Article: Constructing a corporate bankruptcy prediction model for the Indian steel industry Journal: International Journal of Public Sector Performance Management (IJPSPM) 2021 Vol.8 No.3 pp.273 - 288 Abstract: The steel industry is undergoing its hardest time in India. The reports of IBBI 2017-18 revealed that out of 525 cases were admitted under Insolvency and Bankruptcy Code (IBC), 45 cases were from the steel sector with the default worth of Rs. 57,001 crores and 39 corporates are in the Corporate Insolvency Resolution Process (CIRP). The steel industry in India is at present experiencing a consolidation phase and debt-ridden bankrupt companies now become attractive buys. Identifying the reasons for bankruptcy is the foremost step to revive the Indian steel industry. In this paper, the monetary condition of the Indian steel industry is analysed by taking 15 companies as a sample. Financial data from 2008 to 2017 is taken for this study. Traditional Altman's Z score and logistics regression are applied to derive the financial distress model for the steel industry. Factor analysis is applied to 44 ratios and 22 ratios were identified as relevant for the study. This study found that the financially indebted steel companies which made a substantial investment during the last three years with soaring profit and high financial cost lead to bankruptcy within a short period of time. Inderscience Publishers - linking academia, business and industry through research

Title: Constructing a corporate bankruptcy prediction model for the Indian steel industry

Authors: Selvarani Mariappan; Jebanandhini Masilamani; S. Sakthivel Rani

Addresses: Kalasalingam Business School, Kalasalingam Academy of Research and Education (Deemed to be University), Krishnan Koil, 626190, Tamil Nadu, India ' Neeyamo Enterprise Solutions Pvt. Ltd., Madurai, Tamil Nadu, India ' Vyasa Arts and Science Women's College, Vasudevanallur, Tamil Nadu, India

Abstract: The steel industry is undergoing its hardest time in India. The reports of IBBI 2017-18 revealed that out of 525 cases were admitted under Insolvency and Bankruptcy Code (IBC), 45 cases were from the steel sector with the default worth of Rs. 57,001 crores and 39 corporates are in the Corporate Insolvency Resolution Process (CIRP). The steel industry in India is at present experiencing a consolidation phase and debt-ridden bankrupt companies now become attractive buys. Identifying the reasons for bankruptcy is the foremost step to revive the Indian steel industry. In this paper, the monetary condition of the Indian steel industry is analysed by taking 15 companies as a sample. Financial data from 2008 to 2017 is taken for this study. Traditional Altman's Z score and logistics regression are applied to derive the financial distress model for the steel industry. Factor analysis is applied to 44 ratios and 22 ratios were identified as relevant for the study. This study found that the financially indebted steel companies which made a substantial investment during the last three years with soaring profit and high financial cost lead to bankruptcy within a short period of time.

Keywords: bankruptcy; steel industry; Altman score; logistics regression; financial distress prediction model.

DOI: 10.1504/IJPSPM.2021.118699

International Journal of Public Sector Performance Management, 2021 Vol.8 No.3, pp.273 - 288

Received: 19 Jul 2019
Accepted: 16 Jan 2020
Published online: 03 Nov 2021 *

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Title: Constructing a corporate bankruptcy prediction model for the Indian steel industry

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