Analysis of sickness in Indian industry (a case study on anusika industries

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PREPARED BY: ROHIT MALIK ROLL NO.01015903909

‡ BY THE COMPANIES (SECOND AMENDMENT) ACT. sickness and death is an inevitable aspect of trade and industry. 2002 ‡ Defines a sick company as one: ‡ Which has accumulated losses in any financial year to 50 percent or more of its average net worth during four years immediately preceding the financial year . this is unavoidable in any economy. An industry flourishing today may face closure tomorrow while an industry languishing today may turn the corner and grow rapidly tomorrow.About the topic ‡ Industrial sickness: Just like birth and growth. . or ‡ Which has failed to repay its debts within any three consecutive quarters on demand for repayment by its creditors.

‡ C)change in international scene.The causes of industrial sickness can be categorized into:‡ Internal Causes ‡ A)Personal constraints ‡ B)marketing constraints ‡ C)production constraints ‡ D)finance constraints ‡ E)management constraints ‡ External Causes ‡ A)improper credit facilties ‡ B)import restrictions.Cont ‡ Due to the liberelisation of economy competion has increased and industrial sickness has grown at alarming pace. ‡ D)unfavourable government policies .

‡ BIFR sends the revival package to all interested parties. .Cont ‡ REHABILITATION OF SICK INDUSTRIAL UNITS ‡ BIFR directs operating agency to prepare suitable revival package. ‡ Sacrifices made by various organizations. ‡ After careful examination of Draft Rehabilitation Scheme BIFR will sanction the revival scheme with or without modifications.

00 165.03.30 Gross Block Less: Depreciation Net Fixed Assets 1016.30 456.56 3.36 4.in lakhs) As On 31.41 0.23 1.22 17.00 165. Loans & Advances 0.25 1109.00 Secured loans Unsecured loans TOTAL SOURCES OF FUNDS APPLICATION OF FUNDS 0.33 . 2.40 15.32 7.93 229.92 Capital Work in Progress Investments Current Assets .61 78.94 25.33 671.00 11.00 7.94 0.00 280.28 23.93 355.03.07 As On 31.09 Share capital Reserve & surplus Loan funds 280.87 344.07 12.00 12.77 91.00 11.03 17.46 1108.31 185.43 0.41 456.Analysis of sickness in anusika industries ltd.58 3.84 753.1 ANALYSIS OF BALANCE SHEET As On PARTICULARS SOURCES OF FUNDS 31.99 6.89 393.08 (`.03.00 7.93 136.94 8.43 457.94 Inventories Sundry Debtors Cash & Bank Balance Loans & Advances Other Current Assets Total Current Assets Less: Current Liabilities & Provisions 19.00 280.15 714.08 15.00 165.

00 19 ..09 0. 8 31.64 2.44 11.07 97.04 0.33) INCOME TAX Income Tax Other Adjustments 3.53) 6. 3. 8 Sales Ot er re e ue (i cl j T tal Income 0.75 99. 3.68 125.91 33.07 43.06) NET PROFIT/(LOSS) FOR THE YEAR (16.83) 192.30 8.01) 50.69 w r ) 167.00) 235.08 (2.i l s)  '  Audited    %  .70 (34.92 (0.84 0.74 (42.expenses Selling expenses Financial charges Depreciation Increase/(Decrease) in Stock TOTAL EXPE DITURE NET PROFIT/(LOSS) 3.76 1.00 164. I C 31. 3.41 1.76 EXPE DITURE Consumption of raw material Pa ment of Employee Manufacturing expenses Admn.21 46.53 47.02 (0.62 0.95 (27.00 198.69 164. E 4.08 171.09 .Cont ANALYSIS PARICU ARS Audited As Audited As As 31.40 4.31 39.62) (43.84 19 .41)    © ¨§ ¦   $ $ $     & #  "   ! ¥ ¤ ¡ £ ¢ ¡  I LOSS ACCOUNT ( `.91) EFORE (20.54 10.09 0.

‡ Heavy burden of interest payments.Cont ‡ REASONS FOR SICKNESS ‡ ‡ The main reasons for sickness have been identified as under: ‡ Lack of adequate working capital ‡ Prolonged labor strike which continued for more than 3 years ‡ Low capacity utilization due to prolonged strike of workers. ‡ Roadblock to execute the orders which were sufficient in hands. .

. ‡ Relief s and concessions from various concerned parties.Cont ‡ PROPOSED REHABILITATION STRATEGY ‡ The proposed strategy for revival of the company is as under: ‡ Settlement with the secured creditor. ‡ Capital expenditure for repairs / upgradation / replacement of old plant & machinery. ‡ Re-start of Operations ‡ Payment of Other unsecured creditors ‡ Induction of fresh funds by the promoters.

00 270.f f Da te 1 2 MEANS 0 0 ( 1 ) ) ( 1 C ST F SCHEME 50.58 3.00 137.00 31.Cont Cost of Scheme and Means of Finance (``. Working capital requirement (Ist year) T T AL Promoters' contribution .03. in Lakhs) Capital Expenditure Pay ent o unsecured creditors * Pay ent o workers dues Addl.2010 .00 170.Equity Internal Accruals T T AL Cut.74 270.00 1 1 F FINANCE 100.68 78.

Provident fund From workers From promoters CONCLUSION: net worth of the company becomes positive in the first year of rehabilitation due to induction of fresh funds by promoters and the entire losses will be wiped out in the second year of rehabilitation. State Government of Rajasthan State Electricity Board / Power Supply Company From central government. .Cont ‡ PROPOSED RELIEFS & CONCESSIONS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ FROM FINANCIAL INSITUTIONS / BANK FROM THE STATE GOVERNMENT OF RAJASTHAN Sales Tax Department.

. adopted by government.objectives ‡ Primary objective :i) To analyze the various factors of industrial sickness and to find out the causes of sickness. financial institutions and entrepreneurs on industrial growth. in conducive industrial environment etc. quality control. ii) To analyze the impact of remedial measures. ‡ Secondary objective :(i) To study and analyze the problems being faced by sick entrepreneurs on causes of sickness especially non availability of bank credit.

. the net worth may become positive but in actual it suffers from losses).Research methodology RESEARCH DESIGN :Exploratory Research Design DATA COLLECTIONS:primary and secondry data LIMITATIONS:Not able to cover the Practical aspect i.e the actual working of the company (because in the books.

they face marketing problems. however. Again. Thus. They also face problems in getting timely supply of raw materials since they do not have institutional arrangements for raw material supply. . More than half of the entrepreneurs have received financial assistance. most of the entrepreneurs do not advertise their product and conduct marketing research.findings ‡ The study findings demonstrate that most of the entrepreneurs use intermediate and traditional technology of production. there is gap between amount of loan applied and loan received.

management institutions and government must extend help in marketing the products. .recommendations ‡ To improve standard of living workers should be enabled to move from lower value added to higher value added jobs. ‡ To motivate the first generation entrepreneurs and to encourage industrialization. ‡ Education should focus on fostering a culture that encourages innovation and manufacturing so that people get trained for alternate avenues of employment.

. from this study following conclusions can be drawn:a.)The main reason for sickness of a firm is non-availability of working capital. b.)Only those sick units get revival package which can be rehabilitated within a specified period of 7 years. c.)If proper relief s and concessions are timely granted by various financial institutions many sick units can be prevented from shutting down.conclusions ‡ Conclusions are based on analysis. observations and results.

by H.S Kaicker.Bharat. Snow White.Taxman. ‡ Mergers and Amalgamations. Takeovers and Corporate Restructure.bibiliography ‡ BIBLIOGRAPHY ‡ Sick Industrial Companies.R Sampath. by K.6th edition . .S Pahwa. by P. ‡ Sick Industrial Companies.P.

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