INDUSTRIAL SICKNESSAND INDUSTRIAL RELATIONS PRESENTED BY- SWAYAM GUPTA 08-BBA-13 INDUSTRIAL SICKNESS In simple term a sick unit may mean a unit which is not healthy in terms of yielding profits and fetching returns on investments. According to SICA Act,1985, industrial company defined as sick if:- It was registered for at least seven years; It incurred cash losses for the current and the preceding year and It had eroded 50% more of its peak net worth during any of preceding five financial years. CAUSES OF SICKNESS Industrial units may become sick at different stages and due to different reasons. Indeed, some industrial units are- born sick, some units achieve sickness. CAUSES FOR BORN SICKNESS Wrong Location- It has been observed that “high-technology based units are established in areas without skilled labour or supporting infrastructure; industries based on imported raw materials are founded in regions without adequate transport and communication system.” Inexperienced Promoters-They may go for wrong selection of project and may make faulty project planning. This may give birth to sick units. Technological Factors-If plant and machinery finally selected by entrepreneur turns out to be defective or obsolete, then units are bound to be sick. Faulty Demand Forecasting-Wrong assessment of market potential or faulty demand forecasting, change in the market conditions, including the change in the consumer tastes and preferences, etc. Can also cause birth of sick units. CAUSES OF ACHIEVED SICKNESS(INTERNAL CAUSES) Labour Problems-In some cases, acute labour problems have resulted in strikes, lock-outs and even closure of industrial units. If these problems are not tackled in time, these problems can cause sickness. Diversion of Resources-It means investing funds of the business unit in some new ventures. Some entrepreneurs divert their resources in the new ventures without in-depth analysis of such new ventures. if these new ventures do not succeed then it results in losses and lead the unit towards sickness. Failure to Modernise-If the business unit fails to adopt the advanced technology, fails to change the product mix and other elements of marketing mix to suit the changing environment, then such unit may lag behind and in the long run, it may lead to sickness. Over-capitalisation-It means capital invested in the business owned or borrowed is more than the required capital. It put burden in the form of interest and dividend. It affects profitability and leads to sickness. EXTERNAL CAUSES Government Policy-Sudden changes in the govt. policy relating to import, export, industrial licensing, taxation etc. can make viable units sick. Shortage of Raw Material-In a number of cases, the units are not able to achieve optimum capacity due to shortage of raw material. This results in disturbing the production schedule, causing losses to the unit. Recession in the Market-It may cause steep declin

1. PRESENTED BY-
SWAYAM GUPTA
08-BBA-13

2. INDUSTRIAL SICKNESS
 In simple term a sick unit may mean a unit which
is not healthy in terms of yielding profits and
fetching returns on investments.
 According to SICA Act,1985, industrial company
defined as sick if:-
 It was registered for at least seven years;
 It incurred cash losses for the current and the preceding
year and
 It had eroded 50% more of its peak net worth during any of
preceding five financial years.

3. CAUSES OF SICKNESS
Industrial units may become sick at different
stages and due to different reasons. Indeed,
some industrial units are-
 born sick,
 some units achieve sickness.

4. CAUSES FOR BORN
SICKNESS Wrong Location- It has been observed that “high-
technology based units are established in areas without skilled
labour or supporting infrastructure; industries based on
imported raw materials are founded in regions without
adequate transport and communication system.”
 Inexperienced Promoters-They may go for wrong
selection of project and may make faulty project planning. This
may give birth to sick units.
 Technological Factors-If plant and machinery finally
selected by entrepreneur turns out to be defective or obsolete,
then units are bound to be sick.
 Faulty Demand Forecasting-Wrong assessment of
market potential or faulty demand forecasting, change in the
market conditions, including the change in the consumer tastes
and preferences, etc. Can also cause birth of sick units.

5. CAUSES OF ACHIEVED
SICKNESS
(INTERNAL CAUSES) Labour Problems-In some cases, acute labour problems have
resulted in strikes, lock-outs and even closure of industrial units. If
these problems are not tackled in time, these problems can cause
sickness.
 Diversion of Resources-It means investing funds of the business
unit in some new ventures. Some entrepreneurs divert their
resources in the new ventures without in-depth analysis of such new
ventures. if these new ventures do not succeed then it results in
losses and lead the unit towards sickness.
 Failure to Modernise-If the business unit fails to adopt the
advanced technology, fails to change the product mix and other
elements of marketing mix to suit the changing environment, then
such unit may lag behind and in the long run, it may lead to sickness.
 Over-capitalisation-It means capital invested in the business owned
or borrowed is more than the required capital. It put burden in the

6. EXTERNAL CAUSES
 Government Policy-Sudden changes in the govt. policy
relating to import, export, industrial licensing, taxation etc.
can make viable units sick.
 Shortage of Raw Material-In a number of cases, the
units are not able to achieve optimum capacity due to
shortage of raw material. This results in disturbing the
production schedule, causing losses to the unit.
 Recession in the Market-It may cause steep decline in
the demand. It results in decrease in sales and profits of
business units. Decreased sales results in stocks
accumulation. All this leads to sickness of business units.
 Credit Squeeze-Most of the units depend on the banks
for their borrowings. Once a unit start making losses, then
no bank is ready to give loan to such unit. It leads to
shortage of working capital. This lead the unit towards

7. MEASURES TAKEN BY THE
GOVT.
 Takeover of Management-if govt. feels that the main
cause of industrial sickness is management, and the unit
can be revived, then govt. takes over the management of
such sick unit for the period of six months under the
provision of IDRA Act 1951.
 Excise Loan- for providing financial assistance to sick
units, govt. Introduced the scheme for grant of excise
loans to sick units. The sick units will become eligible for
excise loan up to 50% of the excise duty paid by the unit
in last 5yrs.
 Margin Money Scheme- under this scheme, liberal
financial assistance was granted to SSI which are sick , at
low rate of interest and at lesser security.
 Setting up of Industrial Investment Bank of India (IIBI).
 Enacted SICA Act, 1985 and
 Established Board for Industrial and Financial

8. INDUSTRIAL RELATIONS
 It is a relationship between
management and employees or
among employees and their
organisation that characterise and
grow out of employment.

9. IMPORTANCE OF I.R
 Enhance economic status of worker.
 Promote healthy relationship.
 Protect the interest of employees as well as
management.
 Raise the productivity.
 Check the Industrial Conflict.
 Minimize Labour Turnover and Absentism.
 Increases Morale of employees.
 Strong Trade Unions.
 Discourages unfair practices.
 Maintain industrial democracy.

10. THANK
YOU