Mangalore Chemicals and Fertilizers Limited: Strategic Renewal

Abstract

Mangalore Chemicals and Fertilizers Limited was set up by the government of India to meet the demand of fertilizers as a part of its overall operational plan to achieve self-sufficiency and food security. Due to the availability of surplus electricity, the government of Mysore (now Karnataka) represented government of India to set up a fertilizer plant in Karnataka in 1950. MCFL started its first commercial production in 1976. The company reported continuous losses until 1996. Interestingly, the reason for which the plant was set up in Karnataka (surplus electricity) became one of the major reasons for its decline as the state ran into severe power crises coupled with distributed industrial relations. The company was referred to BIFR as a potentially sick company in 1990. At the same time UP group took over MCFL. D.P. Mehta, formerly Vice President (Finance) in MCFL took over as Managing Director in 1996 and took all the challenge to rejuvenate the company. He took all the possible initiatives to maximize the productivity of the company including negotiations with the unions. The company reported profit in 1996 and since then the ratios are going up. The case describes the effect of private ownership in a government owned company and leadership strategies of D.P. Mehta which resulted in the turnaround of the company despite several hurdles form the government, bureaucrats, politicians, suppliers, employees and union leaders.