-default 1.44 σ (model default probability 7.4%).
What works in Ganga Forging Limited's favour?
Operating cash flow is positive over the latest 12 months.
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.
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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.