Sick­ness in small & medium scale En­ter­prises in Coim­bat­ore

- R. Leelawathi

Economic Challenger - - NEWS - R. Leelawathi PH.D. Re­search Scholar, Com­merce Depart­ment, Peri­yar Univer­sity, Salem-636011 Tamil­nadu, Cell: 9442958679, 9626133672, email:


Small and Medium Scale En­ter­prises are play­ing a cat­alytic role in the in­dus­trial de­vel­op­ment of the coun­try. Th­ese in­dus­tries form an in­te­gral part of the In­dian eco­nomic struc­ture. Small and Medium Scale en­ter­prises in the national econ­omy have been rec­og­nized on ac­count of their po­ten­tial­ity for cre­at­ing sub­stan­tial em­ploy­ment op­por­tu­ni­ties at a rel­a­tively small cap­i­tal base, fa­cil­i­tat­ing mo­bi­liza­tion of lo­cal re­sources so as to en­sure a more eq­ui­table dis­tri­bu­tion of the national

in­come. “Sound mind dwells in the sound body. An un­sound body is al­ways at­tacked by harm­ful bac­te­ria which causes sev­eral

dis­eases” . Like an un­sound body mis­man­aged in­dus­try also be­comes sick which causes sev­eral epi­demics to the na­tion and whole of the so­ci­ety. Small and medium scale en­ter­prises not be­ing fi­nan­cially strong are more sus­cep­tiable to even mi­nor mal­func­tions and tend to be sick.

Au­nit is said to be healthy when it shows cash profit, pos­i­tive net work­ing cap­i­tal and pos­i­tive net worth. But in a unit when any of th­ese be­comes neg­a­tive the unit is re­garded as a sick unit. A unit func­tion­ing be­low 20 per cent of its op­er­at­ing ca­pac­ity is also called as a sick unit.

Re­serve bank of In­dia con­sid­ers a unit be­ing sick when that unit in­curs cash losses dur­ing their suc­ces­sive years or when that unit has cur­rent li­a­bil­i­ties in ex­cess of cur­rent as­sets, or when that unit has a wors­en­ing debt eq­uity ra­tio. In­dus­trial sick­ness will have ad­verse ef­fect on the national econ­omy. PER­FOR­MANCE OF SMEs

It has a great po­ten­tial for growth and con­sis­tency gen­er­at­ing high growth rate by pro­duc­ing more than 8000 prod­ucts across sec­tors like food prod­ucts, ba­sic me­tal prod­ucts, chem­i­cals and chem­i­cal prod­ucts, elec­tri­cal and ma­chin­ery parts, rub­ber & plas­tic prod­ucts etc. The govern­ment of In­dia has come up with var­i­ous poli­cies, the act and the schemes to boost the per­for­mance of SMEs but much de­pends on the ef­fec­tive and timely im­ple­men­ta­tion of th­ese poli­cies.

The Small Sec­tor has unique ad­van­tages and as such small is not only beau­ti­ful, but also ben­e­fi­cial ef­fi­cient and re­li­able. Small scale in­dus­tries are those which do not or­di­nar­ily em­ploy more than 100 per­sons with­out power or 50 per­sons with power and work­ing cap­i­tal less than Rs. 5 lakhs. “Man­u­fac­tur­ing en­ter­prises ” means an in­dus­trial un­der­tak­ing or a busi­ness con­cern or any other es­tab­lish­ment by what­ever name called en­gaged in the man­u­fac­ture or pro­duc­tion of goods in any man­ner per­tain­ing to any in­dus­try spec­i­fied in the first sched­ule to the in­dus­tries Act 1951. Man­u­fac­tur­ing En­ter­prises, where the in­vest­ment in plant and ma­chin­ery is more than Rs. 25 lakhs but does not ex­ceed Rs. 5 crores are clas­si­fied as Small Man­u­fac­tur­ing En­ter­prises . Man­u­fac­tur­ing en­ter­prises, where the in­vest­ment in plant and ma­chin­ery is more than Rs. 5 crores but does not ex­ceed Rs. 19 crores are clas­si­fied as Medium Man­u­fac­tur­ing en­ter­prises . “Ser­vice En­ter­prises” means an in­dus­trial

un­der­tak­ing or a busi­ness con­cern or any other es­tab­lish­ment, by what­ever name called, en­gaged in pro­vid­ing or ren­der­ing of any ser­vice or ser­vices. Ser­vice en­ter­prises, where the in­vest­ment in equip­ment is more than Rs. 10 lakhs but does not ex­ceed Rs. 2 crores are clas­si­fied as Small Ser­vices En­ter­prises . Ser­vices en­ter­prises, where the in­vest­ment in equip­ment is more then Rs. 2 crores but does not ex­ceed Rs. 5 crores are clas­si­fied as Medium Ser­vices En­ter­prises.

Tamil Nadu Small in­dus­tries De­vel­op­ment Cor­po­ra­tion com­monly known as SIDCO was es­tab­lished on 16th March, 1970 by the govern­ment of Tamil Nadu with the main ob­jec­tives of as­sist­ing and pro­mot­ing the in­ter­ests of small scale in­dus­tries in the state by pro­vid­ing the ser­vices, for­ma­tion and main­te­nance of in­dus­trial es­tates, as­sis­tance in raw ma­te­rial dis­tri­bu­tion and as­sis­tance to small in­dus­tries in mar­ket­ing their prod­ucts be­ing given through mar­ket­ing as­sis­tance scheme.


The sick in­dus­trial unit is con­sid­ered as sick when if any of the bor­row­able ac­counts of the unit re­mains sub­stan­dard for more than six months. An ap­pro­pri­ate re­ha­bil­i­ta­tion pack­age for the re­ha­bil­i­ta­tion of sick Small and Medium Scale En­ter­prises in the state was an­nounced in the SME pol­icy 2008. The pol­icy en­vis­ages as­sis­tance for con­duct­ing of a di­ag­nos­tic study of sick en­ter­prises, scru­tiny of the di­ag­nos­tic study re­ports by a sub-com­mit­tee of the state level in­ter in­sti­tu­tional com­mit­tee (SLIIC) con­sti­tuted by the Re­serve Bank of In­dia and its rec­om­men­da­tion to the em­pow­ered state level re­ha­bil­i­ta­tion com­mit­tee (SLRC) for ren­der­ing re­ha­bil­i­ta­tion as­sis­tance to sick Small and Medium Scale En­ter­prises.

Ob­jec­tives of the study

1. To an­a­lyse the causes of in­dus­trial sick­ness in small and medium scale en­ter­prises 2. To ex­am­ine the pat­tern of growth of reg­is­tered units vis-a-vis sick units to bringout what pro­por­tion of units be­com­ing sick out of the to­tal reg­is­tered units. 3. To iden­tify the most/least dom­i­nat­ing rea­son for higher / lower in­ci­dent of sick­ness

Data of the study

The rel­e­vant data per­tain­ing to in­dus­trial sick­ness, reg­is­tered units and other nec­es­sary in­for­ma­tion is ob­tained from the re­ports of Dis­trict In­dus­trial Cen­tre in Coim­bat­ore. This In­for­ma­tion re­lat­ing to the rea­sons for sick­ness and other prob­lems faced by the en­trepreneurs of Small and Medium Scale en­ter­prises is ob­tained by ad­min­is­ter­ing ques­tion­naires to them. Apart from this we have also met the of­fi­cers of var­i­ous gov­ern­men­tal agen­cies en­gaged in pro­mot­ing small and medium scale en­ter­prises – Raw ma­te­rial ser­vic­ing cen­tre in Coim­bat­ore Dis­trict in­dus­trial cen­tre.

Lim­i­ta­tions of the study

The study cov­ers only the data per­tain­ing to to­tal reg­is­tered small and medium scale en­ter­prises as well as the reg­is­tered sick units. The regis­tra­tion of Small and Medium Scale En­ter­prises is purely vol­un­tary on the part of the en­trepreneurs. There­fore, the regis­tra­tion is oblig­a­tory only to those en­trepreneurs who are in­ter­ested to avail ameni­ties, con­ces­sions and loan fa­cil­i­ties from the var­i­ous gov­ern­men­tal agen­cies. Though there is a large num­ber of un­reg­is­tered work­ing units and sick units, th­ese units will not come un­der the purview of our study.

The Re­ha­bil­i­ta­tion Pack­age

The sick units should be in­jected back to good health if they are cur­able. If they are in­cur­able, they should be closed or al­lowed to them die, just to avoid the bur­den on the so­ci­ety. Awar against in­dus­trial sick­ness must be waged, oth­er­wise we can­not come out from such tra­vails of sick­ness and th­ese will suck the blood of the econ­omy like par­a­sites. Where any small and medium scale in­dus­trial unit turns sick some bank would be re­quired to par­tic­i­pate in the re­ha­bil­i­ta­tion pack­age. In sick units where

work­ers are in­ter­ested in tak­ing over the man­age­ment by form­ing work­ers co­op­er­a­tives, banks have been ad­vised to ac­tively sup­port the re­ha­bil­i­ta­tion pro­gramme.


The pri­mary source of state GDP in Tamil Nadu comes from the out­put of Small and Medium Scale En­ter­prises. Coim­bat­ore has been ranked 4 th among In­dian cities in in­vest­ment cli­mate by a sur­vey made by the Con­fed­er­a­tion of In­dian In­dus­try. The Coim­bat­ore city has been ranked num­ber 17 th among the top global out­sourc­ing cities.

Coim­bat­ore is reck­oned as one of the few big in­dus­trial towns of Tamil Nadu. The 1000 small and medium tiny in­dus­tries in­clud­ing an­cil­lar­ies and job­bing units have helped Coim­bat­ore to be rec­og­nized. As a sig­na­ture of Tamil Nadu, in­dus­tries in Coim­bat­ore are pro­duc­ing a va­ri­ety of en­gi­neer­ing prod­ucts and com­po­nent ac­ces­sories to cater to the needs not only to Tamil Nadu but also to In­dia. Coim­bat­ore is house to the tex­tile in­dus­tries, au­to­mo­tives parts, com­po­nents, tech­ni­cal in­sti­tute and a lot of en­trepreneurs. Coim­bat­ore is poised to be­come a global man­u­fac­tur­ing hub.

Coim­bat­ore houses a large num­ber of small and medium tex­tile mills. It also has cen­tral tex­tiles re­search in­sti­tutes like the cen­tral in­sti­tutes for cot­ton re­search (CICR) - south­ern re­gional and the sar­dar val­lab­hai pa­tel in­ter­na­tional school of tex­tiles and man­age­ment. The south In­dian tex­tiles re­search as­so­ci­a­tion (SI­TRA) is also based in Coim­bat­ore. The city is the sec­ond largest soft­ware pro­ducer in Tamil Nadu, next only to Chen­nai. IT and BPO in­dus­try in the city has grown greatly with the launch of TIDEL park and other planned IT parks in and around the city.

In Coim­bat­ore city there are more than 25, 000 small medium and large in­dus­tries. The dis­trict also houses coun­try's largest num­ber of hosiery and poul­try in­dus­tries. The Coim­bat­ore city has two spe­cial eco­nomic zones, the Coim­bat­ore high- tech in­fra­struc­ture and Coim­bat­ore IT, TIDEL Park and at least five more zones. The Coim­bat­ore is the high­est rev­enue gen­er­at­ing dis­trict In Tamil Nadu. Glob­al­iza­tion has changed things by all in­di­ca­tions and small and medium scale in­dus­trial units have fared bet­ter than large in­dus­tries af­ter glob­al­iza­tion. Coim­bat­ore is no ex­cep­tion.

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