This is my checklist:
Promoters politically connected
Receivables outstanding increasing continuously
Companies with part-time chairman, CEO etc
M&A transaction with group companies
Competing unlisted subsidiaries
High royalty payments to parent companies (applicable to MNC)
Resignation of directors, CFO, company secetary, auditors etc
Credit rating (ICRA, CRISIL, CARE)
Not paying FD interest
FCCB borrowings, dollar denoted debt
foreign acquisitions
resignation of auditors directors cfo etc
hedging policy
Showing major part of the earnings overseas - easier to book fake transactions in tax-free jurisdictions like the UAE, BVI, and Mauritius with tiny auditors than it is in India
Sectors which require lot of political patronage – iron ore mining, realty & construction, liquor, bus transport, logistics, stone crushing, sand mining,
As a percentage of bank defaulters Diamond and Jewellery businesses tops the list.
Maintain a list of offenders who have had issues in the past.