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Is it a sin a company becoming sick ?How?

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Question added by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice
Date Posted: 2014/01/20
Subhranshu Ganguly
by Subhranshu Ganguly , Quality Analyst. , WIPRO

·         Many companies become sick just to retrench employees or  to deny a share of profits to the employees.

·         In India there is the BIFR and many firms applied for that just to avoid their commitments. This is done through window dressing ie by showing lower than actual profits or losses by manipulating the balance sheet of the company.

·         When the factories are located in prime locations and the value of the real estate is very high compared to the prospect of future profitability  of the co the companies have been made sick. The employees retrenched and the property developed as a multistoried, shopping  Mall  or housing cum office complex. This has happened in many jute mills in suburban Calcutta and cotton textile mills in Mumbai and Gujrat.

·         The management should try its best to bring a production process out of the red. Even then if it fails then that is acceptable. But other wise to take over a firm just to take over the real estate and sell  the plant and machinery , after making it sick is bad corporate practice.

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

Becoming sick by itself is not a sin.Companies are started to run successfully only.The successful companies contribute to the society in many ways like revenue to the government,employment ,growth of other industries like ancillory industries etc.,So society is benefitted inmany ways.At times ,because of reasons beyond the control of the company,the company becomes sick, the society is dutybound to rescue such industries.That is why rescue measures are initiated by Government.Industrial sickness is a world wide phenamenon.Governments resort to rescuing industries.So industrial sickness is not a sin.

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