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SICKNESS IN VENTURE

SICKNESS IN VENTURE. RBI definition : principal or interest has remained overdue for two consecutive quarters in a financial year and there is an erosion in the net worth due to the accumulated cash losses to the extent of 50% or more.

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SICKNESS IN VENTURE

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  1. SICKNESS IN VENTURE

  2. RBI definition: principal or interest has remained overdue for two consecutive quarters in a financial year and there is an erosion in the net worth due to the accumulated cash losses to the extent of 50% or more

  3. Impact – unemployment, non-payment of dues, blockage of finance, non-utilization of assets

  4. Causes of sickness- • Personal • Lack of integrated knowledge/ training • Incompatible personalities • Health • Shift in attitude • Succession • Management • Form of ownership • Wrong choice of product/location • Team building • Planning • Management information systems • Inability to manage growth

  5. HR issues • Faulty recruitment • Wage structure • Industrial Relations • Low productivity • Operational issues • Technology obsolescence • Quality up gradation

  6. Production Management • Plant location & layout • Quality • Capacity utilization • Inventory • Maintenance • Environment • Waste management

  7. Financial • Capital structure • Capacity to bring capital • Poor resources management • Costing/pricing policy • Over-dependence on concessions & subsidies • Diversion of capital • Over-trading • Unfavorable gearing • Lack of tax planning

  8. Marketing • Over-dependence on a single customer • Marketing myopia • Sales &distribution set-up • Market feedback/ research • Marketing strategies

  9. Government • Changing policies • Scale of economy • Controls • Fiscal policies • Role as facilitator • Act of God • Accidents and injuries • Catastrophes and disasters

  10. B I F R Board for Industrial and Financial Reconstruction

  11. Prevention is better than cure

  12. The Success Trap All great companies have some kind of success formula. It could emanate from a unique set of strategic frames, resources, processes,relationships or values. But when the formula hardens,companies lose a vital ingredient for continued success

  13. Is your company at risk? Symptoms of Active Inertia • Strategic frames become binders “We are a growth company” “We know our competitors well” “We are number one” • Resources harden into millstones “Our brand means the product” “We have it all” “Our technology is a fortress”

  14. Processes lapse into routines “We have a ‘bible’ for critical processes” “We hire and promote people like us” “We make our decisions by consensus” • Relationships become shackles “We know our place in the value chain” “We do the important tasks in-house” • Values ossify dogmas “We are a family, not a company” “We have a campus, not a headquarter” “Our competitors are our enemies”

  15. Source: Donald N Sull in his book “Revival of the Fittest: Why Good Companies Go Bad And How Great Managers Remake Them” : Harvard Business School Press,2003

  16. Thank you

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