Sickness in small & medium scale Enterprises in Coimbatore
- R. Leelawathi
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.
I NDUSTRIAL DEVELOPMENT OF COIMBATORE DISTRICT
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.