Authored by Isha Antani ’13 and Joel Joseph ’13
India at Kellogg had a very special opportunity to spend a few enlightening moments talking with B. Muthuraman – vice chairman of Tata Steel and chairman of Tata International about Tata Steel, Leadership, and Innovation.
B Muthuraman is a Tata Veteran. He began his career at Tata Steel in 1966 and has held various positions at the company including vice president of marketing and sales and vice president of cold rolling mill projects. He was appointed executive director in 2000, managing director in 2001 and non-executive vice chairman in 2009.
Tata Steel is growing – and it’s growing fast. The strategy now focuses on consolidation and takes a step back from intense M&A activity. Looking at some qualitative highlights from its past year, the capacity in its Jamshedpur office reached 10 million tons. Jameshedpur is now one of the biggest single-site steel plant globally – in the same ranks as the plants located in Moscow and China. Besides the Jameshedpur plant, Tata Steel has also laid the groundwork for an entirely new plant in Orissa – which is expected to be 6 million tons in capacity. Tata Steel also currently has the largest market share in the domestic automotive sector.
Analyzing things from a slightly global perspective, Mr. Muthuraman does admit that the European operations for Tata Steel were affected by the regional downturn. However, there is optimism in the air as the focus in Europe for the past year has shifted to significantly improve the internal operations within the plants – rendering these plants in a good position to bounce back up again.
We then asked Mr. Muthuraman to comment on the changing economic landscape within India itself and how he foresees domestic changes affecting Tata Steel. The national growth has been slowing down while inflation has been on the rise. The GDP over the immediate past few years has been wavering around 5-6% where previously it was averaging about 8-9%. Mr. Muthuraman highlights two significant trends – 1) Traditionally, India has imported steel at a rate of the 5-7 million tons/year. That import demand rate is falling; 2) There is an increasing push towards cheaper prices. Tata Steel is very well positioned to counter both these trends. In terms of decline in import demand, Tata’s domestic steel availability makes it the optimal solution. Adding to that is that Tata Steel is priced cheaper than the majority of its competitors.
So the question becomes, how has Tata Steel (and to a greater extent, Tata Sons), managed to stay so competitively relevant and innovative in such a changing market? It is because the company fosters a culture where innovation lies at its core – encouraging experimentation and curiosity. It holds an annual Tata Innovista award ceremony to celebrate innovative ideas within the company.
In this culture of innovation also lies the topic of recruiting top talent that continues to drive towards a successful company. In a widening sea of hundreds of freshly minted college graduates, it is becoming harder to extra quality from the degree-boom that emerging India has experienced. “Institutes need to set aside time for people to reflect – knowledge-based inputs are not enough,” according to Mr. Muthuraman. Too often, it seems, the recruits are brimming with academic knowledge but they lack a distinct hunger – to perform, to motivate others, to jump hoops and drive towards true leadership. This change is needed in order for the younger generation to take control and create a future that is driven by both personal and societal success.
For a distinguished leader like Mr. Muthuraman, the historic changes that he has seen India undergo – especially in the last 20 years – make him confident that not only is Tata Steel well-poised to continue its successful journey but also that India contains within in the spirit to truly embrace development and continue on its growth trajectory.
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