November 2015

'Kalinganagar has the potential to be bigger than Jamshedpur'

TV Narendran TV Narendran wears a faintly reflective look when talk veers around to the challenges that had to be surmounted on the road to getting the Kalinganagar project up and running.
A rocky road it has been and that explains the Tata Steel chief executive’s fatigue — as it does the company’s — about a chapter that stands apart in the story of how an ultramodern industrial facility came to be built in a climate of adversity and uncertainty. It’s a time for celebration rather than regrets and Mr Narendran is on more comfortable turf when the positives are highlighted.

An alumnus of the Regional Engineering College in Tiruchirappalli, Tamil Nadu, and the Indian Institute of Management, Calcutta, Mr Narendran has been with Tata Steel since 1988. He has functioned in a variety of roles for the company, in India, the Middle East and in Southeast Asia. In this interview, he speaks about the Kalinganagar plant and the ups and downs on the journey to establishing it.

What does the Kalinganagar project mean for Tata Steel from an organisational perspective and as a business proposition?
From an organisational point of view, there is a sense of fulfilment and achievement. We began thinking about setting up a steel plant in Odisha 20-25 years ago, but for various reasons it took a long time to get going with our plans. The move to Kalinganagar happened in 2005 and then we got off to a bad start with the agitation. Persistent challenges have dogged us in Kalinganagar ever since.

I’m the third chief executive of Tata Steel to run with this venture and we have had so many people at different levels who have contributed so much to it over the last 10 years, not just the project guys but those who have helped us foster social equity with the community, those who have coordinated matters with the government and the administration, as well as others. We did not give up; we stayed the course and, hopefully, we have succeeded. That brings a good feeling for all of us at Tata Steel.

Kalinganagar is our first greenfield site after Jamshedpur. We have built plenty of smaller facilities but a new place, starting from scratch — it’s a great thing for the organisation.

What about the business benefits that Kalinganagar will offer?
From a business standpoint, there are a few factors at play here. One, we are reaching saturation point in Jamshedpur and we had to have another facility and another location. Kalinganagar is critical in that respect. Now that we have the land we have acquired, we can build a capacity of 15-16 million tonnes of steel a year — up from the 3 million tonnes planned for now — and we have the money and desire to do so. Kalinganagar has the potential to be bigger than Jamshedpur. It takes care of Tata Steel’s growth aspirations for some time, as long as we have the financial muscle to build capacity.

The 20-bed Tata Steel Parivar hospital at Gobaraghati in Kalinganagar
If we are to retain our market share, we need to add at least a million tonnes in capacity every year. Kalinganagar will also supplement our product mix. We are a strong player in the automotive industry from our Jamshedpur plant; Kalinganagar will enable us to get bigger there and in other market segments.

This plant, in terms of scale and capability, is at a superior level to what we have in Jamshedpur. It will deliver a wider product range and more sophistication and efficiency with regard to productivity and competitiveness.

To be associated with the making of a steel plant such as this is a once-in-a-lifetime experience. How does it feel to have the facility finally come to fruition on your watch?
I feel extremely privileged. This is perhaps the largest industrial operation under execution in India. It’s a Rs250-billion project as it stands today and it will reach Rs400 billion when we get to the 6 million tonnes a year phase. That’s one reason why it’s an honour to be leading the organisation while we are going through this and I’m fortunate to be in the position.

Could you tell us about the perseverance, the ability to stick it out, that Tata Steel and its people have displayed in pulling the project through to completion?
Part of this has to do with the tradition and culture of the organisation. Tata Steel has on many occasions, across the 100-plus years of its existence, proved its critics wrong. That’s something we are proud of. To point out an example from more recent times, when the economy was opened up in the early 1990s and import duties were slashed, everyone said Tata Steel would die. What we did, instead, was become the most efficient steelmaker in the world. Our early troubles in Kalinganagar saw a lot of people writing us off on the project. We ignored the naysayers, went to work on the ground and slowly, bit by bit, got the project back on track.

We have had to cope with a multitude of challenges along the way: violence, disease, cyclones and more. There was a time when our people could not go anywhere near the place due to the hostility at the site. They have worked in very difficult conditions to make this happen. It shows the passion and commitment of our employees and the resolve of Tata Steel. There has been a huge amount of learning for us from the execution of the venture. If there is to be another greenfield project in Tata Steel’s future, we will go about it differently, for sure.

Land acquisition, an issue that almost derailed the project, seems to be becoming ever more intractable in India. What could be a solution?
We have to understand that this requires all of us — government, industry, the community, nonprofits and wider civil society — to work together. We often find that each one thinks its view is the right view; that attitude is not going to help. The government has a role to play because that’s the administrative side of the equation; there are things only the government can do and nobody else. There are nonprofits that are interested in the welfare of people and they can be an effective bridge between the community and corporate entities.

If we sit together and listen to and utilise one another’s knowledge and other assets, we can find solutions. In Kalinganagar, we have been generous in taking care of the affected people. We are now in the second phase of the project and, having learned lessons from what has passed, the path has been far, far smoother. The community trusts us a whole lot more and it appears that they are now convinced of the benefits that can accrue to them from our presence.

Kalinganagar was little more than a dusty crossroad when Tata Steel first set foot there. Today 14 banks have branches in the area, there is an enormous amount of economic activity, there are hotels and restaurants, and there are direct and indirect jobs. The entire ecosystem has been transformed. So, yes, land acquisition is a complex subject and it is disruptive for local communities, but the gains that can come from industrial development are much greater.

The coke oven lights up as the sun goes down

How difficult has it really been for Tata Steel with Kalinganagar and the land acquisition process?
It has been very hard. Besides the rest of it, there has been the badmouthing of Tata Steel and this finds traction in the age of social media. It seems that anyone can say anything and we have to deal with that reality as best we can.

Does the atmosphere have to be so vitiated? Definitely not, but at the stage of development India is at we probably have no choice. What’s worth considering in this context is that we — as Tata Steel, as the Tata group, as Indians — may be willing to weather it out, but not everybody will be so patient or persevering. These people will go to Vietnam or Indonesia and wherever else. We have taken 10 years to build a plant that will soon produce 3 million tonnes of steel a year, hopefully. During this period, Chinese steel production has increased exponentially. You cannot adequately advance an industry in our kind of fashion.

This article is part of the cover story on the setting up of Tata Steel's ultramodern Kalinganagar plant, featured in the October 2015 issue of Tata Review:
Keeping the faith
It pays to be generous
The making of steel and more