Beruflich Dokumente
Kultur Dokumente
II
1-B)
Edi
tedby
:MANAVSIR
(
Facult
y:PMEC&ResearchSchol
ar:
Ber
hampurUni
ver
sit
y)
Incommonpar l
ance,asickuni tisonewhi chi snotheal thy.Financialinst
it
uti
on
considersaunitsi
ckwheni tfail
stomeeti t
scont ractualobligati
on.
AccordingtoSickI
ndustrialCompani es(SpecialProv i
sions)Act ,1985, asi
ckindustr
ial
undertaki
ngmeans, “
anindust r
ialcompany( registeredfornotl esst hansevenyears)
whichhasatt heendofanyf i
nanci alyearaccumul atedlossesequal t
oorexceedingits
enti
renetwor t
handhasal sosuf f
er edcashlossesi nsuchf i
nanci alyearandthe
fi
nancialyeari
mmedi at
elypr ecedingsuchf inancialyear.”
1.Accor
dingt
oRBI
:-“
Asi
ckuni
tist
hatwhi
chhasi
ncur
redacashl
ossf
oroney
earand
i
slikel
ytocont
inuei
ncur
ri
nglossesf
orthecurr
entyearaswel
lasi
nthef
oll
owi
ngy
ear
andtheuni
thasanimbal
anceinit
sfi
nanci
alst
ruct
ure.
”
2.Accor di
ng to SICA,1985:“ A uni
twasdef i
ned as“indust
ri
alcompany(being a
companyr egi
steredfornotlessthansevenyear
s)whichhasattheendofanyf
inancial
yearaccumul atedlossesequalt o orexceedi
ngitsentir
enetwor t
handhasal so
suff
eredcashl ossesinsuchfinanci
aly
earandthefi
nanci
alyeari
mmediatel
ypr
eceding
suchfinanci
alyear”
3.Def i
nit
ionaccordi
ngtocompaniesAct
,2002:
-Sickindustr
ialcompanymeansan
i
ndustri
alcompanywhi chhas– Accumulat
edlossesinanyf i
nanci
alyearwhi
char e
equalto50per centormor eofi
tsaver
agenetwor thduringfouryearimmediat
ely
precedi
ngsuchfinanci
aly
ear
Fai
l
edt orepayi
tsdebtswit
hinanythr
eeconsecut
ivequar
terondemandmadei
nwr
it
ingf
or
i
tsrepaymentbyacredit
orofsuchcompany
•Ext
ernalproblemsrelat
ingtobanksandotherfi
nanciali
nst
it
uti
ons:
a)Under-
fi
nancingbybanks
b)Over-
fi
nancingbybanks
c)Del
ayindisbursementofloans
d)Del
ayindetectionofearl
ysymptomsofsickness
e)Del
ayindecisionandactiontor
ehabi
li
tat
etheunit.
f)Ot
hers.
•Sicknessmadebygov ernment:
a)Changeingov er
nmentpoli
cies
b)Delayedinpaymentofbil
l
sbyt hegover
nmentdepar
tment
s
c)Red-tapi
sm bygover
nmentof f
ici
als
d)Others.
•Externalprobl
ems:
a)Raw- materi
als
b)Power
c)Mar ket
ing
d)Labour
e)Fi
nance
f)Others
•Otherext ernalpr oblems:
str
ikes, bandhs, insur gents,extorti
onsetc.
1)Ener gycr isis
2)Irr
egul arSuppl yOfI nputs:-
3)Infr
ast ruct ur
al probl emsliket r
ansportbot
tl
enecks;
4)Shor tageofwor kingcapi t
al /li
quidi
tyconstr
aint
s;
5)Recessi on.
6)Arti
f i
cial economi cconst r
aint s
7)OfficialorGov ernmentPol icy
8)Changesi nTechnol ogy;
9)Changei nconsumerbehav iour;
10)Fire, f
lood, othernat ur
alcal amit
ies
11)Ot herf ami l
ypr obl ems
12)Soci alpr oblemsl i
ke
ConsequencesofI S:
Indust r
ialsi cknesshasbeenr esul ti
ngi nser i
ousconsequencesi nanunder dev eloped
l
aboursur pluseconomyl i
keI ndia.TheseconsequencesofI Sinclude:
1)Adv er se i mpacton soci ety:-Aggr av ati
ng empl oymentpr obl em,Lack ofl abour
i
nt ensiveness, highunsat isf actionr ateduet ocl osureofindust r
ial units.
2)Fearofi ndust r
ialunrest: -Wi despreadl abourunr est,highunempl oymentr ate,low
product iv ity,unf avour of t rade uni on due t o closur and t hr eatening i ndust ri
al
env ir
onmentoft hecount ry.
3)Wast ageofr esources:-Wast ageofhuger esourcesinvestedi nt hesesi ckuni t
s,lack
ofi nfr
ast r uct uref aci
li
ties,bl ockofcapi tal equi pment .
4)Adv er sei mpactonr elat eduni ts:Adv er seimpactonr elateduni tsthroughbackwar d
and f or war dl inkages.Fore. g.Channelbr eakdown bet ween i ndust ries;Impacton
suppl i
er s; Impactondi stribut ors;
5)Adv er seef fectoni nvest or&ent r
epr eneur :-Low sati
sf acti
onofi nvest or
;Negat iv
e
effectont hesamel i
nenewent repreneur ;Eff ectont hegrowt hr ateofi ndustry,duet o
widespr eadcl osur eofunit s.
6)Lossest obanks&f inanci alinst i
tuti
on: -Causi nghugelossest obanksandot hert erm
l
eadi ng i nst i
tut i
onsand l ocki ng up hugef undsi nt
ot hesesi ckuni ts.Fore. g.l ow
recov eryr ateofbanks&i nst it
ut i
on;lossi magei nthemar ket;lackoff i
nancialsuppor t
fornewi ndust ries.
7)Lossofr ev enuet oGov er nment :-Resultinghugel ossofr evenuet obot hCent re, Stat
e
andLocal gov t.
RemedialMeasur estodealwiththeproblem ofsi
ckness:(CURESOFSI CKNESS)
I
ndustri
alsicknessi saseriousproblem f
acedbyt hecount r
yatpr esent.Thi
saf f
ected
theheal
thofi ndustri
esworkingunderbothpubl i
candprivatesector.Thusinmeant i
me
vari
ousincentives,concl
usions.dol
esetc.hasbeenof f
eredt othesesi ckuni
tsforthei
r
revi
val
.Thesemeasur esforrevi
valandrehabi
lit
ati
onarediscussedbel ow:
St
epst
akenbybanks
Gi
vi
ngadequat
ewor
kingcapi
tal
whent
her
eisshor
tage
Recov
eryofi
nter
eastr
educedr
ate
Def
ini
ngt
hespeci
alcel
li
ntheRBI
Ar
ranget
hespeci
alCommi
tt
eeofst
atel
evel
int
hel
ocal
branchf
orl
i
nkbet
ween
agency
Pol
icyf
ramewor
koft
heGov
ernment
SWOTanal
ysi
sofi
ndust
ry
Li
ber
ali
zat
ionofsi
cki
ndust
ri
al
Concessi
onsbyt
heGov
ernment
Gi
vi
nghi
ghf
aci
l
iti
est
olar
gei
ndust
ri
est
otakeov
ert
hesmal
lsect
orf
orr
evi
val
Hi
ghl
i
ber
ali
zat
ioni
nter
msoff
inanci
alr
athert
hani
nter
vent
ion
I
ntr
oducet
heschemef
orsi
cki
ndust
ry
st
epsf
ordet
ect
ingsi
cknessear
ly
Cor
rect
iveact
ionst
akenbyRBI
Thei
ndust
ri
ali
nvest
mentbankofI
ndi
a
Setupt
heI
RCI
(I
ndust
ri
alReconst
ruct
ionCor
por
ati
onofI
ndi
a)
Conv
ertI
RCIi
ntoI
RBIi
nMar
ch20,
1985
Conv
ertI
RBIi
ntoI
IBIMar
ch27,
1997
4.I
ndustr
ialI
nvest
mentBankofIndi
a(I
IBI
):
I
nor dertorevi
veandrehabi
li
tat
esickunitsgov
ernmentsetupt
heI
RCI(
indust
ri
al
reconstr ucti
oncor porat
ionofindi
a)withitsauthorizedcapit
alof2.5crore.
Features:
a)Forpr ovi
def inanci
alassi
stance,manager i
alandt echni
calassi
stance;
b)Secur eassi st
ancefrom otherf i
nancialinsti
tuti
onsandgov ernmentagenci
esfor
revi
valofsi ckuni ts;
c)Prov idemer chantbanki
ngser v
icesforamal gamat i
on,mergeretc;
d) Conv ersi
on of I RCIi nto a statutory corporati
on named I RBIin March 20
,1985(aut horized capit
alofRs200 cr ores& pai d up capi
talofRs50 cr or
es)e)
Conv ersionofI RBIintoII
BIinmar ch27,1997
6 . T A K E O V E R P O L IC Y
•REDUCINGLI
ABILI
TIES
•GRANT LOANS AT CONCESSIONAL RATES
•PRIORI
TYINSUPPLYOFRAW
MATERI
AL
•PROFESSI
ONALSERVICES
•TAXEXEMPTION
•MERGER
1.Solv
encyofI ndi vidual
2.Securit
yofCol lateral
3.Prof
itabil
i
ty&Vi abili
tyofPr oject
4.Entr
epreneurial Capabili
ti
es
5.Part
nershipResponsi bil
it
ies
6.AwarenessorSi cknessWar ning
I
nthecir
cumst ances, theent r
epreneurcanf reel
yconfinehi
sprobl
emstothelender
s
andmakeuseoft heirexper tadvicei naver
ti
ngsicknessbef
oreiti
stool
ate.
Gov
ernmentpol
ici
esonr
evi
val
ofsi
cknessanr
emedi
almeasur
es
Gov ernmentPoli
cytoDealwi t
hI ndustr
ialSickness:
Thepol i
cyframeworkinrespectofmeasur est odealwit
hthepr oblem ofi
ndustri
al
sicknesshasbeenlaiddowni ntheguideli
nesi ssuedinOctober1981( whi
chwer e
subsequentlymodif
iedinFebruary1982)f orguidanceofadministrat
ivemini
str
iesof
theCent r
alGover
nment ,
StateGov ernments,andf i
nanci
ali
nstit
utions.
TheI
ndust
ri
alReconst
ruct
ionBankofI
ndi
a(I
RBI
)setupi
n1985hasi
nit
iat
edv
ari
ous
stepsforcheckingt hegrowthofindustr
ialsi
cknessandhel pingi nindustri
alrev
ival
.The
IRBIwast akenov erbytheIndustri
alInv
estmentBankofI ndiain1997.I tfuncti
onsas
theprinci
palcreditandreconstr
uctionagencyforindustr
ialrevi
v al.Asignif
icant
measur etakendur i
ng1986wast hesetti
ngupofSmal l
Indust r
iesDev elopmentFund
(SIDF)intheIDBI.Thisismeanttopr ovi
despecialfi
nancialassistancet othesmal l
-
scalesector.
I
facorporat
edebtorisindi
ffi
cul
tyi
tisl
ikelythathewouldapproachtheseni
orlendersforsome
r
ehabi
li
tat
ion,waiv
erofcompoundorpenal inter
est,
fundi
ngoftheinter
estduesonazer ocoupon
r
ateoratconcessi
onalter
ms.Itwoul
dpr epareaschemeofar r
angementorrehabili
tat
ionplanwi
th
t
heassist
anceofex per
tsoranadvi
soraftermakingrefer
encetoBIFR.
Whocanobt ai
nr eli
efunderBI FR?
Appl i
cabili
tyofandCov erageofSICA–TheActex tendstowhol eofI ndia.TheActappl iest o
‘
Indust ri
alUnder t
akings’ asdef i
nedinsect i
on3( 1)(f
),whichst atest hat;
The‘ i
ndust rialunder taki
ngmeansanyi ndustri
alunder t
akingper tainingt oindust r
yli
st edi nschedule
toIndust r
ies( Dev elopmentandRegul ati
on)Act.Thisschedul ecov erspr acti
cal l
yall
indust r
iesand
hence, theActi nrealityappli
est oallindustr
ies,exceptshippingi ndust ry.TheActappl iest o
Gov ernmentaswel l aspr i
vateunder t
akings.Howev er,theActdoesnotappl yt ocooper ati
ve
societiesanduni tsownedbyat r
ust.TheSI CAdoesnotappl yt osmal l
scalei ndustr
ies( SSI
).SICA
hasov err
idingef fect–Pr ovi
sionsofSI CAhav eov err
idi
ngef fectov erpr ov i
sionscont ainedi nall
otherlaws, memor andum andar ti
cleofcompanyandanyot heri nstrument ,exceptpr ov isi
onsof
ForeignExchangeRegul ationAct( FERA)andUr banLand( CeilingandRegul ation)Act( ULC)[ sect
ion
32(1)ofSI CA].
Crit
eriaforSeekI
ndustri
alCompany?
(a)Itshouldbeanindustr
ial
company
(b)I
tshouldberegi
ster
edforatl
eastfi
veyears–Acompanyusuall
ymakesl
ossesi
nini
ti
alyear
s
andhence,ini
ti
all
ossesdonotmeanthattheindust
ri
alcompanyi
ssick.
(c)Attheendoffi
nanci
alyear
,accumulat
edlossesshoul
dbeequalt
oormor
ethani
tsenti
renet
worth
Whatar et her el
iefsonr efer
encet oBI FR?
UnderSI CAcr edi t
orsofasi ckcompanyar epreventedf rom enforci
ngt hei
rremedi esinacourtof
l
awsubj ecttost ayormor atori
um int hef ol
lowingcl assesofpr oceedings
a.Suitforr ecoveryofmoney
b.Suitforenf orcementofanysecur ity
c.Suitforenf orcementofanyguar anteei nrespectofanyl oanoradv ancegr antedtothecompany
d.Execut i
onagai nstcompani espr operties
e.Proceedi ngsf ordistressagainstsuchpr oper t
ies
f.Si
mi l
arot herpr oceedingsagai nstsuchpr operties
2.Nocr editorsoft heCompanycani nit
iateanyki ndofl egalproceedingsagai nstt
heCompanyor
againsttheasset soft heCompanyf orr ecov eryofitsduesi ncasesuchCompanyi sbef
ore
BIFR/AAI FRundert hepr ovi
sionsofSI CAt i
llpendencyofsuchr efer
enceort il
l obt
aini
ngleaveof
BIFR/AAI FRt odoso.
3.Howev erthepr iori
tyofclaimsdoesnotgetadv er
selyaffected
RoleofBI FR?
Onr eceiptofref
erencef r
om theCompany ,BI
FRwi lli
nqui
reanddet er
minet hatwhetherappl
icanti
s
sickindustri
alcompanyornotandaf t
ersuchdet er
minati
on,itmayappointoper at
ingagency(e.
g.
panel ofbanks,publi
cfinanci
al i
nst
it
uti
ons)tocomeupwi thDraftRehabi
li
tationSchemeas
preparedinconsultati
onwi t
ht heSi
ckIndustr
ialCompanyf orthepurposeofr evi
valand
rehabili
tat
ionofsuchcompanyori tmayaskf orwindingupofSickIndustr
ialCompanyi fi
tsnot
possibletorevivethecompany .
ScopeofourSer v
ices?
1.Fi
lli
ngref
erence/applicat
ionforonbehalfoft heCompany
2.Prepar
ati
on,assist
ingandConsul ti
nginDr aft
ingofRehabi
li
tat
ionScheme(
DRS)
3.Advisi
ngmeasur esinthetermsofCor porateRestr
uctur
ingundert
heDRS
4.Prepar
ati
onofModi f
iedDraftRehabil
i
tati
onScheme
5.Fi
lli
ngMiscell
aneousapplicati
onswithBIFR
Pr
ocedur
e:
Reporti
ngt oBI FR
I
nquirybyt heBI FR
Rehabili
tat i
onofSSIuni te
Viabi l
it
yofsi ckSSIuni t
s
Reliefandconcessi onforrehabil
itat
ionofpot
enti
all
yviableuni
ts
Del egationofpower
Rel
iefandconcessi onunderr ehabil
it
ati
on
I
nt erestduesoncashcr editandtermloans
Unadj ust edinter
estdues
Ter ml oans
Wor ki
ngcapi talter
ml oans
Cashl osses
Wor ki
ngcapi tal
Cont i
ngencyl oanassistance
Fundsf orstartupsexpenseandmar ginforwor
kingcapital
Promot er’scontri
buti
on
Detai
ls:
Repor t
ingtotheBI
FR
TheBoar dofDir
ect
orsofasi
ckindust
ri
alcompanyisrequi
red,
byl
aw, t
or eportt
hesicknesst
o
theBIFRwithi
n60daysoffi
nal
isat
ionofaudi
tedaccounts,
fort
hef
inancialyearatt
heendof
whichthecompanyhasbecomesick.BIFRhasprescr
ibedafor
matforthisrepor
t.Whil
e
repor ti
ngbyacompanyofi t
ssi cknesst ot heBI FRi smandat or yaspert hepr ov isionsofl aw,
anyot heri nter est edper son/ par tycanal sor epor tt hef actofsi cknessofacompanyt ot heBI FR.
Suchi nterest edpar tiesmaybet hef inanci al inst itut ion/ bankt hathasl entl oant ot hecompany ,
theRBI ,theCent ral /St ateGov er nment s.TheBI FRhaspr escr ibedadi f ferentf or matf ort he
repor ttobesubmi ttedbysuchi nter est edpar ties.Whenacompanyhasbeenf inancedbya
consor ti
um ofbanks, itist heLeadBankt hatshoul dr epor tt ot heBI FRaboutt hesi cknessunder
adv icet oot herpar ticipat i
ngbanksi nt heconsor ti
um.
Enqui rybyt heBI FR
Whenacasei sr ef erredt ot heBI FR, itisv er i
fiedbyt heRegi st raroft heBI FRast owhet hert he
fact soft hecasef al lswi thint hepr ov isionsoft heSi ckI ndust rial (Speci al prov isions)Act ,1985.
Ifso, theBI FRaccept st hecaseandnot ifi
esadat ef orhear i
ngt hecase.
Forr ehabi litatingasi ckuni t,cooper ationofv ar iousconnect edagenci esi samust .Thi sco-
or dinat ioni sachi ev edbyt heBI FR.
TheBI FRi nv itest her epr esent at ivesoft hei nf or mantsi ckcompany ,ther epr esent ativ esof
concer nedf i
nanci al inst itutionsandcommer ci al banks, repr esent ativesoft heCent ral/ State
Gov ernment s, tradeuni onr epr esent ativ eset c. ,tot hehear i
ngandi nqui ryismadeundersect ion
16oft heAct .
Af tert hehear i
ng, theBI FRi t
sel fmayconductast udyorent rustt hewor kt oan‘ oper at i
ng
agency ’appoi nt edbyi tt odet er mi newhet hert hecompanyi si nf actsi ck.
Nor mal l
y,thel eadf inanci al inst itution( IDBI ,I
CI CI ,IFCI , SFC)ort hel eadpubl icsect orbankt hat
hasf inancedt hecompanyi snomi nat edast heoper atingagency .Leadi nst i
tut i
oni sonet hat
hasmaj orf inanci al st akei nt hesi ckcompany .Theenqui ryist obecompl etedwi thin60day s.
Oncompl etionoft heenqui ry ,theBI FRwi lldecl ar ewhet hert hecompanyi ssi ckornot .
Rev i
v alPackage
Onceacompanyhasbeenf oundsi ck, theBI FRmaygr antt i
met ot hesi ckcompanyt oenabl eit
tomakei t
snetwor thposi tiveandbr i
ngt hecompanyoutofsi ckness, withoutanyext er nal
financi alassi st ance.
Ifitisf oundi nf easi blef orcompanyt omakei tsnetwor thposi tivewi thoutanyext ernal financi al
assi st ance, ori ft heBI FRdeci dest hatt hecompanycannotmakei tsnet wor thposi ti
v e
Rehabi li
tationofSi ckUni t
s359wi thinar easonabl et i
me, theBI FRwi lldirectt heoper at ing
agencyt opr epar easui tabl er ev ival packagef ort her est or ationoft heheal thoft hecompany .
Theoper atingagencypr epar esasui t
abl er ev ival package.Ther ev ival packagemayv ar yf rom
caset ocasedependi ngont henat ur eoft hepr obl em andmayi ncl ude
addi tional financi al assi stance,
post ponementofr ecov er yofl oanal readyl entbybanksandf inanci al inst itutions,
changei nmanagement ,
amal gamat ion,
sal eofr edundantasset s,
l easeofasset soranyot hersui tabl emeasur e.
Ther ev i
val packageshoul dbesubmi ttedt ot heBI FRwi thinat imel i
mi tof90day sorsuch
ext endedper i
odasmaybegr ant edbyt heBI FR.
Onsubmi ssionoft her ev i
v al packagebyt heoper at ingagency ,theBI FRsendst her ev ival
packagei nadr af tf or mt oal lt hei nt erest edpar ties( i.
e. ,thesi cki ndust ri
al company , thebanks/
financi alinst i
tut ionswhohav egi venf inanci al assi st ancet ot hesi ckcompany ,theoper ating
agency ,thet r
ansf er eecompany( i
ft her ei sar ecommendat ioni nt her ev ival packagef or
amal gamat ion)et c., elicitingt hei rv iews/ suggest ionsont her ev ival package.
TheBI FRwi llal sopubl ishpar ticul ar soft hedr af tr ev ival packagei nnewspaper si nv iti
ng
suggest ions/ obj ect ions, ifany , from t heshar ehol der soft hesi ckcompany ,credi tor sand
empl oy eesoft hesi ckcompany ,transf er eecompanyandanyot heri nt erest edpar ty.
Onr ecei ptofv iews/ suggest ions/ obj ect ionsont hedr af tr eviv al scheme, theBI FRmay ,if
deemedf i
t,af for danoppor t
uni tyt ot hei nt erest edpar tiest obehear d.Af tercar ef ulexami nat i
on
ofal l theaspect s, theBI FRwi l
l sanct i
ont her ev ival schemewi thorwi thoutanymodi ficat ions.
Thescheme, assanct i
oned, wi llcomei nt of or cef r om t hespeci fieddat eandal l theconcer ned
par tiesar er equi r edt oabi debyt hepr ov isionsoft her ev ival scheme.
TheBI FRmayal soor dert heoper atingagencyt oi mpl ementt hesanct i
onedr ev ival scheme.
Whent her ev i
v al packageasf inal i
zedbyt heBI FRcont ainsf ur therf inanci alassi stanceorr eli
ef s,
concessi ons, sacr ificeset c.( forexampl e, sanct i
oni ngofaddi tional financi alassi stancef ort he
pur chaseofcer t ainbal anci ngequi pment s, wai v ingofpenal int er est/ compoundi nterest
charged, wai vi
ngofi nterestinpar torf ull
,waiv erfrom salestaxet c.
)theschemewi l
lbe
cir
culatedt ot heconcer nedagenci esf ortheirconsentt ober eceivedwi thi
naper iodof60day s.
Oncet hev ar i
ousagenci esinvolvedint her evivalschemegi v
et heirconsenttothescheme, i
t
wil
lbecomebi ndingont heconsent i
ngpar ti
est oimplementt her ecommendat ionscont ainedin
therevival scheme.Howev er,whenanyoft heinvolvedagencydoesnotgi veit
sconsentt othe
scheme, theBI FRhasnopower st of orcet heagencyt oaccordi t
sconsent .Ifi
nt heopini onof
theBIFR, ther eviv
al packagecannotbesuccessf ulwithouttheconsentf r
om oneormor eof
theagenci esi nvolved,theBI FRhasnoot heropt ionbutt orecommendf orwindingupoft he
company .Infact ,
thet hreatofact ual windingupoft hecompanyi stheonlyweaponi nthe
handsoft heBI FRt omaket hev ariousagenci estoext endsuitablereli
efsandconcessi onsas
maybedeemednecessar ybyt heBI FR.BI FRi tselfcannotinit
iatethewindinguppr oceedi ngs.It
canonl yfor war di
tsopi niont otheconcer nedHi ghCour tandtheHi ghCour twil
l i
niti
atet he
windinguppr oceedi ngs.