Comprises of:

Monitoring and Evaluation of Business Preventing sickness and Rehabilitation of

Business units. Effective management of small Business. 

5 unit

Monitoring is the systematic collection and analysis of information as a project progresses.

It is aimed at improving; Efficiency Effectiveness Impact

Monitoring and Evaluation of Business

Help you identify problems and their causes Suggest possible solutions to problems Raise questions about assumptions and strategy Push you to reflect on where you are going and

how you are getting there Provide you with information and insight Encourage you to act on the information and

insight Increase the likelihood that you will make a

positive development difference  

Need

Establishing indicators (See Glossary of Terms) of efficiency, effectiveness and impact

Setting up systems to collect information relating to these indicator

Collecting and recording the information Analyzing the information Using the information to inform day-to-day

management.

Monitoring……

Self-evaluation Participatory evaluation Rapid Participatory Appraisal External evaluation Interactive evaluation

Ways to analyze Evaluation

Familiar Comfortable Preciseness and acceptance Less cost

Advantages of Internal evaluation

Drawing positive conclusions No specific training Opportunity cost

Disadvantages

An understanding of development issues. An understanding of organisational issues. Experience in evaluating development projects,

programmes or organisations. A good track record with previous clients. Research skills. A commitment to quality. A commitment to deadlines. Objectivity, honesty and fairness. Logic and the ability to operate systematically. Ability to communicate verbally and in writing.

 

Qualities

Fulfilling objectivity Expertise Chances of getting true information Reliable

Advantages of External Evaluation

Lack of understanding Lack of openness Costly

Disadvantages

Were the goals achieved? Efficiently? What are all the outcomes? What value do they

have? Independent determination of needs and

standards to judge project worth. Qualitative and quantitative techniques to

uncover any possible results. Expert judgement Use of expertise. How does

an outside professional rate this project? Critical review based on experience, informal

surveying, and subjective insights

Approaches

Which is not healthy Healthy denotes reasonable profit, return on capital employed, maintains appropriate reserves etc

Meaning Industrial Sickness

“Industrial company(being a company registered for not less than five years) which has at the end of any financial year accumulated loss equal to or exceeding its entire net worth and which has also suffered cash losses in such a financial year immediately preceding such financial year”.

Industrial Sickness (Definition)

“ A sick unit is that which has incurred a cash loss for one year and is likely to continue incurring losses for the current year as well as in the following year and the unit has an Imbalance in its financial structure”

BY THE COMPANIES(SECOND AMENDMENT) ACT, 2002  Which has accumulated losses in any financial year to 50

percent or more of its average net worth during four years immediately preceding the financial year in question, or

Which has failed to repay its debts within any three consecutive quarters on demand for repayment by its creditors.

Continued….

Identify industrial sickness 

Continuous decline in gross output compared to the previous two financial years.

Delays in repayment of institutional loan, for more than 12 months.

Erosion in the net worth to the extent of 50 percent of the net worth during theprevious accounting year.

 

 Decline In Capacity Utilization Shortage Of Liquid Funds Inventories In Excessive Quantities Irregularity In Maintaining The Bank

Accounts Frequent Break Downs In Plant & Equipments Decline In The Quality Of Products Frequent Turnover Of Personnel Technical Deficiency 

Signals of Industrial sickness

Shortage of cash Deteriorating financial ratios Continuous decline in prices of shares Delay in audit of annual accounts Delay and default in the payment of

statutory dues morale degradation of employees Debt /external fund increase

Symptoms of Industrial Sickness

Internal causes Inappropriate Financial Structure  Poor Utilization Of Assets Inefficient Working Capital Management Lack Of Proper Costing And Pricing Absence Of Financing, Planning &

Budgeting Improper Utilization Or Diversion Of Funds

Causes

Improper Credit Facilities Delay In Advancing Of Funds Unfavourable Investment Climate Shortage Of Inputs Import Restrictions On Essential Inputs Change In International Marketing Scene Excessive Taxation Policy Of Government Market Recession

External causes

Consequences of Industrial Sickness

Huge financial losses to the banks & financial institutions

Loss to employment opportunities Emergence of industrial unrest Adverse effect on perspective investors and

entrepreneurs Wastages of scarce resources Loss of revenue to government

Planning Techniques of production Training Infrastructural facilities Supply of raw materials Credit arrangements Marketing arrangements

Remedial measures

Rehabilitation of Business Units Viability study is conducted:

• Technical appraisal• Managerial appraisal• Commercial appraisal• Financial appraisal

  Change management

Development of a suitable management information system

A settlement with the creditors for payment of their dues in a phased manner, taking into account the expected cash generation as per viability study

Determination of the sources of additional funds needed to refinance.

Modernization of plant and equipment or expansion of an existing programme or even diversification of the products being manufactured.

Concession or reliefs or assistance to be allowed by the state level corporation ,financial institutions and central government.

 

Rehabilitation Programme: 

1. The Industrial Finance Corporation of India (IFCI) in 1948 - to provide medium & long-term credits to the public sector limited companies in order to facilitate post-war rehabilitation & development.

2. The State Financial Corporations (SFC) were established at state level in 1951 to supplement the work of IFCI by financing medium and small-scale industrial concerns.

Government measures

3. Industrial Reconstruction Corporation of India or (IRCI) was set up with its head quarters at Calcutta in 1971

The control measures adopted by IRCI included i. transfer of major shares in the name of IRCI ii. appointment of IRCI nominees in the Board of

Directors of the sick unit iii. appointment of personnel and nominees in

key managerial post and purchase/sales committees

iv. frequent plant and factory inspections and so on.

Continued

4. Industries (Development & Regulation) Act, 1951 was further amended in 1971 -empowering the Central Government to take over industrial undertakings which special emphasis on sick units.

5. Foreign Exchange Regulation Act (FERA) 1973 – limited the share of foreign companies to 40% of the total capital.

Continued…

7. The Reserve Bank of India set up Tandon Committee, in 1975- guideline was laid down governing the participation of banks in the management of various sick industries.

Further the government came up with several industrial policies in order to revive the sick units

Continued…

Introduced in 1976 to provide financial assistance to five selected industries (jute, cotton, cement, textile and sugar) on concessional terms for modernization & rehabilitation of their old machineries.

Soft loans

Was Being operated by the IDBI in collaboration with IFCI & ICICI.

In 1984 this scheme was modified into soft loan scheme for modernization –all categories of industries are eligible for

financial assistance for up gradation of process/technologies/product, export orientation/import substitution, energy saving, anti-pollution measures and improvement in productivity

SOFT LOANS

For merger of sick units with the healthy ones

Healthy was allowed to carry forward and set off the accumulated losses & unabsorbed depreciation of the sick unit against its own tax incidence.

Sick units to be eligible for merger should have >100 employees & assets worth >50 lakh.

Merger policy of 1977

Government has from time to time formulated several committees like the Standing Committee On Industrial Sickness, State Level Inter-Institutional Committee, Guidance Committee & others to examine the problems of growing industrial Sickness

 

.

Different committees and industrial sickness-   

Various provisions for the revival of the sick industries were introduced like The Relief Undertaking Act, Sec 72(a) Of The Income Tax Act, IRBI Act Of 1984,SICA 1985, and others.

Legal framework 

Effective Management Tasks for the Self-Employed

Effective Management Tasks for the Employer. ( For more clarifications refer KV notes)

Effective management