Sickness
Sickness
CAUSES OF INDUSTRIAL
SICKNESS
External causes
Internal causes
External causes:
1.Power Cuts:
- lack of power electricity support
- shortage in electricity
CONTD
2. Erratic supply of inputs:
- shortage of raw material.
- lack of transportation facility.
- high price.
3. Demand & credit restraints:
- no equal balance of demand and supply and lack
of credit facility.
- lack of credit facility.
- storage expanses.
- chance of out of fashion.
CONTD
4. Government policy:
- change in government policy.
- lack of government support.
- high authority to large unit.
Internal causes:
1.Fault at the planning & construction stage:
- wrong location area
- absence of market analysis.
- unbalance capital structure.
2. Financial problem:
- unable to repay payment.
- lack of financial support from bank & institution.
CONTD
3. Defective plant & machinery
- lack of technical & professional skill
- lack of technology
- in efficient in machine.
- high maintenance.
4. Entrepreneurial incompetence
- lack of knowledge of market
- lack of efficient professional skill
- lack of innovation
SYMPTOMS OF SICKNESS
DELAY OR DEFAULT IN PAYMENT TO SUPPLIERS, BANK AND FINANCIAL
INSTITUTIONS
ACCUMULATION OF
INVENTRIES
DECLINE IN
CAPACITY
UTILIZATION
DECLINE IN THE
PRICE OF EQUITY
SHARE
DECLINE IN THE
PRICE OF
DEBENTURES
REVIVAL OF SICKNESS
When an Industrial Unit is identified as sick a viability
study should be conducted to assess the unit, it covers:
Market
Operations
Finance
Human Resource
Environment
The viability study may suggest one of the following
measures:
Debt restructuring
Infusion of funds
Replacement of existing management
REVIVAL PROGRAMME
Settlement with creditors
Disinvestment and disposal
Strict control over costs
Streamlining of costs
Improvement in managerial systems
Workers participation
Change of management
Merger with a healthy company
HINDUSTAN MOTORS
Maker of Ambassador saloon, once the power symbol in
India is set to declare itself sick.
Revenue from its flagship product Ambassador tumbled
Slow to respond to aggressive competition from
multinational players such as Suzuki and Hyundai due to
its design which has remained virtually unchanged for
over 6 decades
It had a negative net worth of Rs. 36 crore on June 30th
2013
Board of Industrial and Financial Reconstruction
(BIFR)
A central Govt. agency that helps restructure bankrupt
companies or close down sick unit.
HM is the third automobile company to report in BIFRs
door after PAL, the maker of Premier Padmini and FIAT
India.
REMEDIAL
Internal
Causes
Causes
1)Govt. policy
1)Out dated
Technology
2)Erratic Supply of
Inputs
2) Financial Problem
3) Management
problems
4)Technological
Factors
4) Labour Problem
5)Power Cuts
5) Marketing &
Sickness
Remedial Measures
Steps taken by commercial banks:
provide working capital assistance
Recovery of interest at reduced rates
Suitable moratorium on payment of interest
Freezing a portion of outstanding in the accounts
No. of organizations or agencies were set up:
- sick industrial undertaking cell
- state level inter-institutional committees
- standing coordination committee
- special cell rehabilitation finance division of
IDBI
REMEDIAL MEASURES
THE INDUSTRIAL Investment BANK OF
INDIA:
-Establishment of Reconstruction
Corporation of India
- to provide all kinds of assistance
- IRCI converted to IRBI (industrial
reconstruction bank of India)
BOARD FOR INDUSTRIAL & FINANCIAL
RECONSTRUCTION
-Rehabilitation package