Ram Sahgal

Depressed markets. Global slowdown. Falling domestic demand. What does a market leader do in such a situation? Ask Nimo Punwani, managing director of Tata SSL Limited, the largest manufacturer of steel wires in the country, and he'll tell you.

"We intend to become a global player, to be among the top five steel wire manufacturers in the world," says Mr Punwani. "To beat the current slowdown in the domestic market, we are exploring more opportunities in overseas markets. We have tied up with a Hungarian company to manufacture 15,000 tonnes of steel wire in Hungary and then export it to other markets. And we are pursuing a strategy of acquisitions and joint ventures in overseas markets such as those in the European Union."

Brave words, especially when most domestic and overseas steel manufacturers are cracking under the strain of the ongoing world recession. However, Mr Punwani's words are buttressed by a lot of steel, and of the best quality at that. You wouldn’t expect less from a Rs 1,000-crore organisation that terms itself a 'global company'.

One clear advantage Tata SSL has over the competition is that it is a member of the Tata family. "Being a part of the Tata stable means that we have a reliable supplier of base products for our wires and rods," says Mr Punwani. "Furthermore, we can leverage our steel by using the Tata brand name."

This essentially means that the future belongs to the integrated steel company. One that has a reliable and low-cost supply of steel in a product market that frequently sees volatility in prices. For instance, a stand-alone cold-rolled mill will be affected if it does not have hot-rolled steel capacity.

Another reason why things are looking up for Tata SSL, says Mr Punwani, is the growth of construction activity in China, the South East Asian countries and in Eastern Europe. "These markets are witnessing a boom, especially in housing and infrastructure, and the demand for long products like steel wires will grow."

Tata SSL is now exporting 65 per cent of its low-relaxation, pre-stressed concrete strand wire (PC wire). This goes to the United States, Australia, New Zealand and markets in South East Asia and the Middle East. And it follows from anticipated demand not being met in the domestic market, as also the fact that, contrary to specifications, India does not use the wire for high-rise buildings and other housing applications, as is the norm abroad. But this wire has great future potential in the country.

As regards other steel wire products, the company meets the entire bead wire requirements of multinational tyre company Continental for its plant in Sweden. Continental is now looking at Tata SSL as a bead wire partner for its other plants across the world. Tata Wire, as a brand, is known in the vineyards of the Napa and Soma Valleys in California, where it is used in apple and grape farming operations.

Says Mr Punwani: "We have a segment-specific strategy to ensure that 25 per cent of what we produce is exported. Steel wire exports for the nine-month period in the current financial year have been 27,500 metric tonnes, as against 23,700 metric tonnes for the corresponding period last year. That’s a growth of 17 per cent."

That's the export story, but what's happening on the home front? Apart from shifting focus from flat to long products, Tata SSL is planning an expansion drive of its wire business — through acquisitions, conversions and a green-field plant at Jamshedpur in eastern India. The company has already received an order to supply 4,000 tonnes of steel wire for the ambitious Bandra-Worli trans-harbour sea link project in Mumbai.

The company’s other plans include shrinking its operations at Borivali in Mumbai due to high labour and other input costs. Over the past year, Tata SSL has reduced its Borivali workforce by 300 (30 per cent of its employees) by offering a voluntary retirement scheme. It has also sold part of the land in its Mumbai plant in an effort to minimise non-performing assets.

Tata SSL’s efforts have started paying off. It recorded a net profit of just over Rs 90 lakh during the third quarter of 2001-02, as against a loss of Rs 46 lakh during the same period in the previous year. The major sales for the third quarter have come from steel and wires (Rs 137.72 crore), which works out to 87 per cent of net income earned. Cold-rolled strips and other products accounted for the rest.

Awards won by Tata SSL

• Engineering Export Promotion Council (EEPC) of India recognition for excellence in exports of steel wires in 1996-97.
• EEPC recognition for exports of steel wires for 1997-98
• Regional QCFAI recognition for ‘best of sessions’ award for three Tata SSL quality circles in 1999-2000.

Initiatives

• Tata SSL has made the Tata Business Excellence Model a way of life. All its officers have undergone TBEM training and all its plants are ISO 9002-certified.
• The company was among the first in the Tata Group to adopt the ‘balance scorecard’, presented at each board meeting as part of the managing director’s report on operations.
• Every Tata SSL employee has undergone the ‘large scale interactive process’. This has helped in developing awareness, across all levels, about the importance and urgency of solving organisational problems.
• The company has introduced ‘total operational performance’ with the help of Tata Steel to institutionalise cost reduction.

Products

• 130,000 metric tonnes concast steel billets through electric arc furnace and ladle refining (for captive consumption).
• 225,000 metric tonnes morgan wire rod mill with stelmore cooling. The company also supplies mild steel and high-carbon steel wire rods.
• 175,000 metric tonnes steel wire plants, covering a wide range of products such as bead wire (tyres); pre-stressed concrete strands and PC single wires (construction and railways); galvanised wires (meshes, fencing); spring steel (automobiles); and fine steel wires.

History

• 1958: Established as a private limited company, Special Steels starts off by manufacturing umbrella rib wire at Borivali in Mumbai.
• 1961: Company goes public.
  
• 1976: Sets up second plant for tyre bead manufacture (at Tarapur near Mumbai).
  
• 1980: Integrates backwards, adds state-of-the-art wire rod mill, procured from Morgan, USA, to the Tarapur plant.
  
• 1984: Tata Steel acquires 55% of the shareholding from the promoter Pallonji Mistry.
  
• 1993: Commissions cold rolling plant at Tarapur.
  
• 1995: Tata Metals amalgamated with Tata SSL.
  
• 1996: The company is renamed as Tata Special Steels.
  
• 1999: Hives off cold rolling mill at Tarapur to Tata Steels.
  
• 2001: Tata Steels makes second open offer; acquires 93% of Tata SSL.