INDUSTRIAL SICKNESS

Presented by: Swathi Patil

Meaning:
Industrial sickness can be defined as a condition where in an industrial unit fails to generate surplus on a continuous basis and depends on frequent infusion or external funds for it survival

Definition:
According to Sick Industries Companies Act 1985, an industrial company was defined as sick when: It was in existence for not more than 7years.

Its net worth was eroded by losses.

Incurred cash losses for the current years and the preceding year

According to Companies Amendment Act 2002, a sick industrial company means an industrial company which has: Accumulated losses in any financial year which is equal to 50% or more of its average net worth during 4years immediately preceding such financial year. Failed to repay its debt within any 3 consecutive quarters on demand made in writing fees its repayment by a creditor of such company

Causes:
Internal causes: Poor handling of labour

Poor management of strategies

Choosing wrong idea or industry

Department structure of industry

Poor management prevailing in industry

Unsatisfactory organization

Cont.
Poor utilization of capacity

Poor planning in various functions of department

Unsatisfactory and Lack of project implementation Absence of horizontal and vertical integrations Unsatisfactory training programs

External:
Industrial factors

Infrastructural factors
Financial factors Government factors Market factors Other factors

Signals:
Continuous accounts irregularity in cash credit

Low capacity utilization Profit fluctuation High rate of rejection of goods manufactured Failure to pay statutory liabilities General decline in the particular industry combined with many failures

Effects:
Affects on competitiveness It has dead investment

No flexibility in the unit due to policies of d company Money its stacked and affects the availability of resources to other viable units

Prevention:
Continuous monitoring of the unit Careful project appraisal

Professional institutional response to units problems Required systems at client units

Incentives to unit to remain healthy

Conclusion:
A sick industrial unit needs to be identified and helped so that the sick industrial unit becomes a healthy unit.

The form of helps are:

Governmental help

Technical help.