This document presents information on industrial sickness and revival in three parts. It begins by defining industrial sickness and listing some of the causes, both external like power cuts and government policy, and internal like faulty planning and financial problems. It then describes symptoms of sickness like delays in payments and declining capacity utilization. The final section discusses revival, including conducting a viability study, suggesting measures like debt restructuring or new management, and outlining a potential revival program. It provides Hindustan Motors, maker of the Ambassador, as an example, describing its financial difficulties and plans to turn its Chennai plant into a separate entity.

1. A SUBJECT PRESENTATION OF MERGER
ACQUISITION AND CORPORATE
RESTRUCTURING
ON THE TOPIC:
SICKNESS AND REVIVAL OF SICKNESS
PRESENTED BY:
MANOJ KUMAR
ODIL KUJUR
AMIT KUMAR NAMADAS
MD. NADEEM HASNAIN

2. SICKNESS
INTRODUCTION:Industrial sickness means when an industrial company
which has at the end of any financial year accumulated
losses equal to or exceeding its entire net worth and has
also suffered cash losses in such financial year and the
financial year immediately preceding such financial year.
Industrial sickness means a company failed to repay its
debt within any three consecutive quarters on demand for
repayment by its creditors

3. CAUSES OF INDUSTRIAL SICKNESS

External causes
Internal causes

External causes:

1.Power Cuts:
- lack of power electricity support
- shortage in electricity

4. CONT’D…
2. Erratic supply of inputs:
- shortage of raw material.
- lack of transportation facility.
- high price.
3. Demand & credit restraints:
- no equal balance of demand and supply and lack
of credit facility.
- lack of credit facility.
- storage expanses.
- chance of out of fashion.

5. CONT’D…
4. Government policy:
- change in government policy.
- lack of government support.
- high authority to large unit.

6. 
Internal causes:
1.Fault at the planning & construction stage:
- wrong location area
- absence of market analysis.
- unbalance capital structure.
2. Financial problem:
- unable to repay payment.
- lack of financial support from bank & institution.

7. CONT’D…
3. Defective plant & machinery
- lack of technical & professional skill
- lack of technology
- in efficient in machine.
- high maintenance.
4. Entrepreneurial incompetence
- lack of knowledge of market
- lack of efficient professional skill
- lack of innovation

8. SYMPTOMS OF SICKNESS
DELAY OR DEFAULT IN PAYMENT TO SUPPLIERS, BANK AND FINANCIAL
INSTITUTIONS
IRREGULARITY IN BANK ACCOUNT
ACCUMULATION OF
INVENTRIES
DECLINE IN CAPACITY
UTILIZATION
DECLINE IN THE PRICE
OF EQUITY SHARE
DECLINE IN THE PRICE
OF DEBENTURES

9. REVIVAL OF SICKNESS
When an Industrial Unit is identified as sick a viability study
should be conducted to assess the unit, it covers:
 Market
 Operations
 Finance
 Human Resource
 Environment
The viability study may suggest one of the following
measures:
 Debt restructuring
 Infusion of funds
 Replacement of existing management

10. REVIVAL PROGRAMME
 Settlement with creditors
 Disinvestment and disposal
 Strict control over costs
 Streamlining of costs
 Improvement in managerial systems
 Workers participation
 Change of management
 Merger with a healthy company

11. HINDUSTAN MOTORS
Maker of Ambassador saloon, once the power symbol in
India is set to declare itself sick.
Revenue from its flagship product Ambassador tumbled
Slow to respond to aggressive competition from
multinational players such as Suzuki and Hyundai due to its
design which has remained virtually unchanged for over 6
decades
It had a negative net worth of Rs. 36 crore on June 30th
2013
Board of Industrial and Financial Reconstruction (BIFR)
A central Govt. agency that helps restructure bankrupt
companies or close down sick unit.
HM is the third automobile company to report in BIFR’s
door after PAL, the maker of Premier Padmini and FIAT
India.

12. REMEDIAL
Chennai Plant is being planned to turn in to a separate
entity.
The Chennai unit does contract manufacturing for auto
giants such as
Mitsubishi and Isuzu.
It also intends to bring in foreign investment for its
Chennai and West Bengal units.
It recently launched the BS-IV Ambassador Encore and
is developing a sub-4 metre version.
Besides Ambassador, HM also has Winner trucks in its
portfolio.
The company management says overall vehicle sales
would increase to 7,500 units this year.