INDUSTRIAL

SICKNESS

INTRODUCTION
INDUSTRIAL SICKNESS IS THE MATTER OF SERIOUS NATIONAL CONCERN BECAUSE OF BESIDE AFFECTING THE OWNERS, EMPLOYEES, CREDITORS AND SUPPLIERS, IT ALSO CAUSES FOR WASTES OF NATIONAL RESOURCES AND SOCIAL UNREST.

DEFINITION
IT IS ONE WHICH SKIP DIVIDENTS.

-AN INVESTOR A SICK UNIT IS ONE WHICH IS NOT HEALTHY -LAYMAN

IT IS A UNIT WHICH MAKING LOSSES AND TOTTERING ON THE BRINK OF CLOSURE. -AN INDUSTRIALIST A UNIT WHICH INCURRED CASH LOSSES IN THE PREVIOUS YEAR AND IS LIKELY TO REPEAT PERFORMANCE IN CURRENT AND FOLLOWING YEARS. -A BANKER

THE EXTENT OF INDUSTRIAL SICKNESS

INDUSTRIAL SICKNESS IS GROWING AT AN ANNUAL RATE OF ABOUT 28% AND 13% RESPECTIVELY IN TERMS OF THE NO. OF UNITS AND OUTSTANDING AMOUNT OF BANK CREDIT. IT IS RECKONED THAT AS OF TODAY , THERE ARE MORE THAN 2 LACK SICK UNITS WITH AN OUT STANDING BANK CREDIT OF OVER Rs.7000 crore.

CAUSES OF SICKNESS
1- Internal Cause for sickness : a) Lack of Finance b) Bad Production Policies : c) Marketing and Sickness : d) Inappropriate Personnel Management: e) Ineffective Corporate Management:

Cont.

2- External causes for sickness: a) Personnel Constraint b) Marketing Constraints c) Production Constraints d) Finance Constraints

Effect of Sickness
1) 2) 3) 4) 5) 6) 7) Sickness contribute to high cost economy Effects competitiveness of economy Sick Units Burden on banks and budget Consumers have to pay high cost Restrict employment opportunities Worsens the problem of stringency of financial resources. 8) Effects the availability of resources to other viable units.

Remedies
Prevention Measures:
a) Role Of Government b) role of financial Institution c) Role of industry association
Capacity utilization

Autonomy to Managerial And Technical works

Cont

Curative measures :
a) What is B.I.F.R.? The government of India setup the Board for Industrial and Financial Reconstruction (BIFR) in January 1987 (which became operational on May 15, 1987) for determining the preventive ameliorative remedial and other measures which were required to taken in respect of sick industrial companies.

Conti

b) Functions of BIFR:

Allowing the company time on its own Having a scheme prepared through the operating agency in respect of the company
Deciding on the winding up of the company

Cont

c. What is I.R.B.I.? Industrial Reconstruction Bank of India (IRBI) which came into being on March 20, 1985 by converting the erstwhile Industrial Reconstruction of India.

Cont

d. Functions of I.R.B.I.
To provide financial assistance To provide managerial and technical assistance To secure assistance of other financial institutions and government agencies for ensuring the revival and rehabilitation To provide merchant banking services for amalgamation, merger etc. To provide consultancy services to banks in matter relating to sick industrial units.

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