Sick Industries

Sick Sectors

* Unwell Industrial Companies Act (SICA): -

* Ill industrial unit is defined as a unit or a company (having been in existence because of not less than five years) which is found at the conclusion of virtually any financial season to have sustained accumulated losses equal to or exceeding their entire fortune. * A great industrial unit is also viewed as potentially ill or weakened unit if at the end of any economic year; it has accumulated loss equal to or exceeding 55 per cent of its common net worth during four yr immediately preceding such financial year. 5. Industrial Sickness in India: -

* Commercial sickness particularly in small-scale Sector has been always a demerit for theВ Indian economy. 2. As per a proposal 300 units in the moderate and large level sector had been either shut or had been on the stage of shutting in the year 1976. * About 10% of 4 lakhs unit were reported to get ailing. 5. This position as well remains same in the next many years. At the end of year 1986.

* Reasons behind industrial sickness: -

Both the basic factors which may lead to sickness of the industrial unit are: -- * Inside factors: -- are those that arise during an organization. 5. External factors: - will be those which occur outside a business.

* Internal Factors: -

2. Mismanagement in several functional parts of a company like finance, development, marketing and workers. * Incorrect location of any unit.

* Overestimation of demand and wrong dividend policy.

* Poor implementation of projects which may be due to incorrect planning or perhaps managerial ineffectiveness. * Poor inventory supervision in respect of finished goods along with inputs. 5. Failure to modernize the productive equipment, change the merchandise mix and other elements of marketing mix to match the changing environment. 5. Poor labour-management relationship and associated low workers' morale and low productivity, hits, lockouts, and so forth * Unprovoked expansion and diversion of resources including personal extravagances, excessive expenditure, acquisition of unsuccessful fixed assets, etc . 5. External Elements: -

* Energy crisis coming out of power slashes or shortage of coal or oil. * Failure to attain optimum capability due to deficit of raw materials due to production set-backs in the source industries, poor agricultural end result because of normal reasons, changes in the import circumstances, etc . 5. Infrastructural complications like transport bottlenecks.

* Credit squeeze.

* Situations like industry recession, changes in technology, and so forth * Intercontinental pressures or perhaps circumstances, and so forth

* Effects of Industrial Sickness: -

* This leads to decrease of substantial income to the Government and boosts its open public expenditure. * It a lock up important resources and funds in the sick product. This also increases the non-performing assets (NPAs) of banking companies and banks. * This leads to lack of production and productivity throughout the economy. * It aggravates the situation of unemployment in the economy. 5. It vitiates the industrial ambiance and brings about worker-management conflicts, strikes, lock-outs, etc . 2. It undermines the public confidence in the performing of the prepared sector in the country which in turn influences the overall expenditure climate in the economy. 2. Sick commercial companies work: -

* The federal government has been currently taking many methods and helpful measures in order to tackle this problem in India. * The most important measure is the enactment of the Sick Industrial Companies (Special Provisions) Take action, 1985 (SICA). * This applies to professional undertakings both in the public and private areas. * The standard rationale of enacting SICA was to identify sickness inside the industrial products. * It also aimed at expediting the rebirth of potentially practical units to be able to make the purchases of such devices profitable. 5. To ensure the drawing a line under of unviable units in order to release the...



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