The Sick Unit & Case Study NICCO BATTERIES

PRESENTED BY
ABHINAV SRIVASTAVA
2007101001
P.G.D.M
B.B.D.N.I.T.M
SICK UNIT
According to Sick Industrial Companies Act, 1985
ØIt was registered for at least 7 year .

ØIt incurred cash from losses for the current and
the preceding year.
According to RBI
ØA sick unit is one which incurs cash losses for
one year and in the judgment of the bank it is
likely to continue to incur cash losses for the
current year as well as for the year .
CAUSES OF
SICKNESS
 Internal causes
 External causes
Internal causes
 Planning
 Implementation
 Production
 Labour management
 Marketing management
 Financial management
 Administrative management
External causes
 Market saturation
 Extraneous factors
 Government price controls
 Non-availability of adequate finance
 Non availability of irregular supply of critical
raw materials or their inputs.
Objective Of SICA
 The SICA had been deal in the public interest to deal with the
problems of industrial sickness with regard to the crucial sectors
where public money is locked up.
 It contains special provisions for timely detection of sick and

potentially sick industrial companies, speedy determination and
enforcement of preventive, remedial and other measures with
respect to such companies.
Govt. Concessions and
Incentives for
 The Government theprovided
of India Sick Sector
various
concessions and incentives to the Sick sector
for their sustained growth
◦ Assisting new Sick units on soft terms by lending

institutions,
◦ Reservation of Certain Industries for the SSI sector,
◦ Incentives related to land/shed financing, machinery
and raw-materials,
◦ Provision of facilities within the Industrial Estates, and
◦ Excise duty exemption and price preference
.
CASE STUDY
ON
NICCO BATTERIES LTD
ABOUT NICCO Corporation
Ltd
 Nicco Corporation Limited (NCL) is the flagship
company of the Nicco Group.
For nearly over six decades, NCL has been one of the
pioneers in cable manufacturing industry. It produces
a wide range of power, control, instrumentation and
telecom cables and provides a spectrum of engineering
services and executes turnkey projects. Established in
1942, the US$ 67 million NiccoGroup is a widely
respected Indian industrial powerhouse.
NICCO’s PRODUCT
 Aircraft & Air Field Cables
 Fire Retardant Low Smoke Cables
(FRLS)
 Automobile Cables
 Oil Rig Cables
 Copper Conductors
 Cables For Cranes
 Elevator Cables (lift Cables)
 Furnace & High Temperature Cables
 Marine Cables
 Power Cables
NICCO BATTARIES
 NICCO BATTARIES LTD.
LTD amalgamated with
NICCO Corporation LTD (NCL) with effect
from 1 April 1994 as per the amalgamation
scheme
 In the amalgamation scheme the entire

undertaking of NBL shall be transferred to
NCL and the transferee company, that is, the
NCl shall issue and allot the share holder of
the NBL share in the transferor company in
the proportion of 2 share of the face value of
Rs10 each of the transferee company for 13
equity share of the face value Rs.10 each
Contd…
…..
 The rehabilitation –Cum-amalgamation
scheme envisages settlement of dues of the
bank and the institution, payment to
pressing creditors besides capital
expenditure of Rs 163 lakhs.
A Cost of the scheme:
( Rs in lakhs)
Ø Capital expenditure 163.00
Ø Settlement of dues of the banks 619.00
Ø Payment of unsecured loans from 20.00
Ø Payment of pressing creditors 18.00
Ø Margin money for working capital 57.00
TOTAL 877.00
B Means of finance
(Rs in lakhs)
•Promoter’s contribution out of internal accruals of NCL 477.00
•Benefit under section 72 A of IT Act,1961 400.00
TOTAL 877.00
 The scheme for amalgamation of NBL ,
with NCL shall be under section 72A of
the IT Act,1961 and shall be effective
from 1 April ,1994 .
 The carried forward accumulated loss of

NBL is estimated at Rs 1896 lakhs as on
31 March 1994.
 The estimated tax set –off at the current

rates of IT Act , 1961 is restricted to Rs .
400 lakhs.
Benefits in the merger of sick
unit to the NCL
 Synergistic operating economies
 Diversification
 Taxation advantages
 Growth advantage
 Production capacity reduction
 Managerial motivate
 Acquisition of specific asset
Risks in the merger of sick
unit
to the in
 Dilution of competition NCL
the market
 Actual or a potential competitor, may get
eliminated.
 Efficient and growing medium or small-sized
undertaking.
 May exercise a market power to the
detriment of its customers and suppliers.
CONCLUSION
 The rehabilitation of sick unit is an important

aspect for the economic growth of the
country as well as the growth of the country
in the above case of NCL & NBL we can say
that the share exchange ratio is 2 : 13 and
the cost of scheme is Rs 877 lakhs . Which is
large amount for merger though this we can
conclude that the merger of NBL was the
requirement of time and now it contribute
major part of share of NCL.
THANKYOU

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PRESENTED BY

ØIt was registered for at least 7 year .

 It contains special provisions for timely detection of sick and

◦ Assisting new Sick units on soft terms by lending

 In the amalgamation scheme the entire

 The carried forward accumulated loss of

 The estimated tax set –off at the current

 The rehabilitation of sick unit is an important

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