Mangalore Chemicals and Fertilizers Limited: Strategic Renewal

This case provides a comprehensive account of the origin, foundation, growth, managerial and operational problems, labor relationship, decline in performance, change of ownership, and the initiatives taken by the new management team to revive the company.Mangalore was an initiative by Karnataka State Government in India. Originally, MCFL was conceived as a private sector organization. Eventually it was converted to a state-owned public sector undertaking. There was no accountability for the senior managers in managing the plant. Often, they had to make a trade off between their loyalty to the elected representatives and the prosperity of MCFL. Invariably, the operating officers who were usually drawn from Indian Administrative Services chose to neglect the commercial prospects of MCFL. Erratic power supply and hostile labor situation (as a consequence of inappropriate labor policies) led to frequent shut down of the plant. Consequently, the financial health of the plant deteriorated. The precarious financial position made MCFL a candidate for either closure or for sale. The Indian Government, in an attempt to revive the plant, put MCFL through two rehabilitation packages supported by its Board and its financial institutions. Eventually, MCFL was sold to UB Group in 1990. The Chairman Mr. Mallya nominated a team from UB group to manage and revive MCFL. As of 2002, MCFL is a profit-generating organization. The management has to decide, how MCFL should grow from now onwards.