Bankruptcy Prediction In Public Sector Enterprises: A Financial Distress Analysis Of Vizag Steel Plant Using Altman Z-Score Model

Abstract

This study aims to evaluate the financial soundness of Visakhapatnam Steel Plant (Vizag Steel), a prominent public sector steel manufacturing company in India, using the Altman Z-Score model. The Altman Z-Score is a well-established tool for predicting the likelihood of financial distress and assessing the overall financial health of a company. By applying this model, the study examines key financial indicators such as liquidity, profitability, leverage, and operational efficiency over recent fiscal years. The Z-Score, which incorporates financial ratios like working capital to total assets, retained earnings to total assets, EBIT to total assets, market value of equity to total liabilities, and sales to total assets, provides a comprehensive measure of Vizag Steel’s ability to meet its short-term and long-term obligations. The results of this analysis offer critical insights into the company's financial stability, helping stakeholders including investors, creditors, and management—make informed decisions. Additionally, the study explores the impact of industry-specific challenges, government policies, and macroeconomic factors on the company's performance. The paper contributes to the broader understanding of financial risk assessment in public sector enterprises and highlights the practical application of the Z-Score model for assessing corporate financial health in the Indian manufacturing sector.