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Submitted By: Debadarshi Roy Rahul Mishra Ashish Kumar Das Abhipsa Pattnayak Firdous Ara Chandrima Chowdhury (10DM074) (10DM078) (10DM079) (10DM091) (10DM095) (10DM106)
Any unit will be called as sick unit if its Borrowal account remain sub-standard for more than six months OR Any unit will be called as sick unit if there will be erosion in net worth by 50% or more in any financial year due to accumulated losses, if the unit has been in commercial production for at least 2 years
AS PER SICA: (SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT 1985 (For Medium &Large Industries)
Sick Industrial Company: An industrial company (registered for not less than 5 years), which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth is called as sick unit
Potentially Sick Industrial Company: An industrial company whose accumulated losses as at the end of any financial year have resulted in erosion of 50% or more of its peak net worth during the immediately preceding 4 financial years. Financial institutions broadly rely on the following parameters for identification of sick units. Continuous default by the unit in repaying the dues of industry. Continuous default by the unit in repaying instalments that have fallen due. Occurrence of cash losses on a continued basis.
From the above we can say there is no unanimous and standard definition of sickness of MSME units rather institutions define it as per their convenience. The above definitions give just an outline for identification of sick units. To understand sickness in a broader way let us go for symptoms and causes of sickness.
by banks was only 4,287. This constituted for 3.7 percent of the total sick units. Rehabilitation programs were conducted by banks for only 588 units. Further , SIDBI considers the following to be the early warning signals of a SME falling sick , in respect of the financial facility opted by the enterprise : Non cooperative attitude of the promoters & directors Not inviting nominee director for board meetings Absence of key personnel in the board meetings Non-submission of project reports and progress reports Non-submission of balance sheets Not taking timely and proper insurance cover Inconsistencies in ca certificate / sources & disposition of funds Avoidance of follow-up visits / absence of promoters Adverse market reports / bankers reports / opinion Filing of suit / takeover of stocks/assets by banker/lender Appearance in caution list/defaulter list/wilful defaulter list Takeover by other company without prior approval Failure to pay statutory liabilities Frequent dishonour of cheques Flow-chart depicting the factors leading to the irrecoverable losses which ultimately make the SME heading towards sickness.
FROM THE MARKETING EYE Today business in any form cannot be static it has to be dynamic. It has to adapt itself quickly in order to cater the needs of the target market or else they will fail to retain the customers. Strategy creates core-competence and a unique way of each concern to attract its target market. Strategy itself is a core driver of marketing leading to the arrangement and representation of all the Ps. So in prospect of the SMEs in this competitive scenario, any implementation of irrelevant and unnecessary strategy can be an indicator of sickness in the long run.
Rapid change in strategy which is failing to earn its fruits makes the cost-burden high for the enterprise leading to sickness.
negative trend and vice-versa. Too much working capital can be sometimes a problem for the SMEs thus decreasing its productivity. Excess increase in creditors makes the enterprise more open to the credit risk, similarly too much debtors makes the operational efficiency low thus blocking funds. Strategy to retain customers by providing credit transactions can be sometimes harmful for the small business units. OTHER INDICATORS:
Excise/tax violations, improper business practices, mismanagement.
Raids on promoters/directors by govt and statutory bodies. Not furnishing balance confirmation certificates. Non-acknowledgement of debt and securities.
SICKNESS INDICATIVE MODEL Altman Z-Score is a predictive model created by Edward Altman in the 1960s. This model combines five different financial ratios to determine the likelihood of bankruptcy amongst companies. Generally, the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. Scores in between 1.8 and 3 lie in a grey area. It must be noted that a poor score in this model not necessary mean that the unit is sick. It can only be said that financially the unit is not viable and more prone to risk. The structure of the model is given as under:-
This model can be used to determine the financial soundness of a unit to understand whether it is approaching sickness or not. The other risk factors such as operational risk, management risk and business risk can be determined by comparing the respective parameters with the other concerns having almost the same business structure, and the efficiency can be measured with the help of a credit rating models.
Poor capacity utilization High cost of production Poor inventory management Inadequate repair & maintenance
Lack of timely & adequate modernization
b) Labour management High wage structure / excess manpower / poor productivity Inefficient handling of industrial relations Lack of skilled / trained / competent personnel c) Marketing management Defective pricing Poor sales realisation Dependence on single/limited no. Of products/clients Weak marketing set-up / lack of marketing techniques Lack of market research / feedback d) Financial management Poor resource management Faulty costing Deficiency of funds /working capital Over trading Diversion of funds for inappropriate purposes
Unfavorable gearing
Incompetence, dishonesty
Dissention among promoters
External causes I. Infrastructural bottlenecks Non / irregular availability of critical inputs Chronic power shortage Transport bottlenecks
II. Financial bottlenecks
Non availability of required finance in time III.Market constraints Recession Market saturation Product obsolescence IV.Govt. Policies Price controls and credit control Duties and levies Abrupt policy change affecting costs / prices/ imports/ exports / licensing / land acquisition/usage Procedural delays by govt. depts., regulatory authorities, etc. V. Extraneous Factors a. Natural calamities b. Political upheaval, riots, strikes and terrorism
c. Unstable labour situation
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CHAPTER-2 GOVERNMENT, RBI AND FINANCIL INSTITUTIONS PLAN OF ACTION TOWARDS SICK MSME UNITS
After identifying sick units now what should be plan of actions of financial institutions, RBI and Govt. of India. Now two approaches or way is there on part of Govt. and others. First one is Exist Approach. In this approach Govt. or others will not come to help sick units any more rather they will let it be closed finally. If this will be the blind approach of Govt. or others then it will be a threat to MSME sector and their contribution towards our economy. If we will look over Credit outstanding data in case of sick units from 1998 to 2009 we can see from the Table A as given below how much Crore of rupees financial institutions are going to lose who have financed them if Govt. is following Exist approach blindly. Table-A: Credit Outstanding and Position of Sick Units Financed by Scheduled Commercial Banks: Year End March 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 No. of Sick MSE Units 221536 306221 304235 249630 177336 167980 138811 138041 126824 114132 85187 103996 11 Amount Outstanding(In Crore) 3857 4313 4608 4506 4819 5706 5285 5380 4981 5267 3083 3620
Note:
1. 2009 data are provisional 2. 1988 data re ate to June end. 3. MSE stands for Micro Small enterprises
When we look at the World Bank surveys on doing business across countries, India typically ranks quite low in the range of 120-130 in the creation of new enterprises. At the same time, both the level of profit of corporate sector in India and the growth of profits is among the highest in the world. That means once you get in, it is easy to grow, but getting in, in the first place, is difficult. Small enterprises not being financially strong are more susceptible to even minor malfunctions and tend towards sickness. A small enterprise, like a sapling or a baby, has to be nurtured in the initial stages. The stress induced at the initial stage, if not managed promptly, leads to sickness and ultimately closure of the unit in most cases. Thus, there is a strong possibility of sickness setting in small enterprises at the initial stages and the banks should more carefully monitor the working of small enterprises in the initial stages. So exit method is not only the solution. So Govt. should not have more biasness towards Exist method. Second approach that can be followed is that sick units will be tested whether it can be potentially viable or not. If not, recovery of the dues of lenders through a fair, efficient and swift legal mechanism will be done. This is one way to manage sickness - the exit route which may be employed only in terminally ill i.e. non viable cases. However, for viable units, timely and effective rehabilitation by way of renegotiation of terms of loans, induction of fresh dose of funds, business restructuring, change of management etc may be employed. Now let us try to understand which unit will be called as viable unit.
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The above data (Table-B) reveals that: There was a perceptible decline of 10% in the number of sick SSI units in year 2007 but the Amount outstanding against them went up by almost 6% as compared with 2006. (126824 A/Cs in 2006 to 114132 A/Cs in 2007 with aggregate exposure of Rs 4981.13 Crore in 2006 to Rs 5266.65 Crore in 2007) 15
In Small Enterprises Sector out of 114132 sick units, only 3.76% units were found viable by the banks and out of the same only 13.72% units were put under nursing. Thus only 0.52% of the sick SSI units were put under nursing. Among the sick medium enterprises, out of 17949 sick units, only 10.77% units were found viable by the banks and out of the same only 6.05% units were put under nursing. Thus only 0.65% of the sick units were put under nursing. For the SME sector as a whole, out of total 132081 sick units, the total units found viable are only 4.71%, of which 11.33% were put under nursing i.e. only 0.53% of the sick units were put under nursing. It is difficult to assess as to how many units were really studied for their viability out of the 95-97% units not found viable.
Now let us go for degree of viability of micro, small and medium enterprises for the year end on 2008 as per the data given below (Table-c): From the data given below we can infer that degree of viability is more for medium enterprises than micro and small enterprises. This is due to stronger base of medium enterprises than micro and small enterprises.
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Now let us go for region wise viability position of sick units for the year end on 2008 as per the Table-D given below: From the given Table-D we can see percentage of viability is highest in Southern region of India (17.36%) followed by Eastern (6.693%) and Northern (4.59%) part of India. Percentage of viability is lowest in Western region (0.469%).
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sector based on the data furnished by banks. Among others, the representatives of the local state level MSE associations are invited to the meetings of SLIIC which are held quarterly. A sub-committee of SLIIC looks into the problems of individual sick MSE unit and submits its recommendations to the forum of SLIIC for consideration.
Prudential Guidelines on MSME Debt Restructuring by banks have been formulated and advised to all commercial banks by Department of Banking Operations & Development. (ii) In the light of the recommendations of the Working Group on Rehabilitation of Sick MSEs (Chairman: Dr. K.C. Chakrabarty), all commercial banks were advised: (a) put in place loan policies governing extension of credit facilities, Restructuring/Rehabilitation policy for revival of potentially viable sick units/enterprises and non- discretionary One Time Settlement scheme for recovery of non-performing loans for the MSE sector, with the approval of the Board of Directors and (b) implement recommendations with regard to timely and adequate flow of credit to the MSE sector. (iii) Banks have been advised to give wide publicity to the One Time settlement scheme implemented by them, by placing it on the banks website and through other possible modes of dissemination. They may allow reasonable time to the borrowers to submit the application and also make payment of the dues in order to extend the benefits of the scheme to eligible borrowers.
Cluster Approach
(i) 60 clusters have been identified by the Ministry of Micro, Small and Medium Enterprises, Government of India for focused development of Small Enterprises sector. All SLBC Convenor banks have been advised to incorporate in their Annual Credit Plans, the credit requirement in the clusters identified by the Ministry of Micro, Small and Medium Enterprises, Government of India. As per Ganguly Committee recommendations banks have been advised that a full-service approach to cater to the diverse needs of the MSE sector may be achieved through extending banking services to recognized MSE clusters by adopting a 4-C approach namely, Customer focus, Cost control, Cross sell and Contain risk. A cluster based approach to lending may be more beneficial: (a) in dealing with well-defined and recognized groups; (b) availability of appropriate information for risk assessment and (c) monitoring by the lending institutions. Clusters may be identified based on factors such as trade record, competitiveness and growth prospects and/or other cluster specific data. (ii) As per announcement made by the Governor in paragraph 157 of the Annual Policy Statement 2007-08, all SLBC Convenor banks have been advised to review their institutional arrangements for delivering credit to the MSME sector, especially in 388 clusters identified by United Nations Industrial Development Organisation (UNIDO) spread over 21 states in various parts of the country. 21
(iii) The Ministry of Micro, Small and Medium Enterprises has approved a list of clusters under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) and Micro and Small Enterprises Cluster Development Programme (MSE-CDP) located in 121 Minority Concentration Districts. Accordingly, appropriate measures have been taken to improve the credit flow to the identified clusters of micro and small entrepreneurs from the Minorities Communities residing in the minority concentrated districts of the country. (iv) In terms of recommendations of the Prime Ministers Task Force on MSMEs banks should open more MSE focused branch offices at different MSE clusters which can also act as Counselling Centres for MSEs. Each lead bank of a district may adopt at least one MSE cluster.
Major Instructions issued to Public Sector banks subsequent to the policy announcements
On the basis of the Policy Package as announced by the Union Finance Minister, some of the major instructions issued by Reserve Bank to all public sector banks were as under: Public sector banks were advised to fix their own targets for funding SMEs in order to achieve a minimum 20% year on year growth in credit to SMEs. The objective is to double the flow of credit from Rs. 67,600 crore in 2004-05 to Rs. 1,35,200 crore to the SME sector by 2009-10, i.e. within a period of 5 years. Public sector banks were advised to follow a transparent rating system with cost of credit being linked to the credit rating of the enterprise. All banks, may make concerted efforts to provide credit cover on an average to at least 5 new small/ medium enterprises at each of their semi-urban/ urban branches per year. The banks may ensure specialized MSME branches in identified clusters/ centres with preponderance of small Enterprises to enable the entrepreneurs to have easy access to the bank credit.
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To examine and suggest steps & measures needed to make its net worth positive. To prepare schemes providing measures in order to make its net worth positive within reasonable period. To suggest measures for smooth implementation of the rehabilitation scheme. To monitor implementation of BIFR approved scheme. To comply with any other direction of BIFR as its agent.
CHAPTER-5 STUDY OF BENGAL CHEMICALS & PHARMACEUTICALS LTD. AND JESSOP & COMPANY LTD
many other stalwarts. Besides this, Shri Rajsekhar Bose, the noted writer, was also associated with Acharya P C Ray. He also happened to be the Manager of BCPW. All of them never missed the opportunity of getting in touch with Acharya P C Ray at the critical hour of the need of the Company. Under stewardship of its founder, BCPW went on accumulating glory and success accompanied with expansion of its production facilities. From humble beginning with one Factory in Maniktala( Kolkata) in 1905, three more Factories were established one in Panihati (North 24 Pargana, West Bengal) in 1920, one in Mumbai in 1938 and one in Kanpur in 1949 with its Registered Office at 6 Ganesh Chunder Avenue, Kolkata 700 013. Besides, the Company is having 9 (Nine) Sales Outlets and 2 (two) C & F Agencies spreaded all over India. In 60s however, compelling market situation acted as deterrent to growth and the Company passed into a dark phase in 1970. Ultimately, to protect the interest of large number of employees of the Company and the common people at large, the Management of the Company was taken over by the Government of India on 15th December, 1977. Finally, the Company was nationalized on 15th December, 1980. A new Company was formed under the name and style Bengal Chemicals & Pharmaceuticals Ltd. (BCPL) in 1981. Truly, BCPL is a Heritage Company in the area of Indian Industries. With the passage of time, the Company expanded and diversified into a multi-product conglomerate, having three Divisions. Division I includes Aluminum Sulphate(Alum), Division-II has been categorized as Drugs & Pharmaceuticals, such as Analgesics & Antipyretics, Antitussive, Expectorants, Enzymes & Hepatobiliary Preparations, Diuretics, Topical Anti-infective & Antifungals, Non-steroidal Anti-inflammatory Drugs, Muscle Relaxants, Antibiotics & Antibacterials, Ant tubercular Drugs, Antimalarial Drugs, Vitamins, Oral Electrolytes, Antiasthmatic Preparations, Anti Venom Serum and Division-III includes Cosmetics & Home Products, namely Cantharidine Hair Oil, Disinfectant Fluid (Lamp Brand Pheneol), Moth Repellant (Naphthalene Ball) , Aguru (Perfume), Floor Cleanser (White Tiger) and Toilet Cleaner (Klin Toilet). Stringent standards of Quality Control, infallible commitment to the consumers have enabled BCPL to receive WHO-GMP Certificate, DGQA Certificate and ISO 9001 Licence. BCPL has explored into strong area of Sera/Vaccine area. Already as a manufacturer of Anti Snake Venom Serum (ASVS), steps are being taken to manufacture more Products, having social importance, like Anti Rabies Vaccine (ARV), Anti Rabies Serum (ARS), Diphtheria Anti Toxin (DAT), Kalazar, etc. It is planned to open new specialized Pharma Division in the areas of cardiovascular medicines, Hypolipidemic Drugs, Anticancer Drugs, new Cephalosporin Antibiotics. Negotiation is going on to evaluate the possibility of manufacturing Anti Retroviral Products for which the Nation is dependent on import.
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Viability of BCPL:
1. Techno-Economic Feasibility Study: a) Projects: On recommendation of BRPSE (Board for Reconstruction of Public Sector Enterprises), Government of India, approved a Revival Scheme for BCPL during December06. The said scheme includes Cash Infusion of Rs.145.00 Crores towards Capital Expenditure for Upgradation & Modernization including capacity augmentation for Chemical Plant (Panihati, West Bengal) and in Pharmaceutical Plants at Maniktala and Kanpur in compliance with Schedule M / WHO-GMP. In addition, Greenfield Projects for Cephalosporin and Betalactum range of products (in dosage forms of Capsule, Tablet, Dry Powder Injectables, Dry Syrup) and Joint Venture Project in the area of Vaccines have also been envisaged in the scheme. Upgradation and Modernization Projects of Pharma Plant covers Civil Construction with GMP compliant Buildings, Lay-out, Installation of Plant & Machinery, Utilities like HVAC, Purified Water System as well as Capacity Augmentation in Tablet and Capsule, Liquid orals, Small Volume Parentals (injectables), Ointment and Liquid Anti-septic Preparations, ASVS, ORS Powder, Central Stores etc. 26
Upgradation and Modernization Projects of Chemical Plant covers new construction in Pheneol manufacturing and filling, composite production block, renovation of Alum Plant and QC block, construction of Finished Goods stores and Administrative Block. Besides above, upgradation projects also includes reconstruction of drainage, development of internal roads, boundary wall, construction of Effluent Treatment Plant (ETP), new electrical sub-stations are also included in the project. Construction activities are in full swing in all the units. It is expected that Civil Construction will be completed by October09 both at Maniktala and Panihati. Commercial productions are expected to commence from March10. So, the company has good upcoming projects and has a scope to grow in the future which shows that the company is viable. b) Exports:
Product Aluminium Sulphate (Alum) Pheneol Cantharidine Hair Oil Pharma Antibiotics, Anti Tubercular & Anti Pyretics Anti Snake Venom Serum (ASVS) Country Bangladesh Bangladesh, Tanzania (Africa) Sarjah (UAE) Myanmar Bangladesh, Malayasia
The company exports its products to Bangladesh, Tanzania, Sarjah, Myanmar and Malayasia. The Company is looking for potential Export Agency for exporting Pharmaceutical Items and Home Products during the year 2009-10. Interested parties, having capability to deal with export of Pharmaceutical and Home Products, may approach with terms and conditions.
c) Products:
The company offers a wide range of products which is again a positive factor for the companys growth.
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Industrial Chemicals : Aluminium Sulphate (Ferric) Category Composition Industrial Chemicals Solid White / Grey Mass An Excellent Water Purifier Available both slab and Kibbled Form Specification as per BIS 299:1987 22Kg naked slab/50Kg export worthy pack
Presentation
Aluminium Sulphate (Non Ferric) Category Composition Industrial Chemicals Solid White Mass Used as a loading material for better grade of paper Available in Kibbled Form Specification as per BIS 260:1969 22Kg naked slab/50Kg export worthy pack
Presentation
Pharmaceuticals : Pharmaceuticals Generic: Tablets Ampicillin disp.125 mg Amoxycillin.disp.125 mg Ethambutol 200 /400/800 mg Pyrazinamide 500 / 750 mg Chloroquine phos.250 mg Quinine sulphate300 mg Paracetamol 500 mg 125mg 125mg 200mg 500mg 250mg 300mg 500mg Antibiotics Antibiotics Anti-tubercular Anti-tubercular Anti-malarial Anti-malarial Analgesicantipyretic
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Cotrimoxazol ss Cotrimoxazoleds Cotrimoxazole( paed ) Ciprofloxacin250 / 500 mg Norfloxacin 400 mg Metronidazole200 / 400 mg Ranitidine 150 mg Albendazole 400 mg Erythromycin Norfloxacillin 400 mg + Tinidazole 600 mg Ciprofloxacillin 250 mg + Tinidazole 500 mg Ciprofloxacillin 500 mg + Tinidazole 600 mg Tinidazole 300 mg Tinidazole 500 mg Azithromycin 250 / 500 mg Ibuprofen200 / 400 mg
Anti microbial Anti microbial Anti microbial Antibiotics Anti bacterial Anti-amoebic
Anti-bacterial
Anti-bacterial
Kalmegh Ampicillin250 / 500 Amoxycillin 250 / 500 Cefadroxil 500 mg Omiprazole 20 mg 29 250mg 250mg 500 mg 20mg
inhibitor Cloxacillin 250 mg Tetracycline 250 / 500 mg Doxicycline 100 mg Rifampicin 250mg 250 mg 100 mg 450mg Liquid preparation Povidone iodine soln 5 % 500 / 750 / ml Povidone iodine soln7.5 % 500 ml Povidone iodine soln10 % 100 / 500 ml Rectified spirit Absolute alcohol Paracetamol syrup 125 mg / 5 ml Ointment Povidone iodine 5 % 125 / 250 gm Silver sulphadiazine 1 % 20 / 500 gm Clotrimazole 15 gm Povidone iodine Topical anti-infective Anti fungal Injectables Atropine sulphate Quinine di-hydro Gentamycin 2 ml ampoule Avs(polyvalent) Water for injection Aminophylline 30 Broncho dilator Sympathomimetic Anti-malarial Anti-malarial Anti snake venom 5% 7.5% 10% Topical antiinfective Topical antiinfective Topical antiinfective Spirit for clinical use Spirit for clinical use Paracetamol syrup Cloxacillin Antibacterial Antibacterial Anti-tubercular
Diuretics
Analgesic Antibacterial
Antiseptic liquid Antiseptic solution 5 lt Chlorhexidine soln.5 % 500 ml / 5 lt Antiseptic lotion 1 lt Antiseptic lotion 1 / 2 lt Antiseptic lotion 5 lt Cetrimide 2% solution 500 ml / 5 lt Glutasol 500 ml / 1 lt / 5 lt Benzalconium soln. Chlorhexidine soln. 5% Cetrimide 15% & + chlorhexidine 7.5% Cetrimide 3%+ chlorhexidine 1.5% Cetrimide 15% chlorhexidine 8% Cetrimide 2% solution Glutaraldehyde
Pharmaceuticals Branded: TABLET RAYMPILLIN 125mg ( Ampicilin ) Raymox 125 mg ( Amoxicillin ) Bengesic ( Ibuprofen 325 + Paracetamol 500 mg ) Ciproben (Ciprofloxacillin ) 250 / 500 mg Nimucet ( Nimesulide + Paaracetamol ) Ray Cal ( Calcium with Vit D 3 & VIT B 12 ) Benzithro ( Azithromycin ) 250 / 500 mg CAPSULE Raymox ( Amoxicillin) 250 / 500mg 31
Benprazole D ( Omeprazole + Domperidone ) Moxybrom ( Amoxycillin + Brohmhexine ) ORAL LIQUID Aqua Ptychotis 100 / 400 ml ( Anti-Flatulent Digestive) Kalmegh Co.100/400 ml (Hepato-Biliary Herbal Tonic) Elixir Digenzyme100 / 200 / 400 ml ( Digestive Enzyme) Kasatol 100 mml / 400 ml ( Ayurvedic Cough Preparation ) Benkoff ( Cough Remidies ) Vibiton (B-Complex Liquid) Pyrifed(Paracetamol Syrup) Catazol (Nasal Drop) Citrasol (Systemic Alkaliser) Kasatol(F) (Mucolytic & Bronchodilator) ANTISEPTICS Benpovidone 100/500 ml (Povidone iodine 5 % ) Bensol 32
Household Disinfectants: Bleaching Powder Category Composition Presentation Disinfectants Calcium Hypochloride Available Chlorine minimum 30% 500 gm, 1 Kg & 25 Kg.
Pheneol [ BCPL's Brand Name for Phenyle] Category Composition RWC Presentation Disinfectant for Domestic & Industrial use Coal Tar Acid, Oils & Emulsifiers 57 450 ml, 5 Litres & 20 Litres
Pheneol - D Category Composition RWC S.A. Value Presentation Disinfectant & Germicidal Agent for Domestic & Industrial use Chlorophen substituted Phenolic Compound & Pine Oil Minimum 5 Minimum 2.5 200 ml bottle
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Klin Toilet Category Composition Presentation Toilet Cleaner Amine based surfactant blended with deodorant 500 ml bottle
Lesol Category Composition Presentation Antiseptic Detergent for surface cleaning Benzalkonium 200 ml bottle
Hair Oil: Cantharidine Category Group Main Ingredients Cosmetics & Home Products Hair Oil Sandalwood Scented has the elixer of Cantharidis (Golden Coloured, Non-sticky Hair Oil) 100 ml, 200 ml, 400 ml
Moth Repellent & Deodoriser 100 gm, 200 gm, 400 gm & 1 Kg.
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Category Presentation
White Tiger Category Presentation Aguru Category Presentation Essence 25ml Floor Cleaner 500 ml, 5 Litres & 20 Litres
2) Projections of Performance and Profitability for the Period of the Proposed Package:
a)
Production & Sales as per Financial Year ending 2008-09: Rs.(in crores) % Growth
Production Sales
89.63 86.82
61 66
This is the highest Production & Sales ever achieved by the company.
b) c)
Loss has been reduced but no Net Profit has been earned during 2008-09. For Financial Year 2009-10, Memorandum of Understanding (MOU) was signed with the Department of Pharmaceuticals, Government. of India to achieve: Production Target Sales Target Rs. 120 crores Rs. 108 crores
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So, there is a scope for improvement in performance and profitability of the company in the near future. 3) Tie-up for Long-Term Funds required to be infused by the Promoters:
The Company is looking for Joint Venture Partner for manufacturing various Vaccines, namely Anti Rabies Vaccine (ARV), Diphtheria Antitoxin (DAT), etc. Department of Pharmaceuticals, Government of India, has opened dialogue with Government of Tunisia for transfer of technology for manufacturing ARV to Bengal Chemicals & Pharmaceuticals Ltd. from Pasteur Institute, Tunisia.
Rehabilitation of BCPL:
Salient Features of Revival Plan Cabinet Committee of Economic Affairs (CCEA) approved Revival Plan and provided fund fdor Upgradation/Modernisation Projectrs to make all the Unit of BCPL Schedule M / WHO-GMP compliant. The Schemes are under implementation in full swing. The Plan, interalia, consists of the following elements:-
(Rs in Crore) a) Infusion of funds by Government of India: b) Waiver of loans and interests on past loans as on 31.03.2005: Total: Waiver of loan/interest by Government of India not to be treated as Income in terms of the Income Tax Act : Not quantified Total : 440.60
207.19 233.41
440.6
Out of Cash Infusion of Rs 207.19 Crores, Rs 145.00 Crores (Rs 55.00 Crores during the year 2006-07 as Equity and Rs 90.00 Crores from 2007-08 to 2011-12 as intrestfree loan) is meant for continuous upgradation of the plant and machinery and 36
technology, Schedule M /WHO-GMP compliance and Joint Venture Projects and Schemes.
Interest-free Loan of Rs 107.49 Crores released by Government of India is to meet the: (i) Settlement of Kolkata Municipal Corporation, (ii) Inter-corporate loan of IPCL (Indian Petrochemicals Corporation Ltd.) & NFL (National Fertilizers Ltd.), (iii) West Bengal Sales Tax Dues Additional support was also given by Government of India in the form of one-
time \ Grant for: Reduction of manpower by VRS and Payment of arrears on account of Pay Revision.
Rehabilitation Outcome:
(i) Although not fully successful, this pioneering pharmaceutical company has been rehabilitated successfully to some extent with GOI-funds through implementation of BIFR-sanctioned scheme. (ii) GOI/MoC&F has since sanctioned around Rs 400 crore towards implementation of its modernization plan as well as restructuring of GOI-loans. (iii)State Government shared its revival efforts initiated by GOI and granted a soft loan of Rs 2.25 crore to enable the said sick unit to settle its past dues of sales tax.
Jessop &
The roots of Jessop & Company Ltd. go back to 1788 when Breen & Company was founded in Calcutta. In 1820, Henry and George, sons of William Jessop acquired Breen & Company on behalf of Butterfly Company established in Derbyshire, England in 1790 by William Jessop. These two companies merged together to become Jessop & Company. Subsequently in 1973, the company was taken over by the Government and Jessop became a Govt. of India undertaking. In 1986, with the formation of Bharat Bhari Udyog Nigam Limited (BBUNL), a Public Sector Holding Company under administrative control of Deptt. of Heavy Industry, Ministry of Industry, Govt. of India, Jessop became a subsidiary of the Holding Company. 37
During the last two centuries, the company has consistently modernized and streamlined its production facilities to keep abreast with the latest technology and has introduced many new products for core sector industries in the country.
1815-1840: First iron bridge (Lohe Ka Pul) over Gomti at Lucknow 1819: First steam boat to sail on Indian waters. 1890: First steam road roller for Indian road and other construction. 1937-1943: First semi balance cantilever bridge over Hooghly River-Howrah Bridge at Kolkata. 1959: First Electrical Multiple Unit (EMU) coach for Indian Railways. 1976: Caisson gates for Haldia Dock Project, first time in India. 1983: Container Quay crane for Madras Port Trust. 1993: Second Hooghly Bridge over river Hooghly (It is a Cable stayed Bridge first in India).
Product Profile: Structures:- Industrial Buildings, Steel Bridges, Technological Structures. HydroMechanical Equipment:- Radial, Vertical, Caisson Gates etc. Cranes:- EOT, Goliath, Steel Mill, Dockside and Port Cranes. Crane Accessories:- Tongs, Hooks, Grabs, Gear Boxes & Couplings. Railway Rolling Stock:- Passenger Coaches, EMU Coaches, Wagons, Loco Shells. Construction Equipment:- Diesel Road Rollers, Tandem Rollers, Vibrato Compactors. Mining Machinery:- Long Wall Roof Supports and Hydraulic Cylinders Vision Statement:
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To emerge as the most competitive quality producer of heavy Engineering Equipments globally upholding transparent business ethics and adding lasting value to all its stakeholders and customers.
Mission Statement: To harness a continuous process of learning and innovation, new technologies and initiatives for continual enhancement of our products & services. To constantly discern the need of our customers enduring a sustained business model fostering growth and prosperity in the organizations corporate image and commitment towards its human resources.
Quality Management System - ISO 9001:2000 Causes of Sickness of BCPL: There have been certain crucial changes in the market scenario which were considered while drawing up the revival package of Jessop. Moreover, the company did not receive the necessary amount of wagon orders from the Indian Railways that was envisaged in the package. Inflow of funds for the revival process was not in line, for accumulation of a property at Durgapur was sold off to Government for Rs.36 crore but payment was made in instalment and there was a lot of delay in disbursement of payments. The company had a very high Debt-Equity ratio, the debt composition in the Capital structure of the company was high from 1999-2003 which is not a positive sign for any company.
2003
2002
2001
2000
1999
Debt-Equity Ratio
4.17
3.62
6.27
4.81
5.80
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Jessop & Co. incurred huge loss which adversely affected in its Net Worth Erosion. As on Net Worth Accumulated loss 31.3.2001 30.9.2001 270.57 290.38 351.81 372.37
Government has made several attempts in the past since 1986 to revive the company through restructuring. The details of reliefs and concessions given by the Government in the past are: (Rs. crore) Year of financial Fund based Non-fund based Total restructuring restructuring restructuring 1986 1997 54.00 52.39 241.55 293.94 52.39 295.55 118.06 466.00
Inspite of huge capital infusion Jessop continued to incur huge losses and had negative PAT from the year 2000-2003
Year PAT
2004 (6.38)
2003 (50.10)
2002 (47.60)
2001 (48.77)
2000 (43.92)
JSL was declared a sick company under the purview of BIFR, BIFR also made attempts to revive the company, but ultimately in August 2000, it declared the revival scheme as having failed and asked the Operating Agency to explore the possibility of changing the management, which signifies inefficient management. Viability Test:
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As
a final attempt to revive the company, Government started the process of disinvestment in JCL. Government approved fresh restructuring proposal (both cash and non-cash based) involving approximately Rs.203.82 crore. - Non funded was conversion of Rs.140 crore outstanding Govt loan in equity and interest waiver was also given in this loan amount. - As Funded restructuring the Government gave financial support of Rs.63 crore to settle the liability of banks.
The networth of the company as on 31.3.2002 even after the financial restructuring by the Government, was likely to be Rs.(-) Rs.17.87 crore. Government received two financial bids for 72% equity stake in JCL. The bid of M/s Ruia Cotex Ltd. amounting to Rs.18.18 crore was more than the reserve price of Rs.12 crore for 72% equity shares.
Government on 27th February 2002 decided to accept the financial bid of M/s. Ruia
Cotex Ltd. for acquiring 72% stake in the equity of JCL for Rs.18.18 crore. This decision was taken because it will also safe guard 1500 jobs of employess which is bound to happen if the company shuts down, this strategic sale will stem the haemorrhage of Rs 40 crore per year.
Pledged shares from promoters was also received (currently for the year ended 2009)
Percentage of Shares (as % of the total shareholding of promoter and promoter group) 11.19
Percentage of Shares (as % of the total share capital) b)Non-encumbered Number of Shares
11.08
54101014 7
Percentage of Shares (as % of the total shareholding of promoter and promoter group) 88.81 41
87.95
Feasibility Test: After continuous attempts to bring back life in the company financially, Jessop is looking for new business prospects, which are not mentioned in its revival package, which has two parts. The first is fund-based, worth Rs 91.2 crore, and the second is non-fund based, worth Rs 277.74 crore. Performance since 2006-2009 has been praise worthy, interims of: 1. 2. 3. 4. 5. 6. Net Worth PAT Book Value EBDIT Debt-Equity Ratio EPS
Thus all the Capital infusion in d company proved to be fruitful as its seen with the performance of the company and better future prospects is expected: - due to set up of new Government so wagon procurement was expected to increase. - due to some railway accidents old wagons were discarded for newer ones. - finally industrial growth was expected to be on the rise Rehabilitation: The Jessop & Co Ltd is now JV-company. With proper and timely steps taken like capital restructuting and change of management from private to public saved the company from becoming another of the many hundreds of a shut-down sick unit. Presently having minority share participation of GOI after disinvestments, Jessop & Co. Ltd. has been successfully revived and ceased to be sick with substantial financial assistance.
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CONCLUSION
Sickness being a natural problem needs timely identification of sick units followed by rehabilitation of viable units. So banks or any other financial institutions who are dealing with MSME units should closely watch their operation. The rehabilitation package should be fully implemented in time after declaration of a unit as viable. Success story of a rehabilitee sick unit is a source of positive thrust to the MSME sector.
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REFERENCES: BIBLIOGRAPHY:
Board of writers of Indian Institute of Banking and Finance (2008) SMALL AND MEDIUM ENTERPRISES IN INDIA. (New Delhi: TAXMAN PUBLICATION (P) LTD., INDIA) 44
Chandra Prasanna (2006) PROJECTS (New Delhi: Tata McGrah-Hill Publishing Company Limited)
WEBLIOGRAPHY:
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