"We started with the processing and distribution of 10,000 tonnes of steel a year and we touched the million mark in 10 years. Now we’re talking about reaching our next million in three years and 3 million by 2012.” To hear Sandipan Chakravortty state the facts of this growth story thus, everything seems simple and steady, but the managing director of Tata Ryerson knows how difficult a task that is. “You must always aim high,” he adds. “If you reach the higher target it means you have an opportunity you had not planned for.”
Aiming high has brought a host of rewards, expected as well as unexpected, for Tata Ryerson (TRyL), an associate company of Tata Steel that processes and distributes steel, hot and cold-rolled coils, strips, plates, sheets, blanks and more. Promoted jointly by Tata Steel and Ryerson Inc, USA, the company commenced operations in 1997 at Bara (Jamshedpur) and has gone on to become India’s largest independent steel service centre.
The beginnings of TRyL can be traced to Tata Steel’s ambition to create value addition on the basic steel that it produced. That’s where the idea to set up a service centre originated. The company scouted for a partner and found the right fit in Ryerson Inc, the largest steel service company in the world. Ryerson was also keen on setting up in this part of the world — where growth rates were far superior to what was obtainable on its home turf — and were happy to combine with Tata Steel.
The primary objective of a service centre is to be a complete solution provider to the customer and not just do a particular job like cutting steel or holding inventory. Tata Ryerson delivers single-window solutions. This means that if a customer asks for 20 types of steel in various shapes and sizes, the centre will give them that.
TRyL believes that customers should concentrate on their core activity and leave the nitty-gritty of buying and processing steel to them. These activities are complemented by the centre’s core business of procuring and processing steel, holding inventories for customers and supplying according to requirement.
“When we started in 1997, we were the only enterprise of the kind in India,” says Chakravortty. “Before that, there was the unorganised sector. Poor workmanship was the norm and customers rarely got what they wanted.”
TRyL, with first-mover advantage on its side, found success quickly with its international-class service. From the very start, the company concentrated on the high-end business from industries such as automobiles, auto components and consumer appliances.
“We did this because we felt that Ryerson’s global experience would come in handy here,” says Chakravortty. “The second point is that these sectors were used to steel service centres and comfortable with their facilities. Identifying and understanding the market was a crucial factor for us. So we set up a wide all-India network of service centres in phase 2.”
TRyL also grasped the importance of locating its facilities at the right place, which is as close to your customer as possible. “Since Tata Steel was our partner we required a major service centre in Jamshedpur, adjacent to Tata Steel, to reduce freight cost,” explains Chakravortty. “Our customers wanted us to be where they were; that is what happens worldwide.”
The company got going with service centres in Pune and Faridabad, and is now opening new ones in Chennai, Panthnagar and Singur specifically tailored for the needs of the final customer — Caterpillar and Tata Motors. Additionally, it has sales outlets in 18 locations across the country and hopes to increase that number to 30 or 40 over the next three years.
Assured steel supply is a vital dynamic for the wellbeing of a steel centre, which is one big reason why having Tata Steel as its partner has been a huge boon for TRyL. “We get tremendous strength and comfort from this arrangement,” says Chakravortty, “especially in times when steel is scarce.”
Tata Steel is the company’s biggest supplier; it is also an intermediate customer in terms of tolling. The benefits of this are many. “We can process a huge amount of steel without actually buying it,” says Chakravortty. “Tata Steel retains the ownership of the steel and the end customers are happy because they know Tata Ryerson is doing the processing.”
More than processing, it is distribution that holds the key for the company. This is the business area where it takes responsibility to supply quality processed steel in exact lot sizes to customers at the correct price and at the correct time. “Going forward our thrust will be more and more on distribution, because that is where the money — and customer satisfaction — comes from,” says Chakravortty.
Among the factors that have helped TRyL to secure 50 per cent year-on-year growth is the focus on key processes to ensure on-time delivery. The company has made the improving and fine-tuning of its business processes a priority. The logic guiding this is straightforward. “Our business processes are an essential ingredient for success,” says Chakravortty. “We have various processes — for value creation, support systems and order fulfillment — that are extremely robust and sustainable.” Planning raw material inventory, having different sources for the steel, contingency planning, keeping inventories judiciously at various centres, and continuous interaction with customers have ensured that its customers get orders fulfilled on schedule.
Two continuous challenges for the company are price (customers want it to go down all the time) and cost control. Then come agility and the ability to innovate. “Agility is how quickly we react to a situation; innovation is finding a different way of doing a job and commercialising it,” says Chakravortty.
TRyL has a young and motivated team of employees and Chakravortty exhorts them to keep an open mind and improve at every opportunity. “There are learnings everyday as customers’ requirements change frequently,” he says. “The more we try new models and techniques, the more we learn.”
Another area that Chakravortty strongly drives within the company is innovation. At Tata Ryerson, people are encouraged to try and not worry about failing. “I tell them to play around. I believe that unless you fail you cannot succeed. But you must not make the same mistake twice,” he adds. Innovative projects and experiments at TRyL get first priority in terms of money allocation. Employees are also rewarded and recognised. All this has helped the company generate innovative ideas which have saved it much money.
There’s more to innovation than the commerce angle at Tata Ryerson, especially in the sphere of HR. A variable pay methodology, kicked off in 2000, is the norm for people in marketing and this has received, according to Chakravortty, “a fabulous response”.
With infrastructure and manufacturing on a bull run in fast-growing India, chances to expand and garner further success will continue to beckon Tata Ryerson. The company, for its part, appears able and willing to make the most of the opportunities that the future has to offer.