Metal companies forge ahead for strong digi-shift across operations

Hindalco, Vedanta, Tata Steel chalk out budgeted roadmaps to achieve digitization

The digital wave currently sweeping India has also brought large domestic metal companies under its fold with players like Vedanta and Tata Steel chalking out detailed plans. Entities like Hindalco Industries and JSW Steel have already implemented it at various stages.

"The company is moving into space where we want to leverage technology, leverage digital and innovation to enhance our safety, efficiency and performance along with productivity and recoveries," Navin Agarwal, chairman of Vedanta Ltd told reporters on the sidelines of company's annual general meeting recently. 

"We believe that our investment in these areas will in fact enhance output and efficiency by about 10-20 per cent," he added without elaborating.

Vedanta Ltd aims to spend $200 to $500 million in the area over the next three years for digitization. Safety is a parameter of keen importance to the company as in past incidents like the chimney collapse of Bharat Aluminium Co (BALCO), 40 people had lost their lives and maimed several others. 

Another non-ferrous company, Hindalco Industries is already reaping benefits of its digital initiatives, which were kicked off more than a year ago. 

"We have taken a front-end client approach to connect them digitally. They (clients) can track their cargo consignment making the process of buying and receiving a seamless and transparent process," informed Satish Pai, managing director of Hindalco Industries.

Operational, financial and human digitization are other areas where the flagship company of Aditya Birla Group is looking to invest increasingly.

"Under human digitalising, there are sensors installed on workers in mine areas to keep their safety in check. Also, manual processes of surveying mines is now replaced by drones which take stock of mined area, keeping a track of who is coming or going outside the boundary," said Pai.

While the company aims to spend a few more millions going ahead, it is patient with the results that the company aims to derive from digitization. 

"Benefits ultimately will show in the results of the company. Recovery rates will translate in margins and EBITDA. Hindalco volumes have been flat, so all these initiatives are driving better EBITDA," Pai added.

Meanwhile, Sajjan Jindal-led JSW Steel says it is doing extremely well on the digitization front. "Last year, which was the first one, we earned Rs 1.72 billion benefit on account of digitization. In FY19, though we have not set a target, it is going to be higher than last year," said Seshagiri Rao, joint managing director and group chief financial officer.

"The company's expenditure towards digitization is very less compared to the benefits we are getting. We have a complete digitization target chalked out over the next three to five years," Rao added.

JSW Steel has created a special digital thrust called digital centre of excellence (DCEX) that is driving digital initiatives across the group. Last year, the Mumbai-based steel producer had picked up three areas -- sales & marketing, manufacturing and supply chain --and this year has added another two -- procurement and projects to the initiative.

Tata Steel, the country's oldest steel producer, which is currently focusing on growing its domestic business is equally focused on investing significantly in IT infrastructure. "We have set ourselves some huge targets, I cannot reveal numbers but these targets are over next three years," informed T V Narendran, global chief executive officer and managing director of Tata Steel.

"IT (information technology) spend has been typically very low at Tata Steel, must be one per cent of India revenue and there is a lot more to do. But it is not so much of spending money but spending it wisely," explained Narendran.