Industrial sickness in India – An empirical analysis

In addressing the core issue of the probability of a company becoming sick in the future and developing predictive models of financial health, this article first classifies Indian industries into two groups – good performing and bad performing – on the basis of ASI data. This classification is based on broadly accepted economic indicators which are translated into corresponding financial ratios. Balance sheet data of 100 companies, evenly drawn from the two groups, is then analysed and the future financial health of these companies is predicted on the basis of a logit model.