We Can Change Your Process & System
To Assemble It Into A Profitable Unit!
What Is Industrial Sickness?
The industrial sickness that is plaguing India is a growing concern that cannot be ignored. This sickness results in a huge waste of physical, financial, and human resources, which the country can ill-afford. In a resource-strapped economy like India, the problem of industrial sickness is even more alarming.
Industrial sickness usually refers to a situation where an industrial firm is performing poorly, incurring losses for several years, and often defaulting on its debt repayment obligations. This problem is causing great harm to the economy and needs to be addressed urgently.
The Sick Industrial Companies Act (SICA) of 1992 defines an industrial company as sick if it has accumulated losses at the end of any financial year that equal or exceed its entire net worth. It’s important to note that this act only applies to registered companies that have been in existence for at least 5 years.
Causes Of Industrial Sickness
There are a few different reasons as to why a business may become sick, meaning it’s no longer running as smoothly or efficiently as it once was. These reasons can either be due to internal or external causes. Internal causes of business sickness may include things like poor management while external causes could be things like an unstable market or new competition.
The most common causes of business sickness usually fall into one of these two categories: Internal or External.
- Lack Of Finance: There are a few potential causes for this, including insufficient funds, unproductive working capital management, improper utilisation or diversion of funds, weak equity base, exclusion of planning and budgeting, deficient use of assets, and use of inappropriate costing and pricing methods.
- Bad Production Policies: The next reason for sickness can be related to production decisions, such as choosing an inefficient site for production activities, poor maintenance of plants and machinery, absence of quality control measures, or absence of standard research and development techniques.
- Man Power: The factors that may contribute to sickness due to man power can include wages, having more employees recruited than what’s required, the skill of employees, and employees welfare.
- Technology: As technology advances, so does the way businesses operate. If a company doesn’t keep up with the latest trends and technologies, they run the risk of falling behind.
- Location: The location of where an industry is situated can also play a part in its success or failure. Things such as the cost of transport, the availability of skilled labour and resources, and the proximity to the market can all contribute to how well an industry is doing.
- Infrastructure Bottleneck: Often, the lack of infrastructure is responsible for industrial sickness. No industrial unit can survive prolonged transport and power bottlenecks.
- High Prices of Inputs: High manufacturing costs and low sales prices make it difficult for industrial businesses to compete in the marketplace.
- Market: Market research is vital for any company that wants to stay afloat in the long run. To adapt to ever-changing tax policies, globalisation, and new technologies, companies must be constantly aware of their surroundings and what consumers want and need.
- Other factors: The main reasons that can cause a business to come to a standstill are things like; war, a labour strike, a pandemic, and political circumstances etc.
Objectives Of IndusTreeBiz
- To be able to identify which companies may be struggling and in need of help and to provide them with the opportunity to revive their company.
- It is our goal to rehabilitate sick units if it is feasible, or to help them with the winding up scheme.
- To reduce the wastage of resources for both public and private sectors, because a company’s economy can be detrimentally affected.
- To safeguard the workers of the company to the best of our ability.
