Management of

Small Business
 Monitoring and Evaluation of
Business
Quantitative Analysis

Qualitative Analysis

Tools for Evaluation and Monitoring

Comparative Statement
Common Size Statement
Trend Percentage Analysis
Ratio Analysis
Fund Flow Analysis
Cash Flow Analysis
 Monitoring and Evaluation of
Business
Quantitative Analysis
Delphi Model
Jury Model
 Monitoring and Evaluation of
Business
Qualitative Analysis
Inter Firm Comparison
Intra Firm Comparison
 Monitoring and Evaluation of
Business
Tools for Evaluation and Monitoring
Comparative Statement
Inter Firm Comparison
Intra Firm Comparison
At a time two year or two division or two companies’ data will be
compared
 Monitoring and Evaluation of
Business
Tools for Evaluation and Monitoring
Common Size Statement
Inter Firm Comparison
Intra Firm Comparison
At a time one year data will be compared using two or more
divisions or two or more companies
 Monitoring and Evaluation of
Business
Tools for Evaluation and Monitoring
Trend Percentage Analysis
Inter Firm Comparison
Intra Firm Comparison
At a time more than one year data will be compared using two or
more divisions or two or more companies
 Monitoring and Evaluation of
Business
Tools for Evaluation and Monitoring
Ratio Analysis
Profitability Ratios
Efficiency Ratios
Solvency Ratios
• Shor-term Solvency

• Long-term Solvency
 Monitoring and Evaluation of
Business
Tools for Evaluation and Monitoring
Fund Flow Analysis
• Sources of Fund
• Application of Fund

Cash Flow Analysis

• Sources of Cash
• Application of Cash
 Causes of Sickness
Sick Industrial Units. SICA, also known as The Sick Industrial
Companies (Special Provisions) Act, 1985, defined
a sick industrial unit as
 one that had existed for at least five years and had incurred
accumulated losses equal to or exceeding its entire net worth at the
end of any financial year.

Causes
External Factors (Exogenous Factors)
Internal Factors (Endogenous Factors)
 Causes of Sickness
External Factors
i. Changes in the industrial policies of the government from
time to time.
ii. Inadequate availability of necessary inputs like raw
materials, power, transport, and the skilled labour.
iii. Lack of demand for the product.
iv. Recessionary trends prevalent in the economy.
v. Industrial strikes and unrest.
vi. Shortage of financial resources especially working capital.
vii. Natural calamities like drought, floods etc.
 Causes of Sickness – Internal Factors
i. Lack of good
management i. Lack of demand
ii. Poor implementation ii. Power shortage
iii. Marketing problems iii. Diversion of funds
iv. Non-availability of raw iv. Technical obsolescence
materials
v. Delayed / inadequate
v. Shortfall of working sanctions by banks
capital
vi. Delayed realization of
vi. Labour trouble receivables
vii. Technical / operational vii. Poor infrastructure
problems
 Consequences of Industrial Sickness
1. Huge Financial Losses to the Banks and the Financial
Institutions

2. Loss to Employment Opportunities

3. Emergence of Industrial Unrest

4. Adverse Effect on Prospective Investors and

Entrepreneurs

5. Wastages of Scarce Resources

6. Loss of Revenue to the Government

Corrective Measures to Curb Sickness

1. Appropriate Yardsticks need to be evolved and developed

2. What can be cured has to be endured by what cannot be

cured should be ended

3. Integration of attitudes of three different sets of a unit-

management, financial institutions and labor

4. Open a separate division in BIFR to deal with sickness in

small scale industries
 Corrective Measures to Curb Sickness

1. Provide for managerial efficiency, marketability of products, adequate

availability of power and raw material in the rehabilitation programmes.

2. Rehabilitation programme should be finalized quickly and implemented

speedily.

3. Periodically review of accounts of small scale units by the banks and

financial institutions.

4. Impart necessary knowledge through Training programmes like

Entrepreneurship Development Programmes (EDPs)
 Government Policies on Revival of
Sickness and Remedial Measures

• Though the Government started initiating policy measures to

deal with sickness problem in its different industrial policies
viz;
• in Industrial Reconstruction Bank of India (IRBI),
• in The Sick Industrial Companies (Special Provision Act), (SICA) 1985,
• the most significant measure initiated to curb the problem of
industrial sickness started with the establishment of the Board for
Industrial and Financial Reconstruction(BIFR).
 Government Policies on Revival of
Sickness and Remedial Measures
• The BIRF came into being by a special gazette of the Government of
India on 27th April 1987 and became operational on 15th may 1987.

• Now, sick SSIs also come within the purview of the BIFR.

• The procedure involved in reporting and reviving sick SSIs by the

BIFR.
• Reporting to the BIFR

• Enquiry by the BIFR

• Rehabilitation of Sick SSI Units

 Rehabilitation Process
1. Viability of Sick SSI Units
2. Reliefs and Concessions for Rehabilitation of
Potentially Viable Units
3. Delegation of Powers
4. Relief and Concessions under Rehabilitation
i. Interest due on cash credit and term loan
ii. Unadjusted interest dues
iii. Term loans
iv. Working capital term loan
v. Cash losses
vi. Working capital
vii. Contingency loan assistance
viii. Funds for start-up expenses and margin for working capital
ix. Promoters’ contribution