Mahut Group: A Failed Case of Organizational Restructuring

Mahut Group (name disguised) was a family-owned business group that operated two cement companies, Heera and Moti (names disguised), in Gujarat, the Western part of India. Heera Cement had been making substantial losses since its inception and was currently under the consideration of Board of Industrial & Financial Reconstruction (BIFR). Moti Cement was also a loss-making company but the losses were not as substantial as that of Heera. Each of the cement companies, Heera and Moti, had a production capacity of 1.2 million tons of cement per annum. The Mahut Cement Group had about 1000 employees, out of which about 30 personnel were in the top management. As of 1999, both the cement companies competed with each other in addition to competing with other cement players operating in Gujarat. The cement industry was deregulated in India in the late 1980's which resulted in fierce competition and price wars among the cement firms. In the face of this fierce competition, the Group decided on a restructuring process, and hired an American consulting firm, in 1998, to find a "synergy" between the two companies, Heera and Moti, and help the two companies to turnaround. This case discusses the issues of the restructuring process and the various interventions undertaken by the top management of Mahut Group. The case discusses the recommendations of the consultant and the role of human resource management during the restructuring process.