The Turnaround of Ispat Karmet
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Case Details: |
Price: |
| Case Code |
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BSTA005 |
Electronic Format: Rs.
300;
courier (within India):Rs. 25 Extra
Themes- |
| Case Length |
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11 Pages |
| Period |
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1994 - 2004 |
| Pub Date |
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2005 |
| Teaching Note |
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Not Available |
| Organization |
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Karaganda
Metallurgical Complex (Karmet) |
| Industry |
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Steel |
| Countries |
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Kazakhstan |
Abstract:
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Karaganda Metallurgical Complex (Karmet), one of the largest single-site
integrated steel plants in the world, is Ispat's first major opportunity in the
erstwhile Soviet Union. Following the collapse of the Soviet Union, the plant
with a capacity of 6 million tonnes per year was producing only 2.5 million
tonnes in 1995, and recording heavy losses. In November 1995, Ispat agrees to
purchase Karmet from the Kazakh government for US$450 million. Mittal realises
that Karmet's main problem is its cultural legacy of state ownership. Managers
and workers have a poor attitude towards quality and customer service, and there
is little concern for cost control. Corruption is rampant both at the plant and
in the administration.
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Apart from 'cleaning up the system', Ispat's managers impose
discipline on the workers. Ispat also makes investments worth US$500 million to
improve product quality. It changes Karmet's revenue model by moving from barter
exports to hard currency exports. Having turned around the operations, Mittal
launched various initiatives to win the faith of the Timertau community.
Contents:
Keywords:
Ispat, Mittal, Turnaround, Karmet, Direct-reduced iron (DRI), Basic oxygen furnace (BOF), Strategy, Steel, Communist, Corruption
The Turnaround of Ispat Karmet
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