Sick Industrial Units in India


Definitions

A small scale industrial (SSI) unit is one in which investment on plant and machinery is limited to a maximum of Rs. 30 million.

A 'tiny' industrial unit is one in which investment in plant and machinery is limited to a maximum of Rs. 2.5 million.


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Industrial units proven to be unable to financially sustain themselves are generally called "sick units" in India. A merely financially-troubled company DOES NOT automatically become a sick unit: it has to be designated as such by the federal government. The Board for Industrial and Financial Reconstruction (BIFR) is assigned with the responsibility of hearing cases that apply for being declared sick and deciding whether or not the unit deserves to be termed "sick." The BIFR is also the authority that must approve takeover of a sick unit. The ultimate recourse in tackling a sick unit is its liquidation by liquidators based in different parts of the country, but revival possibilities are many to avert liquidation.

With the Indian economy opening up progressively since 1991, foreign investors may find take-over of sick units a better alternative to building a unit from scratch. But they have to obtain the approval of the BIFR.

Not all sick units are beyond redemption. A genuine lack of demand for products is RARELY the reason for an industrial unit to go sick in India. Most of them go sick due to inefficient management, over-staffing or obsolete production equipment and techniques. A few cases could arise from dishonesty of the company's promoters who deliberately let their unit go sick after they have transferred funds to their other companies. Some others may find it attractive to approach the BIFR in order to delay payments to their creditors. But such cases of dishonesty are few and far between. Most cases are genuine.

As of March 1995, according to a report in Business Line newspaper, there were more than 271,000 sick industrial units in India  with outstanding bank credit of Rs. 13,739 crores (1 crore = 10 million). Of  these, 99 per cent companies belonged to the small- scale industry.

These sick companies accounted for 6.7 per cent of the total bank credit and 13.3 per cent of the total bank advances to industry. However, the ratios were significantly lower than in the preceding two years, it adds.

The share of the small-scale industry in the list of sick units was at more than 99 per cent. This was despite a positive growth rate of the small-scale sector during the year. Let this statistics however not cloud the fact that the growth of the small-scale sector in India is usually above the growth rates achieved by the industrial sector as a whole.

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Official liquidators of sick units in India

AGARTALA AHMEDABAD ALLAHABAD
BANGALORE KOLKATA CHANDIGARH
CHENNAI COCHIN CUTTACK
DELHI GUWAHATI HYDERABAD
IMPHAL INDORE JAIPUR
MUMBAI NAGPUR PATNA 

AGARTALA
DEPUTY REGISTRAR
OFFICIAL LIQUIDATOR AND
REGISTRAR JUDICIAL
COMMISSIONER
TRIPURA,
AGARTALA - 799001
TELEPHONE: (91 381) 223 180

AHMEDABAD
OFFICIAL LIQUIDATOR
ATTACHED TO THE HIGH
COURT OF GUJARAT AT
6, NAVYUG CONY,
NEAR GUJARAT VIDYAPITH
ASHRAM ROAD,
AHMEDABAD - 380014
TELEPHONE: (91 79) 446 044

ALLAHABAD
OFFICIAL LIQUIDATOR
ATTACHED TO THE HIGH
COURT OF UP AT
33, TASHKANT MARG,
CIVIL LINES
ALLAHABAD - 211 001
TELEPHONE (91 532) 624 943

BANGALORE
4th FLOOR
D&F WING KENDRIYA SADAN
KORAMANGALA
BANGALORE - 560034
TELEPHONE: (91 80) 553 7742

KOLKATA
9-D POST OFFICE
5th FLOOR
CALCUTTA - 700001
TELEPHONE: (91 33) 2248 2483

CHANDIGARH
SCO NO. 9
2ND FLOOR SECTOR- 26
CHANDIGARH - 160019
TELEPHONE: (91 172) 770 378

CHENNAI
KURALAGAM
BLOCK I, 1ST FLOOR
ESPLANADE, CHENNAI - 600108
TELEPHONE: (91 44) 534 1574

COCHIN
CERMAL BLDG.
BANERJI ROAD
COCHIN - 682018
TELEPHONE: (91 484) 355 335

CUTTACK
2nd FLOOR
CHALCHITRA BHAWAN
BUXI BAZAR
CUTTACK - 753001
TELEPHONE: (91 671) 621 959

DELHI
A2, W2, CURZON ROAD
BARRACKS K G MARG,
NEW DELHI - 110001
TELEPHONE: (91 11) 338 8405, 338 9507

GUWAHATI
HIGH COURT
GAUHATI - 781001
TELEPHONE: (91 361) 540 386

HYDERABAD
3-5-398 1ST FLOOR
KENDRIYA SADAN
SULTAN BAZAR KOTI
HYDERABAD - 500195
TELEPHONE: (91 40) 465 6780

IMPHAL
HIGH COURT OF ASSAM
IMPHAL BENCH - 795001
TELEPHONE: (91 3852) 391 583

INDORE
HIGH COURT OF MP
M G ROAD
INDORE - 452001
TELEPHONE: (91 731) 433 568

JAIPUR
B - 75/A
RAJINDER MARG
BAPU NAGAR
JAIPUR - 302015
TELEPHONE: (91 141) 513 289

MUMBAI
BANK OF INDIA BLDG.
5th FLOOR
M G ROAD, MUMBAI - 400023
TELEPHONE: (91 22) 267 1851

NAGPUR
2nd FLOOR,
NEW SECRETARIAT BLDG.
EAST WING CIVIL LINE
NAGPUR - 440001
TELEPHONE: (91 12) 522 934

PATNA
MAURYA LOK COMPLEX
BLOCK A 4th FLOOR
DAK BANGLOW ROAD
PATNA - 800001
TELEPHONE: (91 612) 221 002

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