Professional Documents
Culture Documents
INDEX
Sr no.
Particulars
Introduction
History
3.
Major happenings
5.
Modernization programme
Future projects
7.
8.
Swot analysis
9.
Business plan
10.
11.
Bibliography
Summary
Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian
multinational steel-making company headquartered in Mumbai, Maharashtra, India, and a
subsidiary of the Tata Group. It was the 11th largest steel producing company in the world in
2
2013, with an annual crude steel capacity of 25.3 million tonnes, and the second largest steel
company in India (measured by domestic production) with an annual capacity of 9.7 million
tonnes after SAIL.
Tata Steel has manufacturing operations in 26 countries, including Australia, China, India, the
Netherlands, Singapore, Thailand and the United Kingdom, and employs around 80,500
people.Its largest plant is located in Jamshedpur, Jharkhand. In 2007 Tata Steel acquired the
UK-based steel maker Corus.It was ranked 486th in the 2014 Fortune Global 500 ranking of
the world's biggest corporations.It was the seventh most valuable Indian brand of 2013 as per
Brand Finance.
The measure of their success is thus not an administrative unit or economic unit but their
impact on the overall quality of life of all their stakeholders, including the nations in which
we operate. From a single-location company, Tata Steel now operates in 26 countries with a
commercial presence in 50 countries - making it the world's second most diversified steel
corporation.
INTRODUCTION
treated as one of the important indicators of socio-economic development and living standard
of the people in any country. It is a product of a large and technologically complex industry
having strong forward and backward linkages in terms of material flow and income
generation. All major industrial economies are characterized by the existence of a strong steel
industry and the growth of many of these economies has been largely shaped by the strength
of their steel industries in their initial stages of development India is the 7th Largest steel
producer in the world, employing over 1/2 million people directly with a cumulative capital
investment of around Rs.1 lakhs crore. It is a core sector essential for economic and social
development of the country and crucial for its defense. The Indian iron and steel industry
contributes about Rs.8,000 crore to the national exchequer in the form of excise and custom
duties, apart from earning foreign exchange of approximately Rs.3,000 crore through exports.
Consumption of finished steel grew by 5.9 % and increased to24.9 million tones. steel
consumption is likely to increase at a rapid pace in future due to large investments planned in
infrastructure development, increase urbanization and growth in key steel sectors i.e.
automobile, construction and capital goods. The Indian steel industry has emerged as one of
the core sectors in the Indian economy with a very significant impact on economic growth.
India with its abundant availability of high-grade iron ore, the requisite technical base and
cheap skilled labour is thus well placed for the development of steel industry and to provide a
strong manufacturing base for the metallurgical industries. The deregulated Indian steel
industry is performing at its peak level in almost all spheres. The total production of finished
steel from April 2004 to March 2005 has been estimated to be about 383.25 lakh tones as
against the production of 369.57 lakh tones during the same period last year showing an
increase of 3.7 %. The most spectacular achievement has, however, been recorded in export
performance. Steel has so far proved to be the single key factor responsible for industrial
production and thereby, for economic growth. And it is growing from strength to strength
with newer developments-
Both within steel making practice as well as engineering developments, which ask for more
usage of steel. So much so, that economic development has become almost synonymous with
steel
Major Happenings
Political:
In the 1920s and 1930s, when it was still called Tata Iron and Steel Company, TISCO's
largely tribal workers fought pitched battles with the European or Paris management.
Work conditions and the right to organize were important rallying issues, and over the years,
the company developed a reputation for union-busting, often by violent means. The value
of Dorabjis Expansion Programmed came to be appreciated only during the phase when
5
world was reeling under the pressure of the Great Depression. The Tatas survived the
depression and supplied nearly of the countrys steel requirements. By the Second World
War, Tatas production capacities had expanded enough to make their prices lower than those
of steel produced in England raising them to an authoritarian position. By the 1980s, the
government was clearly in control of what had come to be called the commanding heights of
economy. More than 45% of output in organized industry came from the public sector as well
as bank and other long-lending institution. In 1981-82, eight of the largest firms in India were
in the public sector, as were 24 out of the top 30 in terms of total capital employee. In this
sense it could be said that Nehrus goals when he had began the planning process had been
achieved. But this success has to be seen in the context of the fact that industrial growth rates
had lagged at about 4% per annum between 1964-65 and 1975-76.This rate was in sharp
contrast to what was happening
in theAsian economies and in Southeast Asia. These countries had achieved consistent high
growth by opening up their markets and by abandoning policies of import substitution .Indira
Gandhi in her second stint as prime minister was not willing to inaugurate a new industrial
policy that departed from the socialist pattern put in place by her father. Yet she was far too
astute not to recognize the signs of crises that were waiting in the wings. She made the
gesture that her government supports the expansion and modernization of the private sector.
The basic elements of the new policy began to emerge against the background of the India
Special Drawing Rights billion-dollar loan agreement with the International Monetary Fund
to cope with the balance of payment deficits.
Tata Iron & Steel Company Rajiv Gandhi- Both internal & external finance shortages were
worsening. Trade deficit increased from 10 billion in 1983-84 to Rs. 34 billion in 1985-86 so
it became difficult to repay loan.
Economic:
TATA Steel, formerly Tata Iron and Steel Company Ltd (Tesco), the company around which
the entire township of Jamshedpur was built, was registered in Bombay (now Mumbai) on
August 26, 1907. It had an initial capacity of 160,000 tones of pig iron, 100,000 tones
of ingot steel, 70,000 tones of rails, beams and shapes and 20,000 tones of bars, hoops
6
androids. It also had a powerhouse, auxiliary facilities and a laboratory. It was in 1955
that Tata Steel began its two million-tone expansion programmed, the largest project in the
private sector at that time. The project was completed in December 1958. Beginning in the
1980s, the company undertook in various phases an ambitious modernization programmed.
The first phase, between 1981 and 1985, involved a total project cost of Rs.223 crores. This
phase, among other things, saw the installation of two 130 tone LD converters, two 250
tons a day oxygen plants, a bar forging machine, two vertical twin-shaft lime kilns and a tardole brick plant. Significantly, a six-strand billet caster and a 130-tone vacuum arc refining
unit were installed, that too in the integrated steel plant. The second phase (1985-1992),
involving a project cost of Rs.780 crores, saw for the first time in India coal injection in blast
furnaces and coke oven battery with 54 ovens using stamp-charging technology. Apart from
this, a 0.3 mtpa (million tone per annum) wire rod mill, a 2.5 mtpa sinter plant, a bedding and
blending plant and a waste recycling plant of 1mtpa were installed.
The cost of the third phase (1992-1996) of the project was a whopping Rs.3,600 crores, and
that of the fourth phase (1996-2000) Rs.1,300 crores. The company recently commissioned
its 1.2 mt (million tone) capacity Cold Rolling Mill Complex at a project cost of
Rs.1,600crores. This four-phase modernization programmed has enabled Tata Steel to be
equipped with the most modern steel-making facilities in the world. As of today, the Tata
Steel facility has a hot metal capacity of 3.8 mtpa and a crude steel capacity of 3.5 mtpa,
corresponding to a salable steel capacity of 3.4 mtpa. Tata Steel has been in the
forefront of Indias industrialization and an engine of growth. It is part of Tata Group, a
prestigious, family-owned Indian multinational with 2005 revenues of $17.8 billion,
the equivalent of about 2.8% of India's GDP. Tata Steel's acquisition of Corus was a marriage
made in heaven. Tata acquired Corus, which is 4 times larger than its size and the largest steel
producer in U.K. The deal, which creates the worlds fifth largest steelmaker, is Indias
largest ever foreign takeover and follow Mittal steels $31 billion acquisition of rival Arcelor
in same year. Tata acquires Corus on April 2007 for a price of $12 billion. The price per share
was 608 pence, which is 33.6% higher the first offer which was 455 pence. For the fiscal year
ended March 2006, the company generated revenues of $3,693.6million (IR17, 144.22
Crores), an increase of 0.1% over the previous fiscal year. The company saw a net income
of $755.4 million (IR3,506.38 Crores), an increase of 8%over fiscal 2005months
7
Social:
Social responsiveness became integral to organizational objectives of Tata Steel; even before
the company was established in 1907. In 1970, however, Tata Steel formally incorporated its
commitment to the stakeholder concerns, including those of the nation, and environment, in
its Articles of Association. The Company shall have among its objectives the promotion and
growth of the national economy through increased productivity, effective utilization
of materials and manpower resources and continued application of modern scientific andman
agerial techniques in keeping with the national aspirations, and the Company shall be mindful
of its social and moral responsibilities to the consumers, employees, shareholders, society and
the local community.
For Jamsetji Tata, the progress of enterprise, welfare of people and the health of theenterprise
were inextricably linked. Wealth and the generation of wealth have never "been ends in
themselves, but a means to an end, for the increased prosperity of India. Tata Steels efforts at
environment management are well recognized. Its Steel Works in Jamshedpur, all its mines,
collieries and manufacturing divisions in its out locations are certified to ISO-14001.
Jamshedpur is the only town in the country which has an ISO14001certified service provider. Significant achievements by the Company include animprov
ement in environment and resource conservation, including a reduction in greenhouse
erosion, raw materials and water consumption. The Company has increased waste reuse and
recycling.The heritage of returning to society what they earn evokes trust among consumers,
employees, shareholders and the community. This heritage will be continuously enriched by
formalizing the high standards of behavior expected from employees and companies. The
TATA name is a unique asset representing Leadership with Trust. Leveraging this asset to
enhance group synergy and become globally competitive is the route to sustained
growthand long term success. Values Trusteeship Integrity Respect for Individual Credibility
Excellence.
Towards organization:
9
Tata was the 1st company to amend its articles of association including the clause of social
welfare.
Towards shareholders:
Equal participation, straight forward business policy.
Towards employees:
Pioneer of P.F. scheme , free medical and workmens corporation fund.
Towards Society:
India should not be a economic super power but a happy country.
Towards government:
Suggestions of economic reforms and high tax Payer Company.
Towards consumers:
Consumer is the king of market. Quality products & services timely solutions of problems
Tata Steel is a signatory to the United Nations Global Compact, and abides by its 9 principles
that address issues on Human Rights, Labor Rights and Environment, etc
Technology:
10
Tata Steel has been fortunate to have leaders and a rich reservoir of committed people who
could see clearly through the future and transformed the plant into a modern technological
giant with the power of their meticulous envisioning, strategy and planning, through several
modernization programmers having spent more than Rs. 70000 millions on environmentfriendly technologies since 1980. Installation of a modern Cold Rolling Mill Complex, built
at global speed and cost, is not only the epitome of Tata Steels modernization program, but
also remains a global benchmark in project management of its kind. It is also worthwhile to
mention that the Company lost dearly for their decision on the installation of EOF(Energy
Optimizing Furnace) at Jamshedpur Works, and CRM (Cold Rolling Mill) at Gopalpur in
Orissa .The Tatas made a great contribution in manpower development field too. From the
very beginning the Tatas invested substantial time, money and resources in training schemes.
In1921, the Jamshedpur Technical Institute was set up with a purpose to replace foreign
technical experts with their Indian counterparts. Furnished with super-sophisticated labs,
advanced training aids and other infrastructural facilities, the Technical Training Institutes
inJamshedpur is today one of the best in the country. Recently, a new ManagementDevelopm
ent Centre has been built at Dina to impart advanced management training to middle and
senior level managers in the Company.
11
Modernization Program
12
Tata Iron & Steel Company installation of a modern Cold Rolling Mill Complex, built at
global speed and cost, is not only the highlight of Tata Steels modernization program, but
also remains a global benchmark in project management of its kind. Besides, the Company
has also completely revamped its information technology infrastructure to suit its modernized
plant.Itspentclose to Rs. 40 crores on SAP implementation alone. Tata Steels modernization
programmers are detailed in the section, Technology at its Best of the chapter, Imperatives
of Change Management.
Natural disaster:
Disaster Management & Relief
Tata Steel has a long history of providing relief during natural calamities. Socialconsciousnes
s runs deep down to the last employee of the Company. Every employee contributes to such
causes, complemented by an equal, or more, amount from the
Company.Besides, employees also volunteer to administer relief operations and provide disas
ter management services to other agencies involved.
Relief Operations
Tata Steels relief and rehabilitation program largely executed by the Tata Relief committee,
is carefully planned and time-tested to counter unforeseen devastation caused by floods,
drought and other natural calamities, serving both immediate and long-term needs of those
affected, by offering them food, medical aid, rehabilitation, etc. It has even designed and
constructed buildings that can withstand natural calamities such as earthquakes.
CompanyIndia is a developing country and its economy is growing very fast. Instead of this
economical growth there is need for infrastructure to sustain this growth. The Government
envisions India becoming a developed nation by 2020 with a per capita GDP of $154010.For
a nation that is economically strong, free of the problems of underdevelopment and plays a
meaningful role in the world as befits a nation of over one billion people, the groundwork
would have to begin right now. The Indian steel industry will be required and is willing to
13
play a critical role in achieving this target. If the steel industry gears up in about 3 to 4 years,
Indian steel can be both in Indian and foreign markets. Steel industry has seen a sunrise after
a bad and cloudy night. Worries of financial institutions are over and have taken an exposure
in this sector. Indian government has planned for pumping in a lot of money in infrastructure
in coming years, hence steel consumption will go up manifold.
GDP per capita to increase from USD 2500 and USD 5000 in 2020.
Population growth rate of 1.3 - 1.5% .
Continuously improving macro economic factors,
A strong demographic profile : with a large consumer base,
Growing urbanization & Stable social and political environment
FUTURE PROJECTS
Indian Steel production likely to triple in next 15 years
National Steel Policy Projections
14
steel products use by the construction of two sectors road and power. Present government
commitment that to make India an economic super power for that they inspire globalization
and brass industries to improve GDP growth rate 8% to 10%.Ministry of Steel had no scheme
to implement directly till 10th Plan (2002-07). In the 11thPlan (2007- 12) a new scheme
named Scheme for promotion of Research & Development in Iron and Steel sector has been
included with a budgetary provision of Rs. 118.00 crore for promotion of research &
development in the domestic iron and steel sector. The scheme is presently at formulation
stage.
In 2005. The following are the salient features of the NSP:-(1) The NSP set out a broad
roadmap for the Indian Steel Industry in its journey towards reform, restructuring and
globalization.(2) The long-term goal of the NSP is that India should have a modern and
efficient steel industry of world standards, catering to diversified steel demand. The focus of
the policy is to achieve global competitiveness not only in terms of cost, quality and productmix but also in terms of global benchmarks of efficiency and productivity. Government has a
scheme for routing the allocation of steel material from main producers like SAIL, RINL, and
TATA STEEL to SSI units, and other government departments (up to30% of the total
allocation) through the small scale industries corporation, SSICs and also through National
Steel Industry Corporation NSIC where SSICs are either defunct or not in
existence. In order to ensure that small scale industries obtain these raw materials as
reasonable prices, the government provided nominal handling charges of approximately
Rs.500 per tone to the corporation so that the corporation supply the steel material as the
doorstep of the SSI units .Political compulsions were the only reason for steel companies to
cut prices. Otherwise, steel prices have been looking up quite some time now and there has
been good demand of steel in domestic as well as international markets. Instead of prices
going up, they are declining. The government had recently affected a 5% customs duty cut on
non-alloy steel.
18
Lower Consumption:
Steel consumption in India over a period of time has exhibited a strategy correlation to GDP
growth (correlation coefficient of 0.9855 between 1960-1961 and 1996-1997) and gross
domestic capital formation (0.981).The correlation with GDCF has been 1.0 for the period
FY 1994 to 1999. As investments declined from 1996-1997 onwards, steel consumption also
decreased. Failure to Develop Trade Especially International Trade.
.The countries which have achieved major growth including growth in steel industry, like
Japan, China and South Korea have largely used their trading houses to develop their markets
abroad. In India, they have singularly failed to do so. As a result, Indian steel industry does
not have a major presence even in the neighboring countries. The reasons for the same
include lack of profit motive, wrong scale of assets, little or no co-ordination between plants
and markets, inappropriate logistics/locations, over-manning, poor investment decisions, lack
of innovation and inadequate investment in requisite areas.
Slow Industry Growth:
The linkage between the economic growth of a country and the growth of its steel industry is
strong. The Indian steel industry is no exception. The growth of the domestic steel industry
between 1970 and 1990 was similar to the growth of the economy, which as a whole was
sluggish. This sluggish growth in the steel industry has resulted in enhanced rivalry among
existing firms. As the industry is not growing the only other way to grow is by increasing
ones market share. Consequently, the Indian steel industry has witnessed spurts of price wars
and heavy trade discounts, which has done Indian steel industry no good.
Social Factors:
Corporate Social Responsibility (CSR) has been to develop the villages as model steel
villages. All profitable steel PSUs have made commitments to the cause of CSR and have
earmarked at least 2% of their distributable surplus for CSR activities. The total budget
allocated for CSR in respect of the PSUs for 2007-08 is around Rs. 230.00 crore.
CSR activities focusing on environmental care, education, healthcare, cultural efflorescence
and peripheral development, family welfare, social initiatives and other measures are
20
underway in the PSUs. In view of the calamity brought in by the floods in UP, Bihar and
Assam, some of the PSUs organized immediate relief measures in these affected states.
SAIL, NMDC Ltd. and RINL contributed Rs.5 crore, Rs.4 crore and Rs.2 crore respectively
towards the flood relief measures. All the main producers have been urged by the Ministry to
adopt villages around their plant and as part of their CSR activity and help. Use of steel has
been emphasized in items such as storage beans, bullock carts, buildings such as school
buildings, panchayat halls, health centre buildings, water tanks, waiting sheds etc. 129
villages are being developed into model steel villages.
Child labor is the issues of small scale sector of the steel industry. Children were exploited by
paying them low wages. A decision was taken to have at least one dealer in each district in
order to make available steel items to common man. In order to ensure the availability of
commonly used items of steel in the rural areas across the country, SAIL and RINL are
expanding their distribution networks at a fast pace with the objective of having dealers in all
the districts of the country. Preference for SC, ST and OBC and occupation. Aside its long
history, Tata Steel has written the book on welfare measures in Indian Industry many of
which, have been subsequently followed by others i
Safety Measures
For improvement in the overall safety situation in the Iron & Steel industries in India
following remedial measures need to be taken up:
Tightening the legal system so that any instance of violation of safety policy,whether by
public sector or private sector, does not go unpenalised. The system
of factory inspectorate, safety officers and legal framework has to be refurbished accordingly.
There should be up-gradation in legal provisions to take care of changes in technologies /
work environment so that loopholes are plugged as far as possible.
OHS Management system as per ILO guidelines and OHSAS 18001 should be adopted in all
plants.
In India, many outdated technologies viz., twin hearth furnace, ingot making etc. are still
being practiced in some steel plants. These processes are hazardous to personnel working
there and it is required to phase these out immediately to improve safety in such plants. Apart
21
from this, new technological development will also facilitate attainment of safe work
environment.
Fire modeling and hazard risk analysis should be done in all plants for better assessment of
inherent risk/ hazard:
Justice S. K. Mohanty
The late Justice D. N. Mehta (Retd.) (Chaired the Panel until June 2003, when he
suddenly passed away)
Ms. Tarjani Vakil, MD, EXIM Bank (opted out during the initial phase of the Audit)The
Company nominated Mr. Ajit Jha, Resident Representative, New Delhi, Tata Steel, as the
Secretary and Chief, Co-ordination, 3rd Social Audit, to provide management support to the
Audit Panel, and later in the evaluation process, his role mandated to be independent of intracompany domain. Subsequently, Mr. S. K. Suman, Head, Co-ordination, Tata Steel, was
nominated by the management to provide research and report assistance to the 6
Tata Iron & Steel Company Panel. Mr. Jha and Mr. Suman assiduously checked the facts and
figures contained in this report7
22
SWOT ANALYSIS
- The entire mining operation of the Company is safeguarded against accident occurrence.
Proactive measures are undertaken to ensure the employee's health and productivity through
ergonomically designed work stations and by protecting them from occupational hazards. All
its mines are ISO-14001 -Environmental Management System Certified. Tata Steel's
collieries use 'Surpac', a state-of-the-art mine planning software that estimates the volume of
coal in every seam. This software is coupled with qualitative detailing that focuses on output
consistency. To maximize productivity and utilization, a voice and data equipped Global
Positioning System is used, which helps to supervise mining activity for machine movement
and engine status.
4. Innovativeness of TATA Steel with respect to its competitors
- Tata Steel has the lowest operating cost for steel manufacture in the world Further it has
displayed effective means in adopting an eco-friendly and sustainable approach towards
the manufacture of steel thus proactive measures are undertaken to ensure the employee's
health and productivity through ergonomically designed work stations and by protecting
them from occupational hazards.
5. Adaptability of the company in the fast change of the environment
- Tata Steel has displayed immense agility in the recent past during the global financial
tsunami. Its virtuosos of various fields have adopted various methods like lowering of
production and even shutting down of steel plant sowing to the lack of demand, managing the
balance sheet efficiently etc. The company has 70% of its procurement of raw materials for
its operations in Asia through long term contracts and so its margins can be shielded from the
nuances of the volatility of the financial markets.6.
6. Brand value
- The TATA brand owing to its highly ethical and a socialistic approach to business have
made its name synonymous to trust. After the acquisition of Corus another powerful brand,
the brand value of the company has enhanced further.7.
7. Corporate governance
24
- Tata Steel has had an impeccable record for corporate governance. It has set the benchmark
in global corporate governance principles of transparency, accountability and equity for
others to follow. Tata Steel has been consistently receiving prestigious awards at both the
national and the international arena. Recently it bagged the Best Governed Company Award
for corporate practices presented by Asian Centre for Corporate Governance.8.
25
the delivery of aircrafts as a result of cutting of capacity by airlines. The company also had
certain Cast products largely marketing in the UK which has been witnessing slowdown in
demand since 2001. Hence the company had to close down its Tee Side plant.
4. Degradation in brand value owing to job lossesTATA group has made its name synonymous to job security of it employees. But the
shutdown of its plants in the UK and The Netherlands will dent its image to a certain extent.
As a result of which around 1600 employees would lose their daily livelihood.
27
Opportunities
.
1.Competitive position of the companyTata Steel is the second largest producer of steel in India and the sixth largest producer in the
world.
2. Newer technologies
The Cortex process combines an iron melter /coal gasified vessel with pre-reduction shaft
to produce a liquid product that is very similar to blast furnace hot metal. Coal, oxygen,
and pre-reduced iron are fed into the melter/gasifier to melt the iron and produce a highly
reducing off-gas.ii)
The HIsmelt process Iron reduction and coal gasification take place in a liquid metal bath. The fundamental
processes of HIsmelt began with early experiments in Germany with bottom-blown oxygen
steelmaking converters (LD, LD-AC, KMS, among others) to allow for coal, lime, and/or
iron ore injection through the bottom nozzles.iii)
Direct Iron Ore Smelting -
28
(DIOS) process in Japan and the AISI direct steelmaking process in North America produced
two similar routes to hot metal production. Both processes utilize a smelting reactor where
the primary reactions occur in a deep slag bath as opposed to in the metal phase.3.
been putting up coal blocks under the hammer. Tata Steel has been very active in the asset
acquisition space and has bagged various coal blocks in Asia, Africa etc. which is essential
for its security of raw materials.5.
Opportunities for demand of higher prices
- The demand for steel is on arise both domestically and internationally as a result of the
enhanced focus upon infrastructural development. Secondly with other steel projects of
international giants POSCO, ARCELOR MITTAL stalled due to land acquisition problems
the prices of steel are slated to soar. In the month of April 2010 the steel prices were
increased by Rs.2500/ton and this is just the brink of the U-Shaped economic recovery and
the prices are slated to rise further in the near future.6.
The movement of Tata Steel in the value chain frontIndia is the only country in the world where steel can be made cheaper and there is
consumption. Then there are other countries like Ukraine, Iran, Brazil, Australia and
Bangladesh where steel can be made cheap because of the availability of iron ore and coal.
Tata Steel has been to Iran, Ukraine, Bangladesh - all in the last year and is looking at China
for finishing capabilities Ukraine is like India, where the factors of production are
competitive. The sustainable level of demand in Ukraine is 12 million tons (MT),but one can
make much more steel because of the availability of ore. Secondly, the labor is cheap in India
and so is the cost of energy.
Hence, Tata Steel's strategy is based on breaking up this value chain and putting each part
where it's the most cost-effective. So primary steel will be produced in India, where there are
large deposits of iron ore. But the Asian markets, now a key focus for Tata Steel, will be
better addressed by taking the semi-finished steel to these countries for finishing and then
selling there. For now, Jamshedpur will provide the semi-finished steel for the NatSteel bases.
Tomorrow, it could well come from Iran or Ukraine; these countries have abundant iron ore
and are therefore ideal for primary steel making.
30
maintenance of troughs through casting till guaranteed throughput hot metal is achieved and
the supply of all kinds of equipments required for installation and maintenance of
cast houses.
7.3.1 Vendor Selection through comparative assessment
A comparative analysis of the suppliers was carried out based on parameters,which includes
total throughput commitment of hot metal, throughput of hotmetal committed in between two
repairs, total down time of trough runners,a reference list of a suppliers customers, quality of
refractory to be used andlife-cycle cost of refractory in terms of Rs/ ton of hot metal
(Rs/thm).
7.3.2 Reduction of Life-cycle cost
32
A reduction of the total life-cycle cost. Of refractory, in terms of Rs/thm, has been done by
proper selection of material, optimization of its amount to achieve the guaranteed throughput
and finally by knowledge-based negotiation.
7.3.3 Benefit to Tata Steel
Reduced down time of the trough runners leading to higher rate of production. Reduced
specific consumption of refractory in terms of kg/thm. Reduced overall cost of ownership
due to higher campaign life of refractories and also due to higher rate of production, as
the productivity of the blast furnace largely depends on the quality of refractories used at
thecast house. Different Sourcing Levers Applied for Procurement of High Value
and CriticalCommodities
8. Time for diversificationWith the demand for various products of steelsoaring presents us with the right time
for upstream diversification.
Threats faced by Tata Steel1. Resources to cushion the from business environmental changeTata Steel is a company floated by Tata Sons whose assets are valued at
33
34
around 108 billion USD and thus the company has enough reserves tocushion itself from
market fluctuations.
2. International competitionCompanies like the Indian Steel magnate Lakshmi Mittals Arcelor Mittal, Posco has landed
in the shores of India and have proposed to set up 8 MT and 12 MT respectively. These are
amongst the largest steel producers in the world and have a high chance of eating into the
market share of Tata Steel. Indian market is also plagued with cheaper Chinese made steel
which is ubiquitously available and insignificantly munching through the pie of all Indian
steel makers including Tata Steel.
3. Financial Crises Tata Steel is having a huge debt of 10.2 billion USD in its books and hence a huge interest
burden. With the volatility of the financial markets and the tightening of the liquidity by
the central banks this rate is slated to go up and hence would further increase the interest
burden of the company.
4. Adoptability of the company to technological changes
Tata Steel has shown immense integration abilities in the past. With the acquisition of it has
been able to imbibe the high end technological knowledge to its production facilities and
hence has been able to produce high quality steel at least prices and significantly bettered its
operating margins.
5. Regulatory normsThe government of India has chalked a strict norm for the clearance of a plant through
environmental impact assessment(EIA). To get clearance from the concerned authority
demands more than eight months thus leads to delay and project cost escalation. Albeit the
governments steel policy has been pro industry in order to increase the steel capacity at
a brisk pace.
6. Adverse effects of land acquisition picketing35
India is plagued with violent agitation against land acquisition. The land acquisition process
of the companys plant in Orissa has been stalled primarily due to the uprising of the land
losers in the concerned area. Albeit the company is providing with attractive compensation
packages, the uprising is primarily due to the cheap politics of the local leaders to come into
the limelight. This will severely dent the companys expansion plans of the future.
7. Decrement in the sales volumesSome of the Tata Steel products (like aerospace steel) have witnessed a severe reduction in
sales and as a result of which the production facilities of the company in the UK and The
Netherlands is facing the brunt of shut down.
8. Brand equity of the productsTata Steel brand is a very powerful one, can only take a product very far. Beyond that it will
be necessary for there duct to strike ahead with its own brand. He says, "A villager who goes
to buy steel in the marketplace does not know what Tata Steel is bringing to this steel. All he
knows is that it is a Tata product." That villager needs to be told about the superiority of Tata
Steels product over others. This is the work of the brand. Branding has begun to yield rich
dividends. Last year Tata Steel sold about 345,000 tons of branded steel, which represented
about 12 per cent of its total steel sales, as against 265,000tons, representing 9 per cent of
total steel sales, the previous year. This year the company plans to more than double its
volume of branded steel. Although the resultant increase in turnover of branded products will
be enormous, there are miles to go before Tata Steel can rest on its laurels.
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BUSINESS PLAN
Tata Steel Consulting provides business planning services to a range of industrial sectors,
including:
Iron and steel - all long and flat products
Tube and pipe
Foundry and forge products
Rail products
Iron ore mining
Engineering steels
Wire products
Metal fabrication industries
Steel distribution and service centers
Ferro alloys
The business planning group operates independently or in tandem with other groups within
Tata Steel Consulting and sometimes in collaboration with external organisations such as
management consultants and investment banks. As a result it can always call upon an
exceptional range of skills and experience to meet the diverse requirements of its clients.
Clients
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The business planning group has assisted a broad range of clients, in public and private
sectors, situated in a large number of countries.
Expertise
Assignments undertaken are diverse in terms of the problems and issues addressed. Tata Steel
Consulting has provided strategic assistance to numerous manufacturing companies.
Methodologies
A wide range of expertise and methodologies is employed by the business planning
consultancy group. The first stage of assignments often requires detailed analysis of market
prospects for the client company. This can involve extensive interview programmes in the
metals consuming sectors as well as economic and demand forecasts.
New Delhi: The world's seventh largest steel maker Tata Steel Ltd, a part of India's
diversified business conglomerate Tata Sons Ltd, plans to sell its stake in various group
companies, including Tata Motors Ltd, to raise fund for expansion and repay high cost loans,
the Business Standard reported citing unidentified bankers.
The steel major may garner as much as Rs 72 billion via selling its stake in group companies,
the bankers told the paper.
Presently, Tata Steel owns 5.6% equity stake, worth Rs 50.14 billion, in Tata Motors. Besides,
it also holds 51% stake in Tata Sponge; 73.4% in Tinplate India; 54.5% in Tayo Rolls; 32.5%
in TRF Ltd; 0.7% in Tata Power and 50% in Dhamra Ports.
The steel making company may sell these stakes to the holding company Tata Sons Ltd to
raise funds, which will be utilized for expansion in the Desha state and repay higher cost
loans, bankers told the daily.
Early this year, Tata Steel was holding discussion with Adani Group to divest its holding in
the Dhamra port project (Odisha), media reports said, adding that the company is now
awaiting the Odisha government's approval to raise capacity so that it gets a better valuation
for the loss-making port company.
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Tata Steel plans to spend around Rs 420 billion in its Odisha plant in two phases. Total
expenditure for the phase I has risen up to Rs 240 billion from the earlier estimated Rs 190
billion on account of currency fluctuation and other cost overrun
Tata Steel Europe has won an order to manufacture 60,000 tonnes of high-quality rail for a
new high-speed line linking the two holy cities of Makkah and Madinah in Saudi Arabia.
The new railway will allow millions of pilgrims to cross the 444km between the two cities at
speeds of 320kmh.
The line will cross desert, withstanding temperatures ranging from freezing to 50C, as well as
sand storms, flash flooding and shifting dunes, a statement said.
Grard Glas, rail sector head for Tata Steel, said: "This is a prestigious project which will see
the holy cities being linked by rail for the first time.
"Tata Steel is delighted to be contributing to this high-speed line, which will have to
overcome some major challenges presented by building a high-capacity rail line across some
of the most extreme terrain in the world."
Steel for the project will be made at Tata Steel's Skuthorpe plant in the UK before being
rolled into rail in lengths of 25 meters both there and at the company's plant in Haying,
Northern France, he said.
Work on producing the rail will start at the end of this year and is expected to continue
throughout 2014.
Tata Steel rail has already been used successfully in similarly challenging conditions for
projects in Brazil and Mauritania, the statement added.
Last year the Saudi Railways Organization awarded the contract for the final phase of
completing, running and maintaining the Harman High-Speed Rail Project to a group of
Spanish infrastructure, construction and technology companies.
The new line is expected to carry around 160,000 people a day - and even more during the
Hajj pilgrimage. They will be transported on a fleet of 35 new high-speed trains.
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The project started in 2009, with an estimated cost of more than 12bn. The new rail line is
set to open to the public in late 2014 or early 2015.
Besides the two holy cities, the line will have three other stops, two in Jeddah for commuters
and one in Saudi Arabia's new King Abdullah Economic City, a residential, industrial and
commercial macro-complex that is still being built.
Spanish construction companies Copasa, Imathia and OHL are responsible for building the
line's superstructure and the track bases, as well as for the line's mechanisms.
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Tata Steel can provide service and support to Works, commercial and technical functions,
customers and designers who use steel products and those who wish to evaluate using steel in
their products and services.
Conclusion
Tata Steel is a success story exemplifying organizational reinvention in its most basic form.
The company now finds itself in a position to leverage its inherent strengths and become a
global leader in the steel industry. From survival, the theme has changed to managing
global growth. While technology and operational processes will continue to be important
factors in this new and exciting phase in the companys journey, the people factor will be
the single most critical input for success.
The size of the company, range, and scale of strategic initiatives attempted, the long tenure of
the reinvention, and finally the actual performance on the ground make it a rich case to
appreciate the complexities of organizational reinvention.
The globalization is the order of the day. Post-globalization, Tata Steel took this as an
opportunity for restructuring its business portfolios and seriously took up an exercise of
effective cost-cutting bringing about substantial techno-economic improvements and making
efforts towards becoming a lean and an efficient organizations.
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In order to become globally competitive, it took steps towards becoming the lowest cost
producer. Also, the product mix shifted focus from targeting low-end commodity steel to
high-end specialized products. A realization has dawned that the company can prosper in the
domestic as well as international markets by selecting the right strategy and improving
efficiencies across the entire value chain in an integrated manner.
Tata Steels success is attributed to values such as innovation, openness, flexibility,
empowerment, customer orientation, risk taking, and willingness to take tough decisions. The
companys Tata Steels leadership has been effective, inspiring, visionary, and futureoriented. It has been successful due to strategy formulation and its effective implementation.
BIBLIOGRAPHY
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(5)http://www.tatasteel.com(6)http://greenbussinesscentre.com/images/photos/Exp48.pdf (7)h
ttp://www.tatasteel.com/newsroom/awards.asp(8)http://www.ieIndia.orgpdf8989MM104.pdf
(9)http://www.tatasteel.cominvestorrelations2002pdfsmda.pdf (10)http://steel.nic.in/Performa
nce%20Budget%20(200506)Englishchap2.PDF(11)http://www.tatasteel.cominvestorrelationsan200708investorpresentation-feb08.pdf (12)http://www.slideshare.net/pankajhambarde/tata-corus-pptpresentation(13http://www.tata.com/company/Articles/inside.aspx?artid=KfibEhYKXcET
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