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
 Workers Manage
Society
ment

Consequences of
industrial Share
Consum
sickness holders
ers

Governm Financial
ent Suppliers Institution
s
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

SSIs must put greater

Emphasis
on Planning.
New
market.

Innovative
products.
. Success of any business unit
depends upon

Market
information.
Internet savy.

Marketing the
products.

SUCCESS OF BUSINESS.
 State.
Smooth
functioning
of SSIs
activities.
Infrastructure
facility.
Introduction of Research
and Development.

Cost
reduction.
Quality
improvement.

Product
innovation.
 Promoting.

Training.

Professionalism
in management. External
information.

Entrepreneurial
skills.
To improve competiveness among the SSIs.

Modernization
of plant.

Government
assistance.

Adequate
Finance.
Small-scale industries must
provide proper attention

Marketing
arrangements.

Regular orders.

Continuous
marketing research.
Working group on rehabilitation of sick units

Penal rates of interest

and damages.

Unadjusted interest
dues.
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.