This presentation talks about how industrial sickness could be prevented and what remedies could be adopted to cure industrial sickness.

1. PRESENTED BY-
ASHUTOSH CHAUDHARY
PIYUSH CHANDRA
SEMESTER III (MBA – M52)
MONIRBA, UNIVERSITY OF ALLAHABAD
INDUSTRIAL SICKNESS
PREVENTION AND REMEDIES

2. CONTENT
OVERVIEW
PREVENTION
REMEDIES
CONCLUSION

3. OVERVIEW
 According to Industrial Act, 1985-
A unit is defined as sick industrial company where:
 A company is registered for not less than seven years
 It incurred cash losses for the current and preceding
financial year
 Its net worth was eroded
 Even 50% or more of the net worth of the past 5
financial years is eroded because of accumulated losses

4. PREVENTION
 Proper project planning
• Location of project
•Availability of raw material
•Availability of labor & technical staff
•Availability of finance at reasonable rates.
 Proper Market Analysis
•Demand forecasting
•Study of opportunities & threats of environment
• Consumer tastes & preferences
•Availability of reliable distributors

5. PREVENTION
 Prevention of Sickness by Owners and
Management
As prevention of sickness is concerned, the essentials are
obvious: competent management of various functions
like general management, marketing, operations,
personnel, and finance; and a good performance reporting
System designed to provide top management/owners
timely information on critical parameters such as
sales, production, profits, cost variance, profit variance,
etc.

6. SUGGESTED REMEDIES
 The effective measures which may be taken for revival of sick
units are technical help, professional counseling and improved
management. Also, the role of professionals and experienced
management becomes more important in times of sickness.
Steps taken by banks.
 giving adequate working capital when there is a shortage.
 recovery of interest reduced rate.
 defining the special cell in the RBI.
 arrange the special committee of state level in the local
branch for link between financial institution and
government agency.

7. SUGGESTED REMEDIES
 The Sick Industrial Companies (Special Provisions) Bill, 1997,
passed by Lok Sabha , introduced encouraging changes. It
suggested that a time bound procedure was to be adopted within
which the scheme has to be sanctioned and BIFR would play the
role of a mediator and not a court.
The industrial investment bank of India
- set up the IRCI (industrial reconstruction corporation of India.)
- convert IRCI into IRBI in March 20 ,1985
- convert IRBI into IIBI in march 27, 1997

8. SUGGESTED REMEDIES
 Technical obsolescence and financial mismanagement are
also important factors that lead to industrial sickness. As per
the new provisions, an opportunity will be given to get an
unanimous consent to a scheme from all concerned, failing
which secured creditors will attempt to form a scheme and,
if all this fails, the undertaking would be sold off. Only if it
is not possible to do that, the BIFR(Board of Industrial And
Finance Reconstruction) may order winding up of the
company.

9. CONCLUSION
 Industrial sickness is a significant problem in many market
economies, more so even in the case of Indian economy.
 The sickness in small scale enterprises is very much
looming and large as compared to medium and big
industries.
 The cause for industrial sickness is lack of demand and
shortage of working capital were responsible for the
magnitude of sickness in both registered MSME sector and
unregistered MSME sector.
 Further, analysis also reveals that the tendency of sickness is
at declining end over the years, however, the amount
involved or locked up in the units is on the increasing end.