Industrial sickness and Industrial relationsSoham Gupta
INDUSTRIAL SICKNESS AND INDUSTRIAL RELATIONS
PRESENTED BY-
SWAYAM GUPTA
08-BBA-13
INDUSTRIAL SICKNESS
In simple term a sick unit may mean a unit which is not healthy in terms of yielding profits and fetching returns on investments.
According to SICA Act,1985, industrial company defined as sick if:-
It was registered for at least seven years;
It incurred cash losses for the current and the preceding year and
It had eroded 50% more of its peak net worth during any of preceding five financial years.
CAUSES OF SICKNESS
Industrial units may become sick at different stages and due to different reasons. Indeed, some industrial units are-
born sick,
some units achieve sickness.
CAUSES FOR BORN SICKNESS
Wrong Location- It has been observed that “high-technology based units are established in areas without skilled labour or supporting infrastructure; industries based on imported raw materials are founded in regions without adequate transport and communication system.”
Inexperienced Promoters-They may go for wrong selection of project and may make faulty project planning. This may give birth to sick units.
Technological Factors-If plant and machinery finally selected by entrepreneur turns out to be defective or obsolete, then units are bound to be sick.
Faulty Demand Forecasting-Wrong assessment of market potential or faulty demand forecasting, change in the market conditions, including the change in the consumer tastes and preferences, etc. Can also cause birth of sick units.
CAUSES OF ACHIEVED SICKNESS (INTERNAL CAUSES)
Labour Problems-In some cases, acute labour problems have resulted in strikes, lock-outs and even closure of industrial units. If these problems are not tackled in time, these problems can cause sickness.
Diversion of Resources-It means investing funds of the business unit in some new ventures. Some entrepreneurs divert their resources in the new ventures without in-depth analysis of such new ventures. if these new ventures do not succeed then it results in losses and lead the unit towards sickness.
Failure to Modernise-If the business unit fails to adopt the advanced technology, fails to change the product mix and other elements of marketing mix to suit the changing environment, then such unit may lag behind and in the long run, it may lead to sickness.
Over-capitalisation-It means capital invested in the business owned or borrowed is more than the required capital. It put burden in the form of interest and dividend. It affects profitability and leads to sickness.
EXTERNAL CAUSES
Government Policy-Sudden changes in the govt. policy relating to import, export, industrial licensing, taxation etc. can make viable units sick.
Shortage of Raw Material-In a number of cases, the units are not able to achieve optimum capacity due to shortage of raw material. This results in disturbing the production schedule, causing losses to the unit.
Recession in the Market-It may cause steep declin
Industrial sickness and Industrial relationsSoham Gupta
INDUSTRIAL SICKNESS AND INDUSTRIAL RELATIONS
PRESENTED BY-
SWAYAM GUPTA
08-BBA-13
INDUSTRIAL SICKNESS
In simple term a sick unit may mean a unit which is not healthy in terms of yielding profits and fetching returns on investments.
According to SICA Act,1985, industrial company defined as sick if:-
It was registered for at least seven years;
It incurred cash losses for the current and the preceding year and
It had eroded 50% more of its peak net worth during any of preceding five financial years.
CAUSES OF SICKNESS
Industrial units may become sick at different stages and due to different reasons. Indeed, some industrial units are-
born sick,
some units achieve sickness.
CAUSES FOR BORN SICKNESS
Wrong Location- It has been observed that “high-technology based units are established in areas without skilled labour or supporting infrastructure; industries based on imported raw materials are founded in regions without adequate transport and communication system.”
Inexperienced Promoters-They may go for wrong selection of project and may make faulty project planning. This may give birth to sick units.
Technological Factors-If plant and machinery finally selected by entrepreneur turns out to be defective or obsolete, then units are bound to be sick.
Faulty Demand Forecasting-Wrong assessment of market potential or faulty demand forecasting, change in the market conditions, including the change in the consumer tastes and preferences, etc. Can also cause birth of sick units.
CAUSES OF ACHIEVED SICKNESS (INTERNAL CAUSES)
Labour Problems-In some cases, acute labour problems have resulted in strikes, lock-outs and even closure of industrial units. If these problems are not tackled in time, these problems can cause sickness.
Diversion of Resources-It means investing funds of the business unit in some new ventures. Some entrepreneurs divert their resources in the new ventures without in-depth analysis of such new ventures. if these new ventures do not succeed then it results in losses and lead the unit towards sickness.
Failure to Modernise-If the business unit fails to adopt the advanced technology, fails to change the product mix and other elements of marketing mix to suit the changing environment, then such unit may lag behind and in the long run, it may lead to sickness.
Over-capitalisation-It means capital invested in the business owned or borrowed is more than the required capital. It put burden in the form of interest and dividend. It affects profitability and leads to sickness.
EXTERNAL CAUSES
Government Policy-Sudden changes in the govt. policy relating to import, export, industrial licensing, taxation etc. can make viable units sick.
Shortage of Raw Material-In a number of cases, the units are not able to achieve optimum capacity due to shortage of raw material. This results in disturbing the production schedule, causing losses to the unit.
Recession in the Market-It may cause steep declin
