PRESENTED BY

ABHINAV SRIVASTAVA 2007101001 P.G.D.M B.B.D.N.I.T.M

SICK UNIT
According to Sick Industrial Companies Act, 1985 ØIt was registered for at least 7 year . ØIt incurred cash from losses for the current and the preceding year. According to RBI ØA sick unit is one which incurs cash losses for one year and in the judgment of the bank it is likely to continue to incur cash losses for the current year as well as for the year .

CAUSES OF SICKNESS

 Internal  External

causes causes

Internal causes
      

Planning Implementation Production Labour management Marketing management Financial management Administrative management

External causes
    

Market saturation Extraneous factors Government price controls Non-availability of adequate finance Non availability of irregular supply of critical raw materials or their inputs.

Objective Of SICA

The SICA had been deal in the public interest to deal with the problems of industrial sickness with regard to the crucial sectors where public money is locked up.

It contains special provisions for timely detection of sick and potentially sick industrial companies, speedy determination and enforcement of preventive, remedial and other measures with respect to such companies.

Govt. Concessions and  The Government of the Sick various Incentives for India provided Sector

concessions and incentives to the Sick sector for their sustained growth
◦ Assisting new Sick units on soft terms by lending institutions, ◦ Reservation of Certain Industries for the SSI sector, ◦ Incentives related to land/shed financing, machinery and raw-materials, ◦ Provision of facilities within the Industrial Estates, and ◦ Excise duty exemption and price preference

.

CASE STUDY ON NICCO BATTERIES LTD

ABOUT NICCO Corporation Ltd

Nicco Corporation Limited (NCL) is the flagship company of the Nicco Group. For nearly over six decades, NCL has been one of the pioneers in cable manufacturing industry. It produces a wide range of power, control, instrumentation and telecom cables and provides a spectrum of engineering services and executes turnkey projects. Established in 1942, the US$ 67 million NiccoGroup is a widely respected Indian industrial powerhouse.

NICCO’s PRODUCT
Aircraft & Air Field Cables  Fire Retardant Low Smoke Cables (FRLS)  Automobile Cables  Oil Rig Cables  Copper Conductors  Cables For Cranes  Elevator Cables (lift Cables)  Furnace & High Temperature Cables  Marine Cables  Power Cables

NICCOBATTARIES LTD amalgamated with  NICCO BATTARIES LTD.

NICCO Corporation LTD (NCL) with effect from 1 April 1994 as per the amalgamation scheme In the amalgamation scheme the entire undertaking of NBL shall be transferred to NCL and the transferee company, that is, the NCl shall issue and allot the share holder of the NBL share in the transferor company in the proportion of 2 share of the face value of Rs10 each of the transferee company for 13 equity share of the face value Rs.10 each

…..

Contd…

The rehabilitation –Cum-amalgamation scheme envisages settlement of dues of the bank and the institution, payment to pressing creditors besides capital expenditure of Rs 163 lakhs.

A Cost of the scheme: Ø Ø Ø Ø Ø Capital expenditure Settlement of dues of the banks Payment of unsecured loans from Payment of pressing creditors Margin money for working capital TOTAL B Means of finance •Promoter’s contribution out of internal accruals of NCL •Benefit under section 72 A of IT Act,1961 TOTAL (Rs in lakhs) 477.00 400.00 877.00 ( Rs in lakhs) 163.00 619.00 20.00 18.00 57.00 877.00

The scheme for amalgamation of NBL , with NCL shall be under section 72A of the IT Act,1961 and shall be effective from 1 April ,1994 . The carried forward accumulated loss of NBL is estimated at Rs 1896 lakhs as on 31 March 1994. The estimated tax set –off at the current rates of IT Act , 1961 is restricted to Rs . 400 lakhs.

Benefits in the merger of sick unit to the NCL 
Synergistic operating economies Diversification Taxation advantages Growth advantage Production capacity reduction Managerial motivate Acquisition of specific asset
     

Risks in the merger of sick unit  Dilution of competition in the market to the NCL

Actual or a potential competitor, may get eliminated. Efficient and growing medium or small-sized undertaking. May exercise a market power to the detriment of its customers and suppliers.

CONCLUSION

The rehabilitation of sick unit is an important aspect for the economic growth of the country as well as the growth of the country in the above case of NCL & NBL we can say that the share exchange ratio is 2 : 13 and the cost of scheme is Rs 877 lakhs . Which is large amount for merger though this we can conclude that the merger of NBL was the requirement of time and now it contribute major part of share of NCL.

THANKYOU

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