Industrial Sickness: Causes, Prediction, and Revival

Industrial sickness is a serious problem that can have a significant impact on the economy. This article discusses the causes of industrial sickness, how it can be predicted, and the legal provisions for its revival.

Questions

• What are the causes of industrial sickness?
• How can industrial sickness be predicted?
• What are the legal provisions for the revival of sick industrial companies?

Answers

• The causes of industrial sickness can be varied, but some of the most common include:
  • Financial problems, such as excessive debt or poor cash flow
  • Management problems, such as poor decision-making or lack of innovation
  • Technological problems, such as outdated equipment or processes
  • Market problems, such as changes in demand or competition
• Industrial sickness can be predicted using a variety of methods, including:
  • Ratio analysis, which compares a company’s financial ratios to industry averages
  • Univarite models, which use a single variable to predict sickness
  • Z score and Argenti score, which are multivariate models that use multiple variables to predict sickness
• The legal provisions for the revival of sick industrial companies are contained in the Sick Industrial Companies (Special Provisions) Act, 1985. This Act establishes the Board for Industrial and Financial Reconstruction (BIFR), which is responsible for identifying and reviving sick industrial companies.