You are on page 1of 17

Visit

http://mbafin.blogspot.com
for more presentations
project reports etc.
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. Environmental monitoring
2. Organizational structure
3. Responsibility accounting
4. Management information system
5. 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.