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    Industrial Sickness

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    Aditya
    1) Industrial sickness refers to industrial units that have been unprofitable and unable to provide returns on investment for at least two years. 2) Causes of industrial sickness include both external factors like government policy and internal factors like outdated machinery and incompetent management. 3) Consequences of industrial sickness include industrial unrest, unemployment, losses for banks and the economy. 4) Remedial measures taken by banks and governments include providing additional funding, reducing interest rates, and setting up committees for coordination and rehabilitation of sick industries.

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    Industrial Sickness

    Uploaded by

    Aditya
    4K views10 pages
    1) Industrial sickness refers to industrial units that have been unprofitable and unable to provide returns on investment for at least two years. 2) Causes of industrial sickness include both external factors like government policy and internal factors like outdated machinery and incompetent management. 3) Consequences of industrial sickness include industrial unrest, unemployment, losses for banks and the economy. 4) Remedial measures taken by banks and governments include providing additional funding, reducing interest rates, and setting up committees for coordination and rehabilitation of sick industries.

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    1) Industrial sickness refers to industrial units that have been unprofitable and unable to provide returns on investment for at least two years. 2) Causes of industrial sickness include both external factors like government policy and internal factors like outdated machinery and incompetent management. 3) Consequences of industrial sickness include industrial unrest, unemployment, losses for banks and the economy. 4) Remedial measures taken by banks and governments include providing additional funding, reducing interest rates, and setting up committees for coordination and rehabilitation of sick industries.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    4K views10 pages

    Industrial Sickness

    Uploaded by

    Aditya
    1) Industrial sickness refers to industrial units that have been unprofitable and unable to provide returns on investment for at least two years. 2) Causes of industrial sickness include both external factors like government policy and internal factors like outdated machinery and incompetent management. 3) Consequences of industrial sickness include industrial unrest, unemployment, losses for banks and the economy. 4) Remedial measures taken by banks and governments include providing additional funding, reducing interest rates, and setting up committees for coordination and rehabilitation of sick industries.

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    Download as PPT, PDF, TXT or read online from Scribd
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    Industrial Sickness

    Presented by:
    Nidhi Gupta
    Meaning of industrial sickness
    • In simple term a sick unit may mean a unit which
    is not healthy in terms of yielding profits and
    fetching return on investment

    • As defined by SICA, according to act, as industrial


    company was defined as sick if:-

    1) it was registered for at least seven years;


    2) it incurred cash losses for the current and the
    preceding
    year and
    3) it had eroded 50% more of its peak net worth
    during any of preceding five financial years.
    Causes of Industrial Sickness
    EXTERNAL INTERNAL

    1. GOVT. POLICY 1.INEXPERIENCED MANAGERIAL


    SKILLS
    2. ERRATIC SUPPLY OF INPUTS 2.PAUCITY OF FUNDS

    3.LOCATIONAL PROBLEMS 3.ENTREPRENEURIAL INCOMPETENC

    4.TECNOLOGICAL FACTORS 4.WEAK MANAGEMENT

    5. POWER CUTS 5.OUTDATED/DEFECTIVE PLANT AND


    MACHINERY
    Consequences Of Industrial
    Sickness
    1. Industrial unrest
    2. Unemployment
    3. Losses of banks and financial
    institution
    4. Loss to economy and government
    Remedial Measures
    • Steps taken by banks

    1)Grant of additional working capital


    facilities to overcome the shortage of
    working capital faced by such units

    2)Recovery of interest at reduced rates

    3)Suitable moratorium on payment of


    interest
    Conti…
    • A no. of steps are also undertaken on the organization
    form like;
    1. Setting up a sick industrial undertaking cell in
    Reserve bank of India to function as a clearing house
    for information relating to sick units

    2. Setting up of state level inter institutional committee


    at all the regional officers of the department of
    banking operations and developments of RBI for
    ensuring better coordination between the banks
    Conti…
    3. Constitutions of a standing co-ordination committee
    by RBI to consideration the issues relating to co-
    ordination between commercial banks and term
    lending institutions on an ongoing basis; and

    4. Setting up of special cell within the rehabilitation


    finance division of industrial development bank of
    India for attending to references from banks in respect
    of their sick and problem areas.
    Other Measures To Overcome
    Industrial Sickness
    • IRDA(The industries development and regulation act, 1951,
    empowers the central govt. to take over an undertaking or its
    management in certain cases
    .
    • Rehabilitation through state govt. and financial institutions who
    would provide both financial and managerial support with
    suitable restructuring of management wherever necessary.

    • Proposal ,if any, for the merger of sick units with a healthy unit
    in the private sector will be examined by the specified authority
    under the income tax act,1961 with reference to the guidelines
    on the subject.
    Conti…
    • RBI took the initiative in the matter of identifying sick industrial units,
    and coordinating the lending operations of the term lending institutions
    and commercial banks
    • Both central and state govt. have taken a no. of steps in past for
    development of small and medium enterprises by establishing
    development institutions to support entrepreneurs just like

    Small Industrial Development Organizations(SIDO)


    Small Industrial Service Institutes(SISI)
    Small Industrial Development Corporation (SIDCO)
    Entrepreneurial Guidance Issue (EGB)
    National Productivity Council (NPC)
    Venture Capital Funds(VCF)
    • Following measures may be taken to turnaround a sick unit:
    1. Formulation and implementation of a new strategy
    2. Identifying the problem and activating corrective measures to help in revival
    of sick units
    3. Participative style of decision-making environment
    4. Effective administrative and budgetary control
    5. Personnel training
    6. Performance evaluation
    7. Commitment of managers and employees towards revival plans
    8. Effective leadership
    Conclusion:
    To conclude ,the sick units may be attempted to be turned around through
    efficient management ,change of top level executive, executing a turnaround
    strategy.

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