industrial sickness

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Industrial Sickness

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Introduction

• The problem of industrial sickness has become a matter of great concern. Closure of industrial units leads to unemployment and wastage of investment made.

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Meaning

“The sick industrial company is a company which has at the end of any financial year accumulated losses equal to or excluding its entire net worth and has also suffered cash losses in that financial year and in the financial year immediately preceding it.”

• Industrial companies act, 1985

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Causes Of Industrial Sickness

• Internal causes• External Causes

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Internal Causes

• Faulty initial planning• Inappropriate technology • Problem related to finance• Incompetent entrepreneurs• Problem relating to management• Problem related to labour

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External causes

• Change in policies.• Inadequate availability of requisite input

like raw material, power, transportation and skilled labour.

• Inadequate demand for the production.• Natural calamities like earthquake ,floods

etc

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Reasons For Sickness In Ssi's 

• Production Related Reasons:1. Faulty Product Mix2. Poor Quality of end product3. Delayed delivery schedule

• Financial Reasons:1. Low Profitability2. Lack of financial resources3. Poor liquidity4. Lack of credit facility

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Cont…

• Market Reasons:1. Poor marketing strategy2. Imbalance between production & marketing3. Lack of specific market segmentation4. Lack of awareness of consumer’s

preferences

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Consequences of industrial sickness

• Losses to Banks and other financial institutions

• Unemployment• Industrial unrest• Wastage of resources• Revenue loss to the Government • Adverse impact on related units• Adverse impact on entrepreneurs and

prospective

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Remedies

• The Role of Government: • The Role Of Financial Institutions: • The Role Of Industry Associations :

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Data

• Refer Excel sheet

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Conclusion

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Thank you