SICKNESS IN INDIAN INDUSTRIES.

INTRODUCTION

• Industrial sickness has been growing from the last decade.

• Many traditional and modern industries are now being effected by industrial sickness.

• Persisting problems are been faced by the industrial sector of the country.

DEFINITION

“ A company where the accumulated losses at the end of any financial year results in erosion of 50% or more of its peak net worth during the immediately

preceding five financial years ”.

WARNING SIGNALS OF INDUSTRIAL SICKNESS

• SHORTAGE OF LIQUID FUNDS

• GROWING OF EXCESSIVE INVENTORIES.

• UNDER – UTILISATION OF CAPACITY.

• RETURN ON INVESTMENT

• MAINTENANCE OF CERTAIN FINANCIAL RATIOS

CAUSES OF SICKNESS

• LACK OF INFRASTRUCTURE FACILITIES

• MISMANAGEMENT

• LABOUR UNREST

• LACK OF MODERNISATION

• GOVERNMENT POLICY

• SLACKNESS OF FINANCIAL INSTITUTION

• FAULTY PLANNING

Consequences of industrial sickness

Workers

Financial Institution

s

Share holders

Management

Consumers

Government Suppliers

Society

MEASURES TO PREVENT SICKNESS/REVIVE LARGE AND MEDIUM SCALE SICK UNITS.

• TAKEOVER POLICY

• REDUCING LIABILITIES

• GRANT LOANS AT CONCESSIONAL RATES

• PRIORITY IN SUPPLY OF RAW MATERIAL

• PROFESSIONAL SERVICES

• TAX EXEMPTION

• MERGER

GOVERNMENT POLICY ON INDUSTRIAL SICKNESS

• SUITABLE ARRANGEMENT OF MONITORING

• GROUP OF PROFESSIONAL DIRECTORS

• SCREENING COMMITTEE

• REMEDIAL MEASURES IN RESPECT OF INDUSTRIAL UNITS

• TACKLE THE PROBLEM OF INDUSTRIAL SICKNESS

SICKNESS IN SMALL SCALE INDUSTRIES .

SICKNESS IN SMALL SCALE INDUSTRIES

Definition of Sick SSI Units:-

A small scale industrial unit is considered as sick when

1. Any of its borrowal accounts has become “doubtful” advance i.e. principal or interest in respect of any of its borrower accounts has remained overdue for a period exceeding 2-1/2 years, and

2. There is erosion the net worth due to accumulated cash loses to the extent of 50% or more of its peak net worth during the preceding two accounting years.

Measures to improve the effiency of SSIs and prevent sickness

New market.

Innovative products. Emphasis

on Planning.

SSIs must put greater

1.

SUCCESS OF BUSINESS.

Marketing the product

s.

Internet savy.

Market informa

tion.

Success of any business unit depends upon

2.

Role of state in improvingState.Infrastructure facility.

Smooth functioning of

SSIs activitie

s.

3.

Product innovation.

Quality improvement.

Cost reduction.

Introduction of Research and Development.

4.

Entrepreneurial skills.

Professionalism in management.

Training. External information.

Promoting.5.

Adequate

Finance.

Governmen

t assistance.

Modernizatio

n of plant.

To improve competiveness among the SSIs.6.

Marketing arrangements.

Regular orders.

Continuous marketing research

.

Small-scale industries must provide proper attention

7.

Penal rates of interest and damages.

Unadjusted interest dues.

Working group on rehabilitation of sick units

Cont…….

Interest rate on term loans.

Unaided interest of the cash credit.

Conti…..

Rehabilitation programme.

Working capital may be charged at 1.5 %.

Conti……

Working capital in the form long term loans RBIs contribution towards the rehabilitation.