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ED UNIT V SICKNESS IN SMALL BUSINESS. Meaning A sick Industry as an industrial company (being a company registered for not less than seven years) which.

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Presentation on theme: "ED UNIT V SICKNESS IN SMALL BUSINESS. Meaning A sick Industry as an industrial company (being a company registered for not less than seven years) which."— Presentation transcript:

1 ED UNIT V SICKNESS IN SMALL BUSINESS

2 Meaning A sick Industry as an industrial company (being a company registered for not less than seven years) which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and has also suffered from cash losses in such financial year immediately preceding such financial year – The sick industrial companies (special provisions) Act, (SICA) 1985

3 Signals and Symptoms of Sickness Decline in capacity utilization Shortage of liquid funds to meet short term obligations Inventories in excessive quantities Non submission of data to banks and other financial units Irregularities in maintaining bank accounts Frequent breakdowns in plants and equipments Decline in quality of products manufactured or service rendered Delay or default in the payment of statutory dues High attrition rate

4 Continuous tumble in the prices of the shares Delay in the audit of final accounts Frequent request to banks for loans

5 CAUSES AND CONSEQUENCES OF INDUSTRIAL SICKNESS I.EXTERNAL OR EXOGENEOUS CAUSES Changes in the industrial policies of the Government Inadequate and untimely availability of necessary inputs Lack of demand for the product Recession in the economy Frequent industrial strikes and labour unrest Shortage of financial resources especially working cap Natural calamities like floods, drought etc

6 II. Internal Causes Lack of good management Poor implementation Marketing problems Non-availability of raw materials Shortage of working capital Labour trouble Technical operational problems etc

7 Consequences Huge financial losses to the banks Loss to employment opportunities Emergence of industrial unrest Adverse effect on prospective investors and entrepreneurs Wastage of scarce resources Loss of revenue to the government

8 CORRECTIVE MEASURES Identification of sickness at the early stage (incipient stage) reduces deterioration Merger of large number of sick units will be a welcome proposition There should be a consensus among financial institutions – management and laborer on continuity and rehabilitation of suck units

9 There should be a separate board for the reconstruction of suck units Rehabilitation programmes should be carried out on permanent basis. Decision to rehabilitate a sick unit be finalized quickly, and in full swing other it may jeopardizes all efforts Banks and financial institutions have to periodically review the accounts of small scale units. EDP programmes have to be organized and conducted for entrepreneurs.

10 BEST OF LUCK


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