IL&FS Engineering and Construction Company Limited — financial distress indicators
Financial-health summary
IL&FS Engineering and Construction Company Limited's reported numbers place it in the 'Very weak' financial-health band (distress score 81/100). The main indicators are liabilities exceed assets (negative equity), severe working-capital shortfall and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 2.2%. In its favour: comfortable interest coverage (11.6×).
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 2.96× 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.
Current ratio is 0.14 (current assets cover 14% 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.
Revenue changed -46% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Total debt is 341.7× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
O-score 16.85 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Short-term debt is 11.9× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Operating cash flow negative in 3 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Comfortable interest coverage (11.6×).
- High insider/promoter ownership (81%) aligns management with survival.
📰 Recent news scan
- IL&FS Engineering and Construction Company Limited (IL&FSENGG.NS) Stock Forum & Discussion - Yahoo! Finance CanadaGoogle News · 2026-10-08
- IL&FS Engineering and Construction Company Ltd. Lower Circuit: Price and Key Data - UnivestGoogle News · 2026-09-29
- IL&FSENGG Share Price Today - IL&FS Engineering and Construction Company Ltd. Stock Price Live NSE/BSE - UnivestGoogle News · 2026-09-21
- IL&FS ENGINEERING AND CONSTRUC Share Price - UpstoxGoogle News · 2026-05-05
⚖️ 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 IL&FS Engineering and Construction Company Limited's financial-health indicators show?
As of 2026-10-09, IL&FS Engineering and Construction Company Limited's public financial data places it in the 'Very weak' band with a distress score of 81/100, driven by liabilities exceed assets (negative equity), severe working-capital shortfall and revenue collapse. 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 IL&FS Engineering and Construction Company Limited's financial distress score?
81/100 ('Very weak'). Ohlson O-score 16.85 (model 1-year failure probability 100%). Merton distance-to-default 2.01 σ (model default probability 2.2%).
What works in IL&FS Engineering and Construction Company Limited's favour?
Comfortable interest coverage (11.6×). High insider/promoter ownership (81%) 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.
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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.