Credit risk modeling is imperative for keeping firms safe from debt trap and bankruptcy. The present study attempted to predict the default occurrence of steel sector firms using MDA, Logit function and structural model. Study developed 2 models using MDA and Logit model, further study also evaluated the Altman original model and calibrated model by applying it on sample data of selected steel sector. The developed models have also been validated on the out-of-sample data. The study obtained satisfactory statistical results pertaining to the developed models. The classification results witnessed the following accuracies for MDA, Calibrated, Altman, Logit and Structural model such as 89%, 74%, 11%, 91 and 18%. The validation accuracies obtained by mda, calibrated and logit models are 27%, 59% and 91%.

Altman, E. I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy (pp. 589–609).

Bandyopadhyay, A. (2006). Predicting probability of default of Indian corporate bonds: logistic and Z-score model approaches. Journal of Risk Finance, 7(3), 255–272. https://doi.org/10.1108/15265940610664942

Charitou, A., & Trigeorgis, L. (2005). Explaining Bankruptcy Using Option Theory. In SSRN Electronic Journal. https://doi.org/10.2139/ssrn.675704

Duffie, D., Saita, L., & Wang, K. (2007). Multi-period corporate default prediction with stochastic covariates. Journal of Financial Economics, 83(3), 635–665. https://doi.org/10.1016/j.jfineco.2005.10.011

Falkenstein, E., Boral, A., & Carty, L. V. (2000). RiskCalc TM For Private Companies: Moody’s Default Model Contact Phone RISKCALC TM FOR PRIVATE COMPANIES: MOODY’S DEFAULT MODEL Rating Methodology. Moody’s Investors Service, May, 1–88. https://riskcalc.moodysrms.com/us/research/crm/56402.pdf

Härdle, W. K., & Prastyo, D. D. (2013). www.econstor.eu.

Hassan, E. ul, Zainuddin, Z., & Nordin, S. (2017). A Review of Financial Distress Prediction Models: Logistic Regression and Multivariate Discriminant Analysis. Indian-Pacific Journal of Accounting and Finance, 1(3), 13–23. https://doi.org/10.52962/ipjaf.2017.1.3.15

Kealhofer, S. (2003). Quantifying credit risk I: Default prediction. Financial Analysts Journal, 59(1), 30–44. https://doi.org/10.2469/faj.v59.n1.2501

Leland, H. E., Anderson, F. R., & Hennessy, C. (2004). Predictions of Default Probabilities in Structural Models of Debt The author thanks Dirk Hackbarth for his comments and invaluable assistance with the. 1–31.

Liang, Q. (2003). CORPORATE FINANCIAL DISTRESS DIAGNOSIS IN CHINA?: EMPIRICAL ANALYSIS USING CREDIT SCORING MODELS Author ( s ): Qi Liang Source?: Hitotsubashi Journal of Commerce and Management , Vol . 38 , No . 1 ( 38 ) ( October Stable URL?: http://www.jstor.org/stable/. Hitotsubashi Journal of Commerce and Management, 38(1), 13–28.

Marvadi, D. C. R. (2018). Assessing Corporate Financial Distress in Automobile Industry of India: An Application of Altman’s Model. Research Journal of Finance and Accounting, 2(3), 155–168. http://iiste.org/Journals/index.php/RJFA/article/view/335

Mvula Chijoriga, M. (2011). Application of multiple discriminant analysis (MDA) as a credit scoring and risk assessment model. International Journal of Emerging Markets, 6(2), 132–147. https://doi.org/10.1108/17468801111119498

Pal, S. (2013). A Study on Financial Distress in Indian Steel Industry under Globalization. IOSR Journal of Business and Management, 14(2), 49–53. https://doi.org/10.9790/487x-1424953

Singla, R., & Singh, G. (2017). Assessing the Probability of Failure by Using Altman’s Model and Exploring its Relationship with Company Size: An Evidence from Indian. Journal of Technology Management for Growing Economies, 8(2), 167–180. https://doi.org/10.15415/jtmge.2017.82003

Smaranda, C. (2014). Scoring Functions and Bankruptcy Prediction Models – Case Study for Romanian Companies. Procedia Economics and Finance, 10(14), 217–226. https://doi.org/10.1016/s2212-5671(14)00296-2

Tanthanongsakkun, S., Pitt, D., & Treepongkaruna, S. (2010). A Comparison of Corporate Bankruptcy Models in Australia: The Merton vs. Accounting-based Models. Asia-Pacific Journal of Risk and Insurance, 3(2), 1–33. https://doi.org/10.2202/2153-3792.1042

Tudela, M., & Young, G. (2005). A MERTON-MODEL APPROACH TO ASSESSING. 8(6), 737–761.

Vadyak, A. (2017). “ Altman ’ s Z – Score Analysis of Chhattisgarh ’ s Steel Industry ”. International Journal of Research in Management, Economics and Commerce, 07(2), 10–18.

Wang, W. T., & Zhou, X. (2011). Could traditional financial indicators predict the default of small and medium-sized enterprises? -Evidence from Chinese Small and Medium-sized enterprises. Economics and Finance Research, 4, 72–76.

Zeitun, R., Tian, G., & Keen, S. (2007). Default Probability for the Jordanian Companies?: A Test of Cash Flow Theory. International Research Journal of Finance and Economics, 8(8), 147–161. http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1365&context=commpapers