Rajshree Sugars & Chemicals Limited — financial distress indicators
Financial-health summary
Rajshree Sugars & Chemicals Limited's reported numbers place it in the 'Weak' financial-health band (distress score 63/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 87% and the market-implied (Merton) default probability is 50.8%. In its favour: high insider/promoter ownership (52%) aligns management with survival.
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 0.36×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -0.02 σ → PD 51%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Total debt is 10.7× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
O-score 1.94 → model probability 87%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Revenue changed -15% year over year.
Falling sales reduce cash available for debt service.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- High insider/promoter ownership (52%) aligns management with survival.
📰 Recent news scan
- Rajshree Sugars & Chemicals (NSE:RAJSREESUG): What Is the Special Window for Physical Share Re-Lodgement? - Kalkine IndiaGoogle News · 2026-09-18
- Rajshree Sugars & Chemicals (RAJSREESUG.NS) Eases to ₹33.2 as Focus Shifts to ₹31.54 Support Zone - Key Reversal Day - https://www.siam.in/Google News · 2026-09-13
- Rajshree (RAJSREESUG.NS) Technicals: Loses 3.39% to Close at ₹36.80 on the Day; Current Setup - https://www.siam.in/Google News · 2026-08-26
- Rajshree Sugars & Chemicals Ltd. (RAJSREESUG) Share Price Rises 8.99% Today - UnivestGoogle News · 2026-08-20
⚖️ 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 Rajshree Sugars & Chemicals Limited's financial-health indicators show?
As of 2026-10-09, Rajshree Sugars & Chemicals Limited's public financial data places it in the 'Weak' band with a distress score of 63/100, driven by operating profit does not cover interest, market-implied default probability >20% and very high leverage. 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 Rajshree Sugars & Chemicals Limited's financial distress score?
63/100 ('Weak'). Ohlson O-score 1.94 (model 1-year failure probability 87%). Merton distance-to-default -0.02 σ (model default probability 50.8%).
What works in Rajshree Sugars & Chemicals Limited's favour?
High insider/promoter ownership (52%) 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 Consumer Staples companies with distress indicators
- MT Educare Limited (MTEDUCARE)Very weak 100/100
- Shree Rama Newsprint Limited (RAMANEWS)Very weak 100/100
- Shree Renuka Sugars Limited (RENUKA)Very weak 100/100
- Simbhaoli Sugars Limited (SIMBHALS)Very weak 100/100
- Shanti Overseas (India) Limited (SHANTI)Very weak 94/100
- Vishwaraj Sugar Industries Limited (VISHWARAJ)Very weak 90/100
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.