Saloni Meghani

If you cannot do great things, do small things in a great way. Harsh K. Jha, managing director, Tata Metaliks, started a recent presentation with this quote. He couldn’t have been more on the mark for the company he heads. Small can be more than beautiful — it can be profitable.

Tata Metaliks manufactures pig iron, operating a ‘mini blast furnace’ (MBF) with a capacity of about 210 cubic metres. This Tata Steel associate has taken big strides in the eight years of its existence to reach an enviable position in the industry. "We have met the Tata Group’s targets of sticking to plans, emerging as a market leader, and creating value for our shareholders," says Mr Jha.

Tata Metaliks has exceeded its profit target for the financial year ended 2002, and become the most profitable MBF operator in the country. The company’s profit before tax for the financial year ended 2002 was Rs 17.7 crore. That’s a sharp upswing from the financial year ended 1999, when its profit before tax was Rs 16 lakh.

Other parameters for measuring success, too, show up Tata Metaliks in remarkable light. Its shareholder value-addition, negative in 1999, was 110 per cent at the end of financial year 2002. The company paid a dividend of 22.5 per cent this year, and it has maintained a positive economic value added (EVA) status at 23 per cent, not considering the provision for deferred tax (the Parke Davis national benchmark is 24.47).

Independent assessors have taken note of the company’s upward mobility. The Stern Stewart survey in Business Today (February 2002) listed Tata Metaliks as the 28th highest wealth-creating corporate in India for the financial year ended 2001, and a recent survey by Business World ranked it the 13th fastest-growing corporate in India over a seven-year period. "We have been doing progressively better and better," says Mr Jha.

A new company in a sunset industry
The climb hasn’t been easy, though. Says Amit Ghosh, general manager (finance and accounts): "We are a relatively new company in what is a sunset industry."

In the late 1980s, the demand for metals was greater than its supply. In the early 1990s — around the time Tata Metaliks was born — the government issued a large number of licences to MBFs. These license holders started out enthusiastically enough, but most of them were in grave trouble within three years. The long gestation period in the industry was one problem; more serious was an international and domestic recession.

The last two years have not been much easier, price decreases the reason this time. That Tata Metaliks has ridden out the storm is credit enough, but its real achievement lies in rising to become a benchmark for the industry. "We sustained ourselves and, ultimately, we delivered," says Mr Ghosh. "This proves we are ahead in the race"

The period in which the company registered progress did not allow for risk. Far from being a handicap, this was an advantage, making the management style for decision making extremely structured. "Such an approach is in our bloodstream," says Mr Ghosh.

In its pursuit of the optimal way of doing things, Tata Metaliks implemented the ‘total productive maintenance’ (TPM) movement for enhancing performance and improving machine availability and product-quality levels. The company’s journey from the TPM kick-off date to the final audit, due shortly, has been one of the shortest in corporate India’s history.

Jha points out that Tata Metaliks, which has the highest productivity among all MBFs, is also considered the best as far as consistency in pig-iron chemistry goes. "We have mastered the art of making the metal through the correct charge-mix preparation, the consistency of our supply chain, and our logistics. This has been possible because of our technological confidence," says Mr Ghosh.

The soundness of Tata Metaliks’ technology is reflected elsewhere too. "The time before the refractory lining of the blast furnace (worth more than Rs 5 crore) is replaced, is normally four to four-and-a-half years. But we ran our furnace for six-and-a-half years," says Mr Jha. "Besides, till October 2000 it used to take about 44 days to change the lining. We finished the job in 33 days."

Speed is the key
The speed factor operates in other aspects as well. The company finished implementing all six modules of SAP in five-and-a-half months. According to SAP, this may well be the fastest such implementation in the country. The Tata Metaliks vision — ‘reach tomorrow first’ — touches all of its activities.

Agility is another attribute that Tata Metaliks has made its own. "We define agility as responsiveness to emerging markets," says Mr Jha. "If we find an opportunity, we increase our price. If we see a problem, we drop our price. We react on a daily basis to market conditions."

Mr Jha relates the example of how Tata Metaliks responded to the entry of a company with a blast furnace "larger than the largest possessed by Tata Steel". "We realised that this could threaten our survival. The Indian requirement for pig iron is only 3.5 million tonnes. Here was a plant coming in with a capacity of 1.2 million tonnes. Then the Mineral and Metal Trading Corporation of India (MMTC) decided to pump Rs 150 crore into this project and become a part-owner.

"We found out that the company was likely to come into operation around December 2001. By January we had started exporting pig iron to Bangladesh. I approached the MMTC chairman and told him we would help them with their marketing — on the agreement that they wouldn’t disturb our market. We got about 40,000 tonnes from them for Tata Steel. This deal gave us a clear lead time of three months to establish ourselves in Bangladesh."

There are other arrows in the Tata Metaliks arsenal that have helped it stay ahead. Customer focus is one of them. The foundries to which the company supplies its products use the same raw materials as the company itself does. This happened after Tata Metaliks decided to create ‘raw material bundles’ and supply coke, limestone and iron ore to the foundries, which now don’t have to go elsewhere for their requirements.

Additionally, Tata Metaliks has tailored its product to produce five derivatives of pig iron to suit the specific requirements of the foundries. The company aims to become the supplier of choice for them. Most of these foundries are small and have not been upgraded for 20 years. "We offer a free service through an application support group that helps the foundries improve their processes," says Mr Jha. "It is in our interest to see that they are profitable."

WOW, not SNOW
Customer satisfaction is so crucial to the Tata Metaliks work culture that when a consignment went awry, all its officials had to forego their salary for a day. The company’s senior management gives out a card that says WOW (within our world) to employees who do something beyond their call of duty. When an employee’s performance is disappointing, he or she gets a card that says SNOW (sorry, not in our world).

"Non-monetary appreciation carries more weight and its effect lasts longer," says Mr Jha. Tata Metaliks has received the Confederation of Indian Industry’s ‘human resource award’ for two consecutive years, 2000 and 2001.

Tata Metaliks also uses its TPM initiative to empower its workforce with knowledge and skills. "In the TPM concept, a deviation from a norm usually takes place because of human error," says Mr Jha. "Even a technical failure occurs because the designer hasn’t understood the requirement adequately. So we laminate a single-point lesson that analyses a failure, whether knowledge or skill related, and place it alongside the equipment where the person involved works."

To effectively convey the vision and mission of the company, small teams have been formed. The management participates in a mahabhoj, or feast, every quarter. All employees meet over a meal and everything is discussed and shared candidly. "There is a high degree of commitment in the organisation because of the transparency displayed by the management."

Tata Metaliks is now ready for the next big leap. Company secretary Subhasis Dey believes that the organisation, having become debt-free following the recent repayment of all debentures, has come to the point at which expansion is crucial. "If we don’t expand we will create more idle assets," he says. "It is a bit like having high cholesterol. You need to go for a morning walk."

Tata Metaliks is looking at emerging technologies and also at building foundry parks, which can save costs for customers and the MBF. "The manufacturing cost can be brought down by approximately Rs 1,000 per tonne if the foundries are located close to the plant," says Mr Jha. Other plans are also being firmed up to consolidate the company's expansion ambitions.

With processes and technology firmly in place, Tata Metaliks looks ready for the long haul. Many small, sure steps are leading the company to a big future.