Does IRBI justify the sick units?

Do JVs really solve the problem?

Saiba Singh
Shrutika Chandwani
Prashita Pillai
Karishma Rajan
 Industrial Sickness

• Definition of a sick unit is given by Sick Industrial companies act, 1985-

“ The sick industrial company is a company which has at the end of
any financial year accumulated losses equal to or excluding its entire net
worth and has also suffered cash losses in that financial year and in the
financial year immediately preceding it.”

• Industrial sickness especially in small-scale Industry has been always a

demerit for the Indian economy, because more and more industries like
– cotton, Jute, Sugar, Textile small steel and engineering industries are
being affected by this sickness problem.
 Internal Cause for sickness

• a) Lack of Finance
• b) Bad Production Policies
• c) Marketing and Sickness
• d) Inappropriate Personnel Management
• e) Ineffective Corporate Management
 External causes for sickness

• a) Personnel Constraint
• b) Marketing Constraints
• c) Production Constraints
• d) Finance Constraints
 IRBI
• IRBI is the Industrial Rehabilitation Bank of India.
• Established in April 1971.

• Measures taken by IRBI

• To provide financial assistance to sick industrial units
• To provide managerial and technical assistance to sick industrial units
• To secure the assistance of other financial institutions and government agencies for the
revival and revitalization of sick industrial units
• To provide merchant banking services for amalgamation, merger, reconstruction, etc.
• To provide consultancy services to the banks in the matter of sick units, and
• To undertake leasing business. In a similar fashion, the IRBI is to function as the principal
credit and reconstruction agency for industrial revival and co-ordinate the activities of
other institutions engaged in the revival of industries and also to assist and promote
industrial development and rehabilitation of industrial concerns. The IRBI is empowered to
take over the management of assisted sick industrial units, lease them out or sell them.
 JOINT VENTURES
A Joint Venture is a legal entity formed between
two or more companies with the purpose of
undertaking economic activity together and
sharing the risk in formation

Formation of joint ventures by induction of

partners capable of providing technical,
financial and marketing inputs