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INTRODUCTION

DEFINITION OF SICKNESS.

CAUSES OF SICKNESS

UNFAVOURABLE EXTERNAL
ENVIRONMENT.
MANAGERIAL DEFICIENCIES.

UNFAVOURABLE EXTERNAL
ENVIRONMENT

Storage of keys input like power materials.

Changes and govt. policies with respect to
exercise duties, custom duties, export duties etc.
Emergence of large capacity leading to intense
competition.
Development of new technology.
Shift in consumer preferences.
Natural calamities

MANAGERIAL DEFICIENCIES

Production.

Marketing.

Finance.

personnel

Tiwari Committee Report

Sickness arises at the time of planning and

during implementation

Sickness arises after implementation

SYMPTOMS OF SICKNESS

Delay or default in payment to suppliers.

Irregularity in the bank account.
Delay or default in payment to banks and
financial institutions.
Non-submission of information to banks
and financial institutions.
Frequent requests to banks and financial
institutions to additional credit

Decline to capacity utilization.

Poor maintenance of plant and machinery.
Low turnover assets.
Accumulation of inventories.
Inability to take trade discounts.
Excessive turnover of personnel.
Extension of accounting period.
Resort to creative accounting .
Decline in the price of equity shares and
debentures.

REVIVAL OF SICK
UNITS

When an industrial unit is identified as

sick, a viability study should be
conducted.
VIABILITY STUDY:

viability study generally covers the

following:
Market analysis.
Production/technical analysis.
Finance

Environment.
Personnel and organization.

REVIVAL
PROGRAMME

The revival programme usually involves the

following:

Settlement with creditors.

Provision of additional capital.
Divestment and disposal.
Reformulation of product-market strategy.
Modernization of plant and machinery.
Reduction in manpower.

Strict control over costs.

Streamlining of products.
Improvement in managerial system
1.
2.
3.
4.
5.

Environmental monitoring
Organizational structure
Responsibility accounting
Management information system
Budgetary control

Workers participation.
Change of management.

SOME TURNAROUND STORIES

TVS Suzuki
Started in 1987
Was a profit making company
But, incurred losses in 1989-90 & 1990-91

Determined to fight competition and improve

performance, the company took a series of
steps: A six month, week-by-week, cost reduction
drive. This resulted in the drop of 30 % in
the operation cost.
A massive exercise in value engineering.
Product improvement strategy.
A renewed marketing drive.