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Welcome to 
Our 
Presentation
Our Topic
Submitted to: 
Sakufa Chowdhury 
Assistant Professor, Department of 
Business Administration, SUST, 
Guest Teacher, Leading University
Syed Ali Hasan 
1201010248 
Ehsan Ahmed Chy. 
1201010230 
Mahmudul Karim 
1201010205 
Masum Hussain 
1201010202 
Abdul Motin 
1201010219 
Abu Ahmed Shahib 
1201010247
What is Industrial Sickness 
• Sick Industrial Companies Act, 1985 
• A unit is defined as sick industrial company where: 
• a company is registered for not less than seven years 
• It incurred cash losses for the current and preceding 
financial year. 
• Its net worth was eroded. 
• Even 50% or more of the net worth of the past 5 
financial years is eroded because of accumulated losses
Causes of Sickness 
(General Point of View) 
• Colonial exploitation 
• Agriculture based economy 
• Lack of capital 
• Misuse of natural resources 
• Depend on foreign aid 
• Natural disaster 
• Lack of skilled entrepreneur 
• Corrupted administration
Causes of Sickness (Contd...) 
(In Details) 
1. Management Related: (relating to all general 
management activities, personnel activities, marketing 
activities etc.) 
• a) Improper strategic management policy 
• b) Lack of proper training 
• c) Improper manpower planning 
• d) Lack of market planning 
• e) Absence of well developed organizational culture
Causes of Sickness (Contd...) 
2) Financial: (relating to money) 
• Poor financial management policies 
• Improper managing of accounts, 
• Lack of timely decisions form government 
• High interest rate on loans 
• Improper financial analysis (in some 
cases) for investment
Causes of Sickness (Contd...) 
3) Technological: (relating to production) 
• Defective project planning 
• Use of defective forecasting data 
• Improper capacity planning 
• Inadequate quality control 
• Absence of use of scientific methods 
• Improper process planning
Causes of Sickness 
4) Environmental: (relating to economy & technology) 
• Change of local and global economic conditions 
• Lack of coordination between various ministries 
• Strikes, Hartals and other working day losses 
• Occurrence of Natural calamities 
• Attitude of mass media 
• Change of Technology
Symptoms of becoming Sick 
 1) Reduced working capital, fall in sales / profit 
 2) High managerial and labor turnover, labor 
unrest, 
 3) Rise in complaints from staffs and customers, 
 4) Unfavorable market development, 
 5) Rise in finished product inventory, 
 6) Decline in productivity, 
 7) Difficulty in paying salaries, bills,
Stages of Sickness (contd...) 
Stage I (Normal/Healthy) 
• 1. All functional areas are normal and efficient. 
• 2. Generating good cash profit. 
• 3. Positive value of net working. 
• 4. Positive value of net worth. 
• 5. Satisfactory debt equity ratio.
Stages of Sickness (contd...) 
Stage II (Tending Towards Sickness) 
• 1. Decline in profit during last year. 
• 2. Losses estimated in the current year.
Stages of Sickness (contd...) 
Stage III (Incipient Sickness) 
• 1. Cash losses incurred in last year are expected 
in current year also. 
• 2. Deterioration anticipated in current year 
although current ratio was more than 1 during 
last year. 
• 3. Deterioration anticipated in debt equity ratio 
during current year.
StaSgtaesg eosf Soifc ksniceksnse ss
Preventive Measures 
• Political stability 
• Technical education 
• Proper use of natural resources 
• Realistic planning 
• Use of technology 
• Govt. investment 
• Local adviser 
• Capital formation
Corrective Measures
Roles of Concerning Agencies 
• Term Lending Institutions 
• Commercial Banks 
• Entrepreneur 
• Government
Role 1 
Term Lending Institution 
–Appraisal of Management 
–Banning Industries Not Having Scope 
–Machinery & Equipment 
– Satisfactory Implementation
Role 2 
Commercial Bank 
• Careful Proper Appraisal 
• Timely disbursement 
• Feedback from Commercial Banks 
• Warning Signals 
• Market Intelligence 
• Stemming Sickness
Role 3 
The Entrepreneur 
• Management Board 
• Partners in Enterprise 
 Solvency of Individual 
 Security of Collateral 
 Profitability & Viability of Project 
 Entrepreneurial Capabilities 
 Partnership 
 Responsibilities 
 Awareness Sickness Warning
Role 4 
The Government 
• Sudden changes in industrial policy 
• Resistance to change 
• Power to change
Division Wise Sick Units in Industrial Estates 
Area Population Estate Area 
Total Industrial Unit Active Unit Sick/Closed 
12,596 
98,07,000 
98 
253 
0.64 
0.10 
Sylhet
Districts Wise Sick Unit in Industrial Estates of Sylhet Division 
Sylhet Hobigonj Maulvi Bazar Sunamgonj Total 
Area 3,490.40 2,636.58 2,799.39 3,669.58 12,595.95 
Population 3,404,000 2,059,000 1,902,000 2,443,000 9,807,000 
Density 975.25 780.94 679.43 665.74 778.58 
Estate Area 25.76 15.00 14.59 25.52 81 
Industrial Plot 255 70 101 116 542 
Industrial Unit 150 59 64 21 294 
On Production 130 35 29 7 201 
Under 
Construction 
6 17 10 7 40 
Sick or Closed 13 2 7 0 22
Ship Building Industry (Contd...) 
 Rising economy of Bangladesh 
 According to IMO report 
 Total demand 
 Revenue of government 
 International trade
Ship Building Industry (Contd...) 
 0.03% in 2005 
 0.57% in 2008 
 0.80% in 2010 
 0.90% in 2013
Ship Building Industry 
Ship Building Industry 
Problems 
• Interest rate 
• Bank guarantee money 
• Time 
• Security 
• Environment 
• Port facilities 
• Insurance 
Solutions & Possibilities 
Problems 
• Interest rate 
• Bank guarantee money 
• Time 
• Security 
• Environment 
• Port facilities 
• Insurance 
Solutions & Possibilities 
• Fixed area 
• Industry policy 
• Cost & quality 
• Assurance of minister 
• Near future
Thanks for 
Patient Hearing
Sick industries: The reasons and remedies for it (A case study in Bangladesh)

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Sick industries: The reasons and remedies for it (A case study in Bangladesh)

  • 1. Welcome to Our Presentation
  • 3. Submitted to: Sakufa Chowdhury Assistant Professor, Department of Business Administration, SUST, Guest Teacher, Leading University
  • 4. Syed Ali Hasan 1201010248 Ehsan Ahmed Chy. 1201010230 Mahmudul Karim 1201010205 Masum Hussain 1201010202 Abdul Motin 1201010219 Abu Ahmed Shahib 1201010247
  • 5. What is Industrial Sickness • Sick Industrial Companies Act, 1985 • A unit is defined as sick industrial company where: • a company is registered for not less than seven years • It incurred cash losses for the current and preceding financial year. • Its net worth was eroded. • Even 50% or more of the net worth of the past 5 financial years is eroded because of accumulated losses
  • 6. Causes of Sickness (General Point of View) • Colonial exploitation • Agriculture based economy • Lack of capital • Misuse of natural resources • Depend on foreign aid • Natural disaster • Lack of skilled entrepreneur • Corrupted administration
  • 7. Causes of Sickness (Contd...) (In Details) 1. Management Related: (relating to all general management activities, personnel activities, marketing activities etc.) • a) Improper strategic management policy • b) Lack of proper training • c) Improper manpower planning • d) Lack of market planning • e) Absence of well developed organizational culture
  • 8. Causes of Sickness (Contd...) 2) Financial: (relating to money) • Poor financial management policies • Improper managing of accounts, • Lack of timely decisions form government • High interest rate on loans • Improper financial analysis (in some cases) for investment
  • 9. Causes of Sickness (Contd...) 3) Technological: (relating to production) • Defective project planning • Use of defective forecasting data • Improper capacity planning • Inadequate quality control • Absence of use of scientific methods • Improper process planning
  • 10. Causes of Sickness 4) Environmental: (relating to economy & technology) • Change of local and global economic conditions • Lack of coordination between various ministries • Strikes, Hartals and other working day losses • Occurrence of Natural calamities • Attitude of mass media • Change of Technology
  • 11. Symptoms of becoming Sick  1) Reduced working capital, fall in sales / profit  2) High managerial and labor turnover, labor unrest,  3) Rise in complaints from staffs and customers,  4) Unfavorable market development,  5) Rise in finished product inventory,  6) Decline in productivity,  7) Difficulty in paying salaries, bills,
  • 12. Stages of Sickness (contd...) Stage I (Normal/Healthy) • 1. All functional areas are normal and efficient. • 2. Generating good cash profit. • 3. Positive value of net working. • 4. Positive value of net worth. • 5. Satisfactory debt equity ratio.
  • 13. Stages of Sickness (contd...) Stage II (Tending Towards Sickness) • 1. Decline in profit during last year. • 2. Losses estimated in the current year.
  • 14. Stages of Sickness (contd...) Stage III (Incipient Sickness) • 1. Cash losses incurred in last year are expected in current year also. • 2. Deterioration anticipated in current year although current ratio was more than 1 during last year. • 3. Deterioration anticipated in debt equity ratio during current year.
  • 15. StaSgtaesg eosf Soifc ksniceksnse ss
  • 16. Preventive Measures • Political stability • Technical education • Proper use of natural resources • Realistic planning • Use of technology • Govt. investment • Local adviser • Capital formation
  • 18. Roles of Concerning Agencies • Term Lending Institutions • Commercial Banks • Entrepreneur • Government
  • 19. Role 1 Term Lending Institution –Appraisal of Management –Banning Industries Not Having Scope –Machinery & Equipment – Satisfactory Implementation
  • 20. Role 2 Commercial Bank • Careful Proper Appraisal • Timely disbursement • Feedback from Commercial Banks • Warning Signals • Market Intelligence • Stemming Sickness
  • 21. Role 3 The Entrepreneur • Management Board • Partners in Enterprise  Solvency of Individual  Security of Collateral  Profitability & Viability of Project  Entrepreneurial Capabilities  Partnership  Responsibilities  Awareness Sickness Warning
  • 22. Role 4 The Government • Sudden changes in industrial policy • Resistance to change • Power to change
  • 23. Division Wise Sick Units in Industrial Estates Area Population Estate Area Total Industrial Unit Active Unit Sick/Closed 12,596 98,07,000 98 253 0.64 0.10 Sylhet
  • 24. Districts Wise Sick Unit in Industrial Estates of Sylhet Division Sylhet Hobigonj Maulvi Bazar Sunamgonj Total Area 3,490.40 2,636.58 2,799.39 3,669.58 12,595.95 Population 3,404,000 2,059,000 1,902,000 2,443,000 9,807,000 Density 975.25 780.94 679.43 665.74 778.58 Estate Area 25.76 15.00 14.59 25.52 81 Industrial Plot 255 70 101 116 542 Industrial Unit 150 59 64 21 294 On Production 130 35 29 7 201 Under Construction 6 17 10 7 40 Sick or Closed 13 2 7 0 22
  • 25.
  • 26. Ship Building Industry (Contd...)  Rising economy of Bangladesh  According to IMO report  Total demand  Revenue of government  International trade
  • 27. Ship Building Industry (Contd...)  0.03% in 2005  0.57% in 2008  0.80% in 2010  0.90% in 2013
  • 28. Ship Building Industry Ship Building Industry Problems • Interest rate • Bank guarantee money • Time • Security • Environment • Port facilities • Insurance Solutions & Possibilities Problems • Interest rate • Bank guarantee money • Time • Security • Environment • Port facilities • Insurance Solutions & Possibilities • Fixed area • Industry policy • Cost & quality • Assurance of minister • Near future