Sujata Agrawal

Tata Sponge has soaked up a host of lessons in a difficult industry to emerge with the credentials and capabilities to soar further still

Top-notch credentials, cutting-edge capabilities, an unwavering commitment to quality and environment, and high ethical standards —
these are the key characteristics that have enabled Tata Sponge to stand apart in an industry undermined by dodgy operators, poor environmental practices and deficient products.

Commissioned in April 1986, Tata Sponge has emerged as a leader among coal-based sponge iron suppliers in eastern India, while winning kudos from customers for consistency of supply and product quality. “There are three factors that helped the company secure leadership position,” says managing director Suresh Thawani. “First is the Tata brand’s image and promise in a marketplace dominated by small, unorganised operators. Add to this, the advantage of getting an assured supply of quality iron ore from Tata Steel, which ensures consistency in sponge iron quality. And finally, customers and other stakeholders trust us because of the high ethical values that Tata Sponge brings to its business.”

Tata Sponge, which has its manufacturing facility at Bilaipada (in Joda block of Keonjhar district in Orissa), was set up as a joint venture company between Tata Steel and the Industrial Promotion and Investment Corporation of Orissa (IPICOL). It has moved on since, becoming an associate company of Tata Steel following the former’s acquisition of IPICOL’s stake in 1991.

The origins of Tata Sponge can be traced to a groundbreaking effort by Tata Steel to industrialise a backward area of Orissa. Tata Steel proposed to do this by introducing an innovative technology for making sponge iron — TISCO Direct Reduction (TDR), developed by its research and development division.

The idea blossomed quickly enough for Tata Sponge to become a continuously profitable company, with shareholders getting regular dividends, customers being satisfied on every count, and employees finding their contributions being valued in an organisation they have many reasons to be proud of.

Having contented employees is one thing, but retaining skilled workers has been a challenge for Tata Sponge, primarily because of the outback location of its manufacturing plant. The officer cadre is often wooed by competitors with alluring compensation packages, which is why the turnover of young engineers is relatively higher.

Tata Sponge has been working hard to stem this tide. We are now working on two different strategies to train and retain officers as well as our other employees,” says Thawani. For non-officers, a total revamp of training and the introduction of an empowerment process are underway, with the objective of making them engage in everyday management by themselves (officers will be involved only at higher levels). For officers, the thrust will now be on enhancing job satisfaction and improving remuneration packages.

Another challenge that Tata Sponge has to deal with is the gaining of more control on the availability of input materials at competitive prices. The company has recently been allotted a coal block ( Angul, Orissa),
but it still depends on Tata Steel for iron ore supplies.

Probably the most vital test that confronts Tata Sponge is its quest for downstream growth, which means manufacturing steel. For this to materialise, it has to arrange resources, in addition to the expenses incurred on continuing projects like coal-block development, of which a crucial part is to acquire ‘surface rights’ and rehabilitate inhabitants from five villages (about 500 families). Only when the company manages the latter will the central government grant it mining rights.

Meanwhile, Tata Sponge is stepping up its efforts to increase revenue. The company has installed waste heat recovery boilers to produce power from waste heat, and has even started exporting this power from March 2007. This adds to profitability of the company, besides keeping the environment free of thermal pollution. “We are among the first sponge iron enterprises to have sold carbon credits (for generating power from waste heat),” adds Thawani with pride.

Tata Sponge does much more than keep its end up on the environment front, welcome in an industry segment that has the dubious distinction of being among the most polluting anywhere. Not that the process is not amenable to pollution control, but a majority of the players in this industry don’t appreciate the virtues of keeping the environment clean.

Tata Sponge has set a host of national benchmarks on reducing air, water and noise pollution. A range of unique initiatives demonstrate its conscientious endeavour to foster a clean and green culture; tree
plantation drives have ensured that more than a third of its land is ‘green’ and a waste-utilisation project has been initiated with the help of Vidya Shakti Niyas — a non-profit organisation managed by the wives of Tata Sponge employees — to produce bricks from fly ash. Profits generated from this venture are utilised for charity and social welfare projects.

Improving the social environment in which it operates is another priority for Tata Sponge. Thawani elaborates, “We have embarked on a structured development programme targeted to benefit 50 villages within the focus areas of drinking water, education, health and hygiene, agriculture, sports, etc.” These activities are aligned with Tata Sponge’s affirmative action programme for people belonging to the economically deprived scheduled castes and scheduled tribes, who comprise about 80 per cent of the local population.

Tata Sponge’s business plan for the immediate future includes manufacturing iron ore pellets (along with Tata Steel) and increasing its sponge iron capacity to 8,40,000 tonnes per annum.When that happens, the company will have enough waste heat and solid waste to set up additional power plants of over 60MW. The manner, in which it has progressed thus far, suggests Tata Sponge will attain these goals, and many more, as it takes further strides forward.

Uploaded in December 2007