INDUSTRIAL SICKNESS


{
Monirba Allahabad university}
Supported by – Manish kanojia (MBA III sem}

BY: NIRMAL KUMAR

M.B.A. 3rd SEM

DEFINITION
 According to R.B.I.


 “A unit is considered sick if it has incurred cash losses

for one year, and, in the judgment of the financing
bank, is likely to incur cash losses for current as
well as for the following year, and/or there is an
imbalance in the unit’s financial structure, that is,
when the ratio of current assets to current liabilities
is less than 1:1, and debt –equity ratio is worsening”
 According to SICA, 1985


 A unit was defined as “industrial company (being a

company registered for not less than seven years which
has at the end of any financial year accumulated losses
equal to or exceeding its entire net worth and has also
suffered cash losses in such financial year and the
financial year immediately preceding such financial
year.



Definition according to companies Act,2002
Sick industrial company means an industrial company

which has –:
 Accumulated losses in any financial year which are
equal to 50 percent or more of its average net worth
during four year immediately preceding such
financial year
 Failed to repay its debts within any three consecutive
quarter on demand made in writing for its
repayment by a creditor of such company.

CAUSES OF INDUSTRIAL SICKNESS
 INTERNAL CAUSES


 (A) FINANCE QUADRANT



1.Inappropriate finance mix.

2.Poor utilization of assets.

3.Improper working capital management.

4.Absence of, or poor financial planning.


 (B) PRODUCTION QUADRANT


1.Wrong site selection.

2.Inappropriate plant and machinery.

3.Inadequate maintenance of plant and machinery.

4.Poor management and control of inventory.

5.Absence of innovation and R&D work

 (C) MARKETING QUADRANT


1.Wrong demand forecasting.

2.Poor product mix selection.

3.Absence of product planning.

4.Dependence on a few buyers.

5.Inappropriate sales promotion measures.

 (D) PERSONNEL QUADRANT


1.Poor manpower planning.

2.Ignorance to behavioral approach.

3.Poor industrial relations.

4.Absence of a good system of performance evaluation.

4.No recognition and appreciation to better performance.

EXTERNAL CAUSES

1.Poor industrial infrastructure in the areas where the

unit is operational.
2.Delays in sanction and disbursement of assistance.

3.Government policies and taxation.

4.Non- availability of professional and skilled

manpower.
STAGES IN THE LIFE CYCLE OF
SICKNESS

 1.Normal Stage.


 2.Tending sick stage.



 3.Incipient sickness stage.



 4.Completely sick stage.

THANK YOU
