Industrial sickness causes and remedies ppt Rating:
Industrial sickness refers to a situation in which a company or organization experiences financial difficulties and is unable to meet its financial obligations. This can lead to the closure of the company and loss of jobs for its employees. There are various causes of industrial sickness, and it is important to understand these causes in order to implement effective remedies.
One major cause of industrial sickness is mismanagement of resources. This can include inefficient use of raw materials, poor financial planning, and lack of attention to changes in the market or industry. Poor management can also lead to a lack of innovation, causing the company to fall behind its competitors.
Another cause of industrial sickness is external economic factors, such as recession or changes in government policies. These factors can lead to reduced demand for the company's products or services, resulting in financial difficulties.
Lack of access to credit or financing can also contribute to industrial sickness. If a company is unable to secure loans or other forms of financing, it may struggle to meet its financial obligations and keep its operations running.
To remedy industrial sickness, it is important for companies to implement effective financial management strategies. This can include budgeting, cost cutting measures, and identifying new sources of revenue. It may also be necessary for the company to seek external financing or assistance from government programs or financial institutions.
Innovation can also play a role in addressing industrial sickness. By introducing new products or services, a company can increase its competitiveness and potentially boost its revenue.
Another key remedy is diversification. By expanding into new markets or industries, a company can reduce its reliance on any one particular product or service and mitigate the impact of economic downturns or changes in demand.
Overall, industrial sickness can have serious consequences for companies and their employees. By understanding the causes and implementing effective remedies, it is possible to turn around the financial fortunes of a struggling company and ensure its long-term viability.
ADVERTISEMENTS: Normally, when a business unit turns financially sick, avenues should be explored for restructuring and reviving it. Industrial sickness can be best described as a situation when a particular sick unit has been operating below the break-even point for some time and they have no choice but to source funds from external sources, in order to survive in the industry. In such a situation, this would mean that the company is dependent on other company for loans and are unable to repay the debts. The name of a defunct company may be removed from the Registration of Companies by the Registrar. What Causes Industrial Sickness After a detailed study, Nescode realized that the cause may be internal or external. While some units were nursed back to health ,a number of others continued to suffer huge losses. A few of these measures are setting up state-level committees by RBI for better coordination among financial organizations, providing loans on easier conditions, waiving the interest on loan installments, providing added capital to the sick units to function smoothly, etc.
As per the govt. The Board also has the power to require any operating agency to inquire into and make a report on such matter as the BIFR may specify. A consultant from a banking background can address the financials complexities of an industry. But due to industrial sickness huge funds has been locked up which has impinged on the future lending capacity of the banks and the financial institutions. ADVERTISEMENTS: This stage may be termed as the incipient sickness stage of the unit, which may be determined by the following factors: i. Unplanned capital expenditure vi. Default in the payment of statutory dues 10.
Industrial Sickness — Definitions In general a sick unit can be defined as a unit that fails to generate surplus on a continuous basis and frequently depend on external funds for its survival. Causes of Industrial Sickness Talking about the small-scale industry SSI , there can be various reasons for a company to suffer from industrial sickness. The number of income tax filers are even less. And, after 2001, Many small scale industries started coming up. In the process, it may even be given a fresh injection of capital.
Loss of tax payers revenues 4. Or, it may also reduce its workforce removing people from jobs. Rise of Industrial Unrest: The shutdown of a sick unit results into unemployment and leads towards industrial unrest. Thus industrial sickness creates a psychological disinterest for investment among the prospective investors, leading towards non- conduciveness in the industrial development of the economy. High material wastage iv. Definitions of Industrial Sickness 3.
Heavy borrowings, high interest charges iv. Thus, almost 9 out of 10 small units were found to be non-viable. Lack of Orders: A unit may suffer as it does not get enough orders to match its anticipated or targeted production targets. To protect the interest of share holders and creditors. This state showcases the improper functioning of various parts and how it impacts the governing of rest of the parts as well. Frequently, the permitted sales price was insufficient to cover the cost of inputs.
Industrial Sickness: Causes, Remedies of Industrial Sickness in India
If the necessary corrective measures are not taken promptly at the incipient stage or are inadequate, the causal factors may continue to adversely affect the functional areas, gradually worsening the overall position of the unit, which may ultimately fall sick. Term Lending Institutions : If the term lending institutions take the following steps, sickness can be prevented: i. The company should have an accumulated losses equal to or exceeding 50% of its net worth during the immediately preceeding 4 years. It is also present in the advanced countries, hut there it is considered prudent to shut down the units if they are sick. The problem of industrial sickness is nothing peculiar to our economy or any developing country. The company should have accumulated losses equal to or exceeding its net worth at the end of any financial year.
A Rehab scheme may also be sanctioned If it is necessary in public interest to close the company, it is recommended for closure, provided it is not practicable to turnaround the company from Industrial Sickness. Selecting the supplier of the machinery with care ii. One of the reason where most of the sectors struggle is workforce skills and they invest heavily to make them skilled. Our advanced business and management consulting gives you an insight and understanding of what steps should be taken in such crucial circumstances and what should be done to avoid falling sick. At the same time, the government policies also provided an ample scope and temptation for frauds and mismanagement. At this stage, the bank officers are expected to urgently undertake the detailed viability study of the sick unit.
Industrial Sickness : A Social Failure, Impact And Remedies
Desperation amongst the top and middle managerial level. A company may be wound up under Part VII of the Companies Act. Provision of enquiry into companys health. There are two main categories: 1. Unemployment Problem: Industrial sickness has resulted into a serious consequence of loss of employment resulting into socio economic problem. The Entrepreneur: The successful running of the unit surely depends on the ability and sustainable effort of the entrepreneur. Allow us to take you through these observations by going through this blog.