FINANCIAL MANAGEMENT IN SICK UNITS

Abstract

In India, the term ‘sick units’ refers to economically unviable firms which are kept alive ‘in the public interest’ by means of subsidies of various kinds. Since this practice is common, and large parts of the industrial sector are affected, this phenomenon is referred to as industrial sickness. As of March 2001, the Reserve Bank of India counted over a quarter of a million of sick units with outstanding credit worth more than a quarter of a trillion of Indian Rupees, i.e. about 1.2 percent of Indian GDP. Recognizing that scarce resources are wasted on a great scale, the Government of India enacted special legislation to tackle the problem, namely, the Sick Industrial Companies Act. The efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specialized function directly associated with the top management. The significance of this function is not seen in the 'Line' but also in the capacity of 'Staff' in overall of a company. It has been defined differently by different experts in the field. The present policy does not favour management take over.