- Research/Scholar Paper name – “Financial Management In Sick Units: An Indian Perspective”
- Author: Girisha Meena
- Co-Author: Ilina Peehu
- Institution: Gujrat National Law University
- Affiliation: Centre for Study of Contemporary Legal Issues
- Date of Publication: 29/12/2021
Abstract:
History bears testimony to the fact that sick business units have always been a predicament of the industrial regime of India. The terminology ‘sick units’ is used to refer to the economically un-viable company that is striving for sustenance in the industry. Ever since our economy ushered into the era of globalization and liberalization, industrial sickness has become a common phenomenon. After all, every industrial unit has to wade through troubled waters during the operational and implementation stage because of environmental factors. A sickness, however, engulfs a unit if it is not able to reasonably utilize its capacity or generate a surplus. A firm faces financial distress in such circumstances and may be forced to the threshold of bankruptcy. This trend is extremely detrimental for an economy especially that of a developing country like India as the possible outcome for such industrial sickness is unemployment and a low production rate. A firm has to ably deal with financial sickness as there stands a thin line of effort on their part between recovery and liquidation. Financial management of such sick units is extremely necessary for effective and efficient management of resources is needed to steer the unit towards recovery. Against this backdrop, the authors in this essay would attempt to undertake a financial analysis of a sick unit.