April 2015 | Nithin Rao

Driven by innovation

Innovation and marketing have been the mainstays of Tata Steel’s efforts to beat back the effects of the economic downturn. Excerpts from an interview with managing director TV Narendran.

How is the Kalinganagar project coming along? What are the corporate social responsibility lessons learnt from the project?
The project is shaping up very well. It is the culmination of efforts by various leaders and teams over the last 10 years. We are awaiting some clearances from the central and state governments and some technicalities need to be sorted out, but the assets and facilities are more or less ready. The first phase of the 3-million-tonne project will be commissioned in the new financial year. As for the second phase, we have not got a formal approval from the board. The plant is configured for 6 million tonnes.

Kalinganagar has been a great learning experience, the biggest being that when you start a greenfield project you have to start building equity and trust with the community there, well before you do anything else. Kalinganagar has taught us that the next time we want to do a project, we ought to be out there engaging with the community at least three to five years before we start construction.

Tata Steel had strived and found traction in reaching out to customers in the small and medium-sized (SME) business category. Has the company taken this agenda any further?
In some sense we were pioneers in dealing with the SME segment, which was not used to interacting directly with steel companies. We realised that SMEs account for 40 percent of the consumption of steel. Traditionally, these customers were not serviced by steel companies as their requirements were not large. They were used to getting the steel that was available rather than what they wanted.

Tata Steel has a vigorous growth plan to overcome the potential challenges of 2015-16. Watch the video
We spent about a year identifying thousands of SME customers and built a distribution and service centre network to service them. When we added capacity in Jamshedpur the economy was quite low and we thought we would have to export. But whatever we produced we sold to the SME segment. Many of them are confident and ambitious. In fact, we now refer to them as emerging corporate accounts.

You have concentrated on marketing and innovation in recent times to beat back the effects of the economic downturn. What have been the benefits?
This journey started about 15 years ago and we have been innovating constantly ever since. For instance, in the business-to-consumer segment we did what no steel company had done. For the business-to-business segments we had some unique initiatives, including customer value management and focusing on how to look at the customer-supplier relationship as a value driven relationship rather than a price-and-cost relationship.

Our goal now is to increase our revenues from services and solutions to 20 percent from the less than 2 percent where it is at present. We want to raise the business-to-consumer business from 23 percent of revenues today to at least 30 percent on the expanded base. It's a tough target but if you want innovation you need to set a target you don't know how to achieve. People will come out with ideas.

This is an excerpt of the interview from the April 2015 issue of Tata Review in which chief executives of 14 Tata companies speak about the performance of their companies in the year gone by and their plans for the future:
Tata Consultancy Services: 'At TCS, it's always about the team'
Read the complete interviews and more in Tata Review
Jaguar Land Rover: 'Will deliver 12 significant product actions in next 12 months'
Tata International: 'Scale is necessary for a trading company'
Tata Steel Europe: 'European countries remain the key to our success'
Tata Motors (commercial vehicles): 'We will deliver tangible value to our customers'
Tata Motors (passenger cars): 'We plan to introduce two new vehicles every year'
Tata Chemicals: 'Fiscal 2016 is going to be a year of consolidation for us'
Tata Global Beverages: 'The global market is vital to our health'
Titan Company: 'Will continue to explore opportunities in lifestyle space'
Tata Communications: 'Mindset is the key'
Rallis India: 'Want to be among the most valuable companies in our domain'
Tata Technologies: 'We see opportunities in aerospace and defence'
Voltas: 'We look forward to deploying our strengths...'
Tata Projects: New areas of business, new opportunities