Prevantion and Remedies

7/30/2019 Prevantion and Remedies

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By-

MHENDI HASAN

&

PIYUSH KUMARJAISWAL

Prevention and Remedies of

industrial sickness


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PREVENTIVE MEASURES AND ROLE OF

CONCERNING AGENCIES :

following agencies have different role to prevent the

industrial sickness-

Term Lending Institutions. Commercial Banks.

Entrepreneur.

Government.


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ROLEOF TERM LENDING INSTITUTIONS

Appraisal of Management.

Banning Industries Not Having Scope.

Machinery & Equipment.

Satisfactory Implementation.


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ROLEOF COMMERCIAL BANKS

Careful Project Appraisal.

Timely disbursement.

Establishing Co-operation with term lender.

Warning Signals. Market Intelligence.

Stemming Sickness.


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THE ROLEOFTHE ENTREPRENEUR

Management Board.

Considering term lender as Partners in Enterprise.

The Role of the Government

Sudden changes in industrial policy.

Resistance to change.

Power to change.


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RBI COMMITTEESON SICK UNITS

TANDON COMMITTEE

It suggested a two-pronged strategy to effectively

deal with industrial sickness. The first was theintervention by the Banks, who had given loans and

advances to the unit, in their management.Secondly,

it suggested the reorganization or the financialstructuring of the units including reliefs like additional

financial assistance, rescheduling of existing loans.


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H.N RAY COMMITTEE

In 1976, the Government of India constituted a

committee under the chairmanship of Shri H.N. Ray,

the then Secretary of the Ministry of Finance,

Government of India. This Committee was asked to

look into the question whether it was feasible tomerge productive enterprises which were in financial

difficulties or were sick with healthy units, so that the

combined undertaking could function more

effectively. The Committee submitted its Report tothe Government in July 1976, making certain

recommendations.


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STATE LEVEL INTER INSTITUTIONALCOMMITTEES (SLIICS)

This Committee chaired by the Secretary, Industry

of the concerned State Government were

constituted by RBI in the late 1970s in all the

States. It provides a forum for adequate interface

between the State Government officials and Statelevel institutions on the one side and the term

lending institutions and banks on the other. A sub-

committee of SLIIC has also been set up wherein

the borrowers and concerned banks discussed theissues of rehabilitation


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CONTINUE

RBI had issued detailed guidelines on March 26,

1981 on the constitution of SLIIC. As per above

guidelines, the Secretary (Industries) of the

concerned state government would be the

Chairman of the Committee and Director, SISI,representatives of SFC, SIDC, IDBI and 3-4 banks

with majority presence as members. Reserve Bank

is the convener. The major function of the forum

was to monitor / review cases of rehabilitation ofsick SSI units


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THE KOHLI WORKING GROUP, 2002

The RBI set up a Working Group in 2002 under the

Chairmanship of Shri S. S. Kohil, Chairman, Indian

Banks Association to review the existing guidelines

in regard to rehabilitation of sick units in the small

scale industrial sector and to recommend therevision of guidelines making them transparent and

non-discretionary


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REVIVAL PROGRAMMES

Settlement with the creditors.

Provision of additional capital.

Disinvestment Disposals.

Modernization of plant& machinery.

Reduction in manpower.


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CONT..

Strict control over costs.

Change of management.

Workers participation.

Merger and acquisition with healthy firms.

Diversification of the company.


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TENDING

TOWARD

SICKNESS

HEALTHY

UNIT

INCIPIENT

SICKNESS

SICKNESS

DEATH

Neglect &

Inaction

Further

Delay

Prev. & corr.

Action taken

Prev. & corr.

Action taken

Remedial

measure

Further

deterioration

and non-viability


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CONCLUSION

There is need to carry out a detailed study of sick units in

the sector. In particular, it is appropriate to draw lessons

from both successful as well as failed cases in

rehabilitation. Government should hike its spending to

motivate and boost the Small scale sector in the country.

So finally we can say that only financial and management

rehabilitations of the sick units will not bring the desired

result unless Govt. assistance in the form of reduced

taxes, duties, concessions on various charges like gas,electricity & oil etc.

.


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Prevantion and Remedies

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