Ispat - Sidbec: Entering North America

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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	:	BSTA006	Electronic Format: Rs. 300; courier (within India):Rs. 25 Extra Themes -
Case Length	:	11 Pages
Period	:	1994 - 2003
Pub Date	:	2005
Teaching Note	:	Not Available
Organization	:	Sidbec; Ispat
Industry	:	Steel
Countries	:	Canada

Abstract:

Keen on expanding his presence in North America and after an unsuccessful takeover attempt in the US, Lakshmi Mittal, Chairman of Ispat International has turned his sights to Canada. Unlike in the past, where Mittal's takeover targets were all poorly run plants, Sidbec has been operating at full capacity, and although the company has reported huge losses in 1991 and 1992 and a smaller loss in 1993, it has reported a net profit of CAD$11.9 million before being acquired by Ispat in 1994. The case describes the performance of Sidbec under Ispat's management. Mittal decides to leave the top management in place at Sidbec-Dosco. Within two weeks of closing the sale, Ispat approves an investment of CAD$16 million to start up a previously closed unit.

Ispat agrees to invest CAD$10 million to consolidate and modernise the plant in Montreal after formalising a five-year labour agreement that includes a reduction in pay and benefits worth 15 percent and a new profit-sharing plan with the workers. As employees begin to understand the importance of profits, their attitude and the work culture changes and the relationship between labour and management improves. Mittal has also drawn up plans to make Ispat Sidbec an important regional hub for producing direct reduced iron (DRI).