1. SICK INDUSTRIAL
COMPANIES {SPECIAL
PROVISION}
ACT[SICA], 1985

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

14. By :- ROSHNI