Question

What is industrial sickness what are the symptoms of industrial sickness?

Answer 1

It becomes clear from the definitions of industrial sickness that industrial sickness does not occur all of a sudden in the life of an industrial unit. In fact, it is a gradual process with distinct stages taking from 5 to 7 years to corrode the health of a unit beyond cure and making the unit sick. To put in simple words, it starts with downturn in the industry whose continuation ultimately leads to setting in of industrial sickness (Kortial 1997). The process of industrial sickness can be presented in different ways.

The important signals of industrial sickness are:

(i) Decline in capacity utilization;

(ii) Shortages of liquid funds to meet short-term financial obligations;

(iii) Inventories in excessive quantities;

(iv) Non-submission of data to banks and financial institutions;

(v) Irregularity in maintaining bank accounts;

(vi) Frequent breakdowns in plants and equipment’s;

(viii) Decline in the quality of product manufactured or service rendered;

(viii) Delay or default in the payment of statutory dues such as provident fund, sales tax, excise duty, employees’ state insurance, etc.;

(ix) Decline in technical deficiency; and

(x) Frequent turnover of personnel in the industry

Symptoms of Industrial Sickness:

The persistence of various signals over a long period of time becomes symptoms of sickness. The various symptoms ultimately reflect on plant performance, capacity utilization, financial ratios, share market price and practices in the diverse areas of finance, production, marketing and labour relations in the industry.

Some of the important symptoms which characterize industrial sickness are listed as follows:

(i) Persisting shortage of cash;

(ii) Deteriorating financial ratios;

(iii) Widespread use of creative accounting;

(iv) Continuous tumble in the prices of the shares;

(v) Frequent request to banks and financial institutions for loans;

(vi) Delay and default in the payment of statutory dues;

(vii) Delay in the audit of annual accounts; and

(viii) Morale degradation of employees and desperation among the top and middle management level.

However, the financial ratios, in all cases, cannot be considered as true symptoms of industrial sickness mainly due to two reasons. First, the sickness prone units, in order to present a better and sound image, do a lot of window dressing. Second, the financial data is available after a gap of one year. However, an early identification of signals and symptoms of industrial sickness makes the task of detecting sickness easier.

Answer 2

Industrial sickness:

In the field of economics,the industrial sickness is a term which is used to denote the poor financial condition of a company which is mostly facing a major economical loss since a significant amount of time.

Symptoms of industrial sickness:

• The transactions are remaining due from the company's side for a long time.

• Strike among the labours and employees for the salary distribution related issues.

• Poor conditions of the productivity of that company.

• The unpredictable nature of the company's share.

And many more.