Vishwaraj Sugar Industries Limited — financial distress indicators
Financial-health summary
Vishwaraj Sugar Industries 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, market-implied default probability >20% and material debt with no ebitda. Independently, the Ohlson accounting model puts its 1-year failure probability at 90% and the market-implied (Merton) default probability is 64.3%. 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 -0.94×.
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 -0.37 σ → PD 64%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Debt is 51% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
O-score 2.20 → model probability 90%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.76.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Revenue changed -17% year over year.
Falling sales reduce cash available for debt service.
Short-term debt is 41.7× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Operating margin fell from 9% to -7% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- High insider/promoter ownership (30%) aligns management with survival.
📰 Recent news scan
- Vishwaraj Sugar schedules 31st AGM for September 28, 2026 - scanx.tradeGoogle News · 2026-09-28
- VISHWARAJ Share Price rise: price action and market cap - UnivestGoogle News · 2026-08-24
- Vishwaraj Sugar Share Price Rises Nearly 20% - Kalkine IndiaGoogle News · 2026-08-24
- Vishwaraj Sugar Q1 FY27 Losses Widen to Rs 25.84 Cr on Lower Revenue - WhalesbookGoogle News · 2026-08-14
- Vishwaraj Sugar Standalone March 2026 Net Sales at Rs 111.03 crore, down 33.39% Y-o-Y - Moneycontrol.comGoogle News · 2026-06-04
⚖️ 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 Vishwaraj Sugar Industries Limited's financial-health indicators show?
As of 2026-10-09, Vishwaraj Sugar Industries 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, market-implied default probability >20% and material debt with no ebitda. 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 Vishwaraj Sugar Industries Limited's financial distress score?
90/100 ('Very weak'). Ohlson O-score 2.2 (model 1-year failure probability 90%). Merton distance-to-default -0.37 σ (model default probability 64.3%).
What works in Vishwaraj Sugar Industries Limited's favour?
Operating cash flow is positive over the latest 12 months. High insider/promoter ownership (30%) 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
- McLeod Russel India Limited (MCLEODRUSS)Very weak 88/100
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.