2. CONTENTS
MEANING
DEFINITION
CAUSES
CONSEQUENCES OF INDUSTRIAL SICKNESS
FEATURES OF ACT
BIFR
SICK INDUSTRIAL COMPANY [ SPECIAL
PROVISION] BILL, 1997
CRITICISM OF BILL
3. MEANING
TO LAYMAN – SICK UNIT IS ONE WHICH IS
NOT HEALTHY
TO AN INVESTOR- ONE WHICH SKIPS
DIVIDEND
TO AN INDUSTRIALIST- A UNIT WHICH IS
MAKING LOSSES
TO A BANKER- WHICH INCURRED CASH
LOSSES IN PREVIOUS YEAR & LIKELY TO
REPEAT PERFORMANCE IN CURRENT &
FOLLOWING YEARS
4. DEFINITION
ACCORDING TO SICK INDUSTRIES [ SPECIAL
PROVISION] ACT , 1985, “ sick industrial
company indicates an industrial
company [ registered for not less than
7 years] which is showing accumulated
losses equal to or exceeding its net
worth at the end of any financial year
and has suffered cash losses also
during that financial year and the
immediate preceding year.
5. Causes of industrial sickness
1
2
3
Born Achieved External
sickness sickness factors
or
internal
sickness
6. CAUSES OF BORN SICKNESS
FAULTY FINANCIAL PLANNING
LACK OF EXPERIENCE OF
PROMOTERS
SELECTION OF WRONG
LOCATION
LONG GESTATION PERIOD
TECHNOLOGICAL FACTORS
LEGAL COMPLICATONS
7. CAUSES OF ACHIEVED
SICKNESS
BAD MANAGEMENT
INVENTORY MISMANAGEMENT
FAILURE IN MARKETING
UNSATISFACTORY LABOUR
MANAGEMENT RELATION
UNWARRANTED DIVERSIFICATION
AND DIVERSION
8. EXTERNAL FACTORS
SHORTAGE OF ENERGY
SHORTAGE OF RAW MATERIAL
UNFAVOURABLE
GOVERNMENT POLICIES
CREDIT SQUEEZE
LACK OF INFRASTRUCTURAL
FACILITIES
9. CONSEQUENCES OF INDUSTRIAL
SICKNESS
INCREASE UNEMPLOYMENT
WASTAGE OF RESOURCES
HUGE FINANCIAL LOSSES TO
BANKS
LOCKING UP OF HUGE FUNDS
TO THESE UNITS
10. FEATURES OF SICA , 1985
ACT EXTEND TO WHOLE OF INDIA
ACT IS NOT APPLICABLE TO SSI
ALL GOVT. INDUSTRIAL COMPANY ARE
BROUGHT UNDER THIS ACT
PROVIDES LEGAL IDENTIFICATION OF
SICKNESS IN INDUSTRIAL
ORGANISATION
ACT PROVIDES FOR ESTABLISHMENT
OF BIFR
ACT ALSO ESTABLISH AAIFR FOR
HEARING APPEALS AGAINST ORDER OF
BIFR
11. BOARD OF INDUSTRIAL AND
FINANCIAL RECONSTRUCTION [ BIFR]
Organization
Power
References to BIFR
Inquiry
Appointment of special directors
Schemes
Winding up of sick industrial company
Misappropriation of money and
property
Appeal
12. Sick industrial company
[special provision ] bill, 1997
New definition of sick company
References to BIFR
Procedures to deal with cases referred
to BIFR
Suspension of legal preceding
Asset stripping of sick units
Abolition of AAIFR
13. CRITICISM OF THE BILL
Decentralized board
Monthly reports by special
directors
Independent agency