2. DEFINITION OF INDUSTRIAL
SICKNESS
• A sick unit is that unit which fails to generate internal
surplus on a continuing basis and depends for its
survival on frequent infusion of external funds.
(STATE BANK OF INDIA)
3. SYMPTOMS OF INDUSTRIAL SICKNESS
• Shortage of Liquid Funds to meet Short-term
Financial Obligations and other Statutory
Obligations.
• Accumulation of Excessive Inventories.
• Underutilization of Capacity.
• Decreasing Return on Investment.
• Deteriorating Financial Ratios.
• Financing Capital Expenditure out of Shot-term
Sources.
• Other Symptoms.
5. CAUSES OF BORN SICKNESS:-
• Wrong Location.
• Inexperienced Promoters.
• Technological Factors.
• Investment in Unproductive Capital Assets.
• Long Gestation Period.
6. CAUSES OF ACHIEVED SICKNESS
Internal Causes
• Management
Problems.
• Financial Problems.
• Labor Problems.
• Diversion of
Resources.
• Failure to Modernize.
• Personal
Unproductive
Expenditure.
• Over Capitalization.
External Causes
• Government Policy.
• Increased Competition
from MNCs.
• Power Cuts.
• Shortage of Raw Material.
• Recession in the Market.
• De-reservation.
• Credit Sources.
7. CONSEQUENCES/ EFFECTS OF INDUSTRIAL
SICKNESS
• Setback to Employment Prospects.
• Wastage of Resources.
• Adverse Effect on Related Units.
• Industrial Unrest.
• Adverse effect on Investors and Entrepreneurs.
• Loss to Banks and Financial Institutions.
• Loss of Revenue to Government.
8. SUGGESTIONS TO PREVENT AND CURE
INDUSTRIAL SICKNESS
• Proper Project Planning.
• Proper Market Analysis.
• Availability of Trained and Experience Managerial
Staff.
• Balanced Marketing Mix.
• Research and Development (R&D).
• Periodical Review.
9. CONT’D…
• Diversification.
• Avoid Excessive Investment in Unproductive Capital
• Assets.
• Soft Loans for Sick Units.
• Amalgamation.
• Cost Reduction and Cost Control.
10. MEASURES ADOPTED TO PREVENT
INDUSTRIAL SICKNESS
Measures Taken by
Banks.
• Recovery of interest at
reduced rates.
• Grant of additional
working capital to
overcome the shortage of
working capital.
• Rescheduling the
payment of loans.
• Writing off the whole or a
part of accrued interest.
Measures Taken by
Government.
• Takeover of
Management.
• Amalgamation with
healthy units.
• Excise loan.
• Setting up Industrial
Investment Bank of India.
• Enacting SICA and
Establishing BIFR.
• Margin Money Scheme.