Abstract:
Industrial sickness seems to have become a permanent feature of the Indian economy and has also assumed serious proportions. There is a growing need for business turnaround as businesses are finding themselves in problem situations with which they are not equipped to tackle. Turnaround strategies are the answer to such problems. However, they are not simple to design nor easy to implement.
The study aims at providing managers with a framework with which to approach business turnaround situations in a more informed manner. Units belonging to engineering and cotton textile accounted for more than 50 per cent of the total credit amount outstanding against all sick small and medium scale units. This has been causing grave concern among the government, management, academicians and bankers alike who have been looking for ways and means to cope with this problem. According to a report in Business Line newspaper, there were more than 271,000 sick industrial units in India with outstanding bank credit of Rs. 13,739 crores. Of these, 99 per cent companies belonged to the small- scale industry. The textile industry contributes 4 per cent of GDP and 33 per cent of foreign exchange earnings and is the largest employer, utilising the labour of 30-35 million workers. The industry’s turnover is estimated at Rs 1,30,000 crore. Quite clearly, this industry is important for the country. India’s share in global textile exports is 3 per cent, compared to China’s 13.75 per cent. Maximum of the Cotton based Textile Industries which are the main source of revenue for the Government are turning sick day by day. Therefore, the focus will be on suggesting turnaround strategy which will involve the strategic actions which the textile organization can take to compete in the same business in turnaround situations.
This paper was contributed by Prof.Ashu Sharma, IBS, Jaipur as part of Call for Papers for our World SME Conference 2009
