Abstract

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. 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.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Ispat, Mittal, Turnaround, Karmet, Direct-reduced iron (DRI), Basic oxygen furnace (BOF), Strategy, Steel, Communist, Corruption