Leaving aside the economic / industry downturn and technological change, what other aspects are the major reasons for a corporate to become sick (from the perspective of a lender) ?

Internal causes for sickness

We can say pertaining to the factors which are within the control of management. This sickness arises due to internal disorder in the areas justified as following:

a) Lack of Finance: This including weak equity base, poor utilization of assets, inefficient working capital management, absence of costing & pricing, absence of planning and budgeting and inappropriate utilization or diversion of funds.

b) Bad Production Policies : The another very important reason for sickness is wrong selection of site which is related to production, inappropriate plant & machinery, bad maintenance of Plant & Machinery, lack of quality control, lack of standard research & development and so on.

c) Marketing and Sickness : This is another part which always affects the health of any sector as well as SSI. This including wrong demand forecasting, selection of inappropriate product mix, absence of product planning, wrong market research methods, and bad sales promotions.

d) Inappropriate Personnel Management: The another internal reason for the sickness of SSIs is inappropriate personnel management policies which includes bad wages and salary administration, bad labour relations, lack of behavioural approach causes dissatisfaction among the employees and workers.

e) Ineffective Corporate Management: Another reason for the sickness of SSIs is ineffective or bad corporate management which includes improper corporate planning, lack of integrity in top management, lack of coordination and control etc.

External causes for sickness

a) Personnel Constraint: The first for most important reason for the sickness of small scale industries are non availability of skilled labour or manpower wages disparity in similar industry and general labour invested in the area.

b) Marketing Constraints: The second cause for the sickness is related to marketing. The sickness arrives due to liberal licensing policies, restrain of purchase by bulk purchasers, changes in global marketing scenario, excessive tax policies by govt. and market recession.

c) Production Constraints: This is another reason for the sickness which comes under external cause of sickness. This arises due to shortage of raw material, shortage of power, fuel and high prices, import-export restrictions.

d) Finance Constraints: The another external cause for the sickness of SSIs is lack of finance. This arises due to credit restrains policy, delay in disbursement of loan by govt., unfavorable investments, fear of nationalization.

e)credit squeeze initiated by the government policies.

If you exclude all external / environmental reasons that there remains all internal reasons for the company to go sick.

This include poor quality, losing competitive position in marked due to price or quality or credit aspects. From lender's perspective more important is the cash flow management. If cash is earned but is not received then there is a problem. If cash is earned but is not sufficient to recover cost of capital and service the debt there is a problem. If promoter has malafied intents, lenders need to worry about.

Managerial Philosophy that's if the management is committed to adapt to change. E.g Kodak and Xerox. They died because they did not improvise and adapted new technology. Also take IBM. They moved from making computers to largest technological service solutions in the world.  

Thanks for the invitation

I agree with the answers

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agree with mr. vinood on his answer