Published Online:January 2026
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP190126
DOI:10.71329/IUPJARAP/2026.25.1.406-424
Author Name:Biki Digar, Brajaballav Pal and S K Sajit
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:406-424
The paper investigates financial distress and its impact on firm performance in the Indian dairy industry, a sector that contributes nearly 5% to the national economy and supports millions of livelihoods. The primary objective is to identify financially distressed firms and assess how financial distress influences firm performance. Using data from six listed dairy companies over the period 2017-18 to 2021-22, the Altman Z-score model was employed to measure financial distress, alongside key financial ratios such as working capital to total assets, EBIT to total assets, retained earnings to total assets, and sales to total assets. Regression analysis using SPSS was conducted to examine the effect of financial distress on firm performance, with return on assets (ROA) as the dependent variable. The findings indicate that Amrit Corp. Ltd., Anik Industries Ltd., and Mahaan Foods Ltd. fall into the financially distressed category, while Vadilal Industries Ltd. lies in the gray zone. Hatsun Agro Product Ltd. and Heritage Foods Ltd. maintain relatively strong financial positions. The regression results reveal a significant positive relationship between Altman Z-scores and ROA (coefficient = 0.289), indicating that financial stability enhances firm performance. The study contributes to literature by linking distress diagnostics with performance outcomes, offering early warning indicators and practical insights for investors, managers, and policymakers navigating financial risk in the dairy sector.
India’s dairy industry, which contributes almost 5% to the GDP and sustains millions of livelihoods, has become increasingly financially exposed following the Covid-19 pandemic (Das et al., 2021).