THIS IS A SERIOUS ISSUE WHICH HAS TO BE TAKEN CARE OFF

1. PRESENTATION ON…
Industrial Sickness in India
prithvi rani
2nd
m.com.

2. Definition of Industrial Sickness-
•Sick Industrial Companies 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

3. Definition For Small Scale Sick Units
• Incurred losses in previous and current year
• Due to cumulative losses 50% or more of its peak net
worth during past 5 years should be eroded.
• They must have continuously defaulted 4 consecutive
installment of interest or 2 half yearly installment of
principal.
• Large small scale unit – all 3 criteria should be fulfilled
• small small scale unit - any 1 of the criteria should be
fulfilled

4. Definition According to companies
(2nd
Amendment) Act, 2002
“Sick Industrial Company” means an unit which has
• accumulated losses in any financial year which are
equal to 50% or more of its average net worth
during 4 years immediately preceding such
financial years ; or
• Failed to repay its debts within any 3 consecutive
quarters on demand made in writing for its
repayment by a creditor or creditors of such
company.

5. Magnitude of industrial sickness in India
• Industrial sickness is growing at an annual rate of
about 28% and 13% respectively in terms of No. of
units and out standing number of bank credit.
• It is estimated that as of today there are more than
2 lakhs sick units
• with an outstanding bank credit of over
Rs7000crore
• nearly 29000 units are added to sick list every year.

6. Causes of Industrial Sickness-
External Causes
1)Govt. policy
2)Erratic Supply of Inputs
3)Demand & credit restraints
4)Technological Factors
5)Power Cuts
Internal Causes
1)Out dated Technology
2) Financial Problem
3) Management problems
4) Labour Problem
5) Marketing & Sickness

7. consequences of industrial sickness
• set-back to employment
•Fear to industrial unrest
•Wastage of resources
•Adverse impact on related units
•Adverse effect on investors &entrepreneurs
•Losses to banks and financial institutions
•Loss of revenue to government

8. Remedial Measures
•Steps taken by commercial banks:
 provide working capital assistance
Recovery of interest at reduced rates
Suitable moratorium on payment of interest
Freezing a portion of outstanding in the accounts
No. of organizations or agencies were set up:
- sick industrial undertaking cell
- state level inter-institutional committees
- standing coordination committee
- special cell – rehabilitation finance division of IDBI

9. • POLICY FRAME WORK OF THE GOVT. :
REMEDIAL MEASURES
Ministry were given more responsibility
They were responsible in detection of sickness at the early
stage
Policy frame work was framed in 1981 & reviewed in 1982
•Concessions by the govt. :
No. of concessions was given by the govt.
Margin money scheme was introduced
Excise loan were provided

10. REMEDIAL MEASURES
• THE INDUSTRIAL Investment BANK OF INDIA:
-Establishment of Reconstruction Corporation of India
- to provide all kinds of assistance
- IRCI converted to IRBI (industrial reconstruction bank
of India)
• BOARD FOR INDUSTRIAL & FINANCIAL
RECONSTRUCTION
-Rehabilitation package
-Operating agencies will designed the scheme

11. 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.