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Jamsetji to Corus


Ishita Ayan Dutt  |  Kolkata 

From modest beginnings, the company has become the world's sixth largest steel maker.
Jamsetji Nusserwanji Tata's brainchild, Tata Steel, has many 'firsts' to its credit in its journey of 100 years. From being the first steel plant in India and Asia, to bagging the Anglo-Dutch steelmaker, Corus Group, the largest acquisition by an Indian company abroad, Tata Steel has lived up to its reputation of creating history.
The genesis of Tata Steel lay in a report by a German geologist, Ritter Von Scwartz, claiming significant iron ore deposits in Chanda, a district close to Chhota Nagpur. The report spurred Jamsetji who struggled till his very end to set up the plant. But three years before the plant site was discovered Jamsetji died.
He had ensured that his dream was in safe hands. The team which finally gave shape to Jamsetji's dream had C M Weld, an expert surveyor, Dorabji Tata, Jamsetji's son and Shapurji Saklatvala, who was later elected to the British House of Commons and last but not the least, Charles Page Perin, the eminent consulting engineer from New York.
Perin made what in today's parlance would be the DPR or the detailed project report for the plant. Even after the report, Perin stayed till the site for the plant was fixed at Sakchi, or what is known as Jamsehdpur (Sakchi was renamed Jamshedpur by Lord Chelmsford, the viceroy of India, and Kalimati station Tatanagar in 1919).
Leveraging the swadeshi spirit which ran high during the time, Tata Iron and Steel Company Limited, as it was registered, decided to tap the Indian capital market and issued shares on August 26, 1907.
Within three weeks, 8,000 subscriptions were received from Indian investors. When debentures were issued to provide the working capital, the entire issue of 400,000 pounds was subscribed by the Maharaja of Gwalior.
A total of Rs 2.32 crore was raised through issuance of ordinary, preference and deferred shares, to set up a plant with a rated capacity of 72,000 tonnes per annum, 14 per cent of India's total steel requirements. Work on the plant began in 1908 and the first ingot was rolled out on February 16, 1912. Tatas retained 11 per cent in the company.
It wasn't a smooth ride for the fledgling company, which came close to being taken over by the government quite a few times. So much so, that the Steel Industry (Protection) Bill had to be introduced in the Central Legislative Assembly in 1924 to prevent this from happening.
The fears of nationalization were to haunt the company one more time during the Janata Party rule (1977-79) when George Fernandes, the then industry minister, floated the idea. However, it did not happen.
Jamsetji dreamt of building Tata Steel but it was JRD Tata who took it to new heights. Under his leadership, the Tata assets grew from Rs 62 crore to Rs 10,000 crore in 1990.
Apart from being a great leader himself, JRD Tata had the rare ability to create leaders. He chose Russi Mody, a manager par excellence, to succeed him in 1984 while JRD became chairman emeritus.
Mody beefed up marketing operations and started an export cell. He also gave the company the legendary 'G' blast furnace, which he discovered on one of his holidays.The 'G' blast furnace happens to be Tata Steel's biggest blast furnace even today and created national record in 2004.
JRD Tata's successor, Ratan Tata, took over from Mody as chairman in 1992, though it was not a smooth baton-passing, and JJ Irani assumed the role of managing director.
The transition was critical in the history of Tata Steel not for the way it happened but because the company was faced with competitive pricing at the dawn of a liberalized Indian economy.
And Tata Steel was in bad shape. What came as an eye-opener was a McKinsey report in the late 1990s, asking Tata Steel to exit the steel business.
What followed was far from an exit. Drastic changes were brought about. The company was rightsized with innovative schemes so as not to disturb the industrial harmony, from around 80,000 to less than 40,000 today.
The company also exited a host of non-core activities. From "We also make steel", the company made a conscious effort to establish "We make steel", operationally. The product-mix was changed as Tata Steel moved up the value chain to set up a cold rolling mill.
B Muthuraman stepped into Irani's shoes in 2001. 2001-02 was also the year when steel prices touched rock bottom. But Tata Steel emerged as one of the five steel manufacturers across the world to post profits.
What followed were efforts to break the commodity cycle with branding initiatives and retailing. The steel cycle had also turned.
In the last couple of years, under the leadership of Muthuraman, the company has pulled off several global acquisitions, Corus Group being the most historic.
It's not easy for a 100-year old company to vault from 56 to sixth largest in the world and that too in its 99th year! Many century-old companies in India are living in past glory. And only 2.1 per cent of the companies listed on the New York Stock Exchange at that time exist today. The rest have perished.
But Tata Steel seems to have just picked up speed. It's yet to peak.
  • By 2012, its capacity of 40 million tonnes will make it the SECOND LARGEST STEELMAKER in the world
  • By 2015, its de-integrated capacity will be in excess of 50 MILLION TONNES
  • It plans to have a STRONG BASE IN INDIA and primary steel making in countries rich in iron ore, coal and gas
  • It will be on the lookout for ACQUISITIONS in growing and mature markets
  • It wants to become a GLOBAL PLAYER with balanced presence in developed European markets and fast-growing Asian markets
  • It will aim for OWNERSHIP OF STRATEGIC RAW MATERIALS and control over logistics
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    First Published: Mon, August 27 2007. 00:00 IST