rehabilitation oof sick industries
baswanth mohan paruchuri
(Querist) 18 January 2011
This query is : Resolved
What is meaning of rehabilitation in exact legal terminology and in relation to sick industires?
malipeddi jaggarao
(Expert) 20 January 2011
Rehabilitation in relation to sick industries means nursing the industry to bring it back to health. The Industry as well as the financing agency require to take steps for rehabilitation.
The Sick Industry may be required to :
(i) observe financial discipline by reducing expenses
(ii) bring additional funds by way of capital
(iii) Bring change/strengthen the Management
(iv) dispose of slow moving stocks and old machinery
(v) diversify lines of production.
The Financing agency need to examine following points for rehabilitation assistance:
(i) additional term loan for replacement of old and obsolete machinery
(ii)additional working capital finance;
(iii) rephasing the unpaid instalments in the existing loan account;
(iv)funding of unpaid instalments and interest;
(v) giving moratorium on repayment of principal and interest and waiver penal intrest. Some times reduction in rate of interest.
This is all about rehabilitation of sick units.
