S.A.L. Steel Limited — financial distress indicators
Financial-health summary
S.A.L. Steel Limited's reported numbers place it in the 'Very weak' financial-health band (distress score 90/100). The main indicators are operating profit does not cover interest, cash runway under 12 months and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 89% and the market-implied (Merton) default probability is 0.0%. In its favour: strong current ratio (2.31).
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 0.19×.
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 ~0 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.
Revenue changed -62% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Total debt is 11.3× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
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 2.08 → model probability 89%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Share count up +70% in a year.
Survival financing: repeated equity raises at depressed prices.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Strong current ratio (2.31).
- High insider/promoter ownership (77%) aligns management with survival.
📰 Recent news scan
- SALSTEEL Share Price Today - SAL Steel on NSE/BSE - scanx.tradeGoogle News · 2026-10-08
- SAL Steel SALSTEEL Reg 74(5) Certificate Q2 FY27 - Kalkine IndiaGoogle News · 2026-10-08
- SAL Steel Lower Circuit Streak: Day 2 Price and Data - UnivestGoogle News · 2026-10-06
- SAL Steel Ltd. Lower Circuit Today: Price, Data and Peers - UnivestGoogle News · 2026-10-05
- S.A.L. Steel Limited (SALSTEEL.NS) Climbs 4.35% to ₹97.08, Approaches Key Resistance at ₹101.93 - Defined Outcome ETF - siam.inGoogle News · 2026-09-29
- S.A.L. Steel Limited Approvers Regularization of Monika Goyal as Non-Executive Independent Director - www.marketscreener.comGoogle News · 2026-09-26
⚖️ 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 S.A.L. Steel Limited's financial-health indicators show?
As of 2026-10-09, S.A.L. Steel Limited's public financial data places it in the 'Very weak' band with a distress score of 90/100, driven by operating profit does not cover interest, cash runway under 12 months 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 S.A.L. Steel Limited's financial distress score?
90/100 ('Very weak'). Ohlson O-score 2.08 (model 1-year failure probability 89%). Merton distance-to-default 6.33 σ (model default probability 0.0%).
What works in S.A.L. Steel Limited's favour?
Strong current ratio (2.31). High insider/promoter ownership (77%) 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.