Shree Renuka Sugars Limited — financial distress indicators

Total liabilities are 1.36× 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.

Interest coverage (EBIT / interest) is -0.08×.

When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.

At the current free-cash-flow burn, cash covers ~3 months.

Going-concern standard: management must assess ability to continue for 12 months (Ind AS 1 ¶25–26). Runway below that horizon forces dilution, asset sales or default.

Current ratio is 0.48 (current assets cover 48% 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.

Net income negative in 3 of 3 fiscal years.

Persistent losses erode equity and the capacity to absorb shocks.

Total debt is 46.1× EBITDA.

Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.

O-score 4.76 → model probability 99%.

Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.

Merton distance-to-default 1.19 σ → PD 11.7%.

Investment-grade issuers typically have 1-year PD well below 1%.

Short-term debt is 63.1× cash on hand.

Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.