Century of success

Print edition : July 04, 2008

A view of the new (foreground) and old parts of the Tata Steel plant in Jamshedpur.-ARUNANGSU ROY CHOWDHURY A view of the new (foreground) and old parts of the Tata Steel plant in Jamshedpur.

Its ability to assess the needs of the future, absorb new technology and adapt it puts Tata Steel at the forefront of Indian industry.

A HUNDRED years since it was floated in 1907, the Tata Iron and Steel Company (now Tata Steel) has emerged as the worlds sixth largest steel company with an existing annual crude steel capacity of 28 million tonnes and the worlds second most geographically diversified steel producer with operations in 24 countries and a commercial presence in over 50 countries. It is Asias first integrated steel plant and Indias largest integrated private sector steel company.

The story of Tata Steel is the story of a man and his vision; a vision that was translated into action and which took the form of a philosophy unique not just in corporate India, but the whole world. Jamsetji Nusserwanji Tata was born in 1839 in Navsari, Gujarat. At 43, a report by German geologist Ritter Von Schwartz on the availability of iron ore in Chanda district in the Central Provinces gave him the idea of setting up an iron and steel plant in India.

Even earlier, in 1867, Jamsetji was inspired by Thomas Carlyles lecture in Manchester expounding the maxim, The nation which gains control of iron soon acquires control of gold. However, it was not until 1907 when Jamsetjis dream started to materialise. Eminent geologist C.M. Weld, employed by the Tatas, and his assistant Srinivas Rao identified the village of Sakchi (now in Jharkhand) at the confluence of the two rivers Subarnarekha and Kharkai, as the ideal location for the steel plant. The same year the Tata Iron and Steel Company (TISCO) was floated and the Tatas plunged into the Indian market and issued their prospectus to raise Rs.1.5 crore as ordinary shares, Rs.75 lakh as preference shares and Rs.6.75 lakh as deferred shares. Around 8,000 Indian investors subscribed within three weeks for a total of Rs.2.32 crore.

Ten weeks after the discovery of Sakchi, on February 27, 1908, the first stake was driven into the forestland, and thus began Indias journey to the future as an industrial power. The first cast of pig-iron was produced in December 1911, and the first ingot of steel rolled out in perfect shape on February 16, 1912. With the outbreak of the First World War in 1914, Sakchi became an arsenal of the war efforts. The company sold steel to the government at one-third the price that the market would fetch. It shelved the manufacture of the highly profitable ferro-manganese in its blast furnaces, opting instead to convert pig-iron into steel, which was required for the war. In fact, the company provided 300,000 tonnes of steel during the four years of the war.

After the war, the Viceroy Lord Chelmsford visited Sakchi in 1919 to express his gratitude to the company. I can hardly imagine what we should have done during these four years if the Tata company had not been able to give us steel rail, which have been provided for us not only for Mesopotamia, but for Egypt, Palestine and East Africa, he said. Saluting the vision and enterprise of the late Jamsetji, he renamed Sakchi as Jamshedpur, and the name of the railway station was changed from Kalimati to Tatanagar.

Throughout the 1920s and the 1930s the company went on a massive expansion programme but not without difficulties. In fact, in November 1924, Tata Steel was on the verge of closing down because its expansion programme had run into rough weather. Legend is that Sir Dorab Tata pledged his personal fortune and his wifes jewellery to get a loan from the Imperial Bank in order to bail the company out.

Even during such hard times, there was no retrenchment of workers, though shareholders were requested not to push for dividends. Such was the good will that the Tatas enjoyed during the early days of the industry that most of the shareholders, despite receiving their dividends just once during the 13 years of trouble, held on to their shares. By the time the Second World War broke out in 1939, Tata Steel was the largest integrated steel plant in the British Empire, with a capacity of around one million tonnes a year.

During the 1939-40 financial year, a new 100-tonne blast furnace started functioning. In 1942, the company started manufacturing special steel for war purposes. It also set up a Benzol plant, and a wheel tyre and axle plant the first of its kind in the country. During the war, Tata Steel made armoured cars fitted with bulletproof plates and rivets, and which were popularly called Tatanagars. An army report said, Nowhere the plates were pierced and the occupants were all alive.

A blast furnace at the Jamshedpur plant.-ARUNANGSU ROY CHOWDHURY

The post-Independence era changed the direction of the companys expansion programmes. Tata Steel now geared up to participate in the enormous task of nation building. The much required steel for the newly devised Five-Year Plans came from the Tata factories and was used in the construction of the Howrah Bridge, the Bhakra-Nangal Project, the Damodar Valley Corporation Project, the port at Kandla, and so on.

In 1958, 300,000 citizens of Jasmshedpur celebrated the golden jubilee of the industry and town. Prime Minister Jawaharlal Nehru presided over the celebrations and Tata Steel dedicated a 200-acre park, aptly called Jubilee Park, to the people of Jamshedpur and its surrounding areas.

What has kept Tata Steel at the forefront of the Indian industry is its ability to assess the needs of the future. It has constantly recognised the need to increase capacity, absorb new technology and adapt it to Indian conditions. From time to time it has made moves to acquire the latest technical know-how from the United States, Japan, and other technologically advanced nations. In four phases of modernisation, the entire plant has undergone a major transformation by way of capacity expansion and installation of modern equipment.

After the fourth phase, the steel plant became one of the most modern among its kind in the world. Tata Steel has set up a world-class cold rolling mill. It has achieved a capacity of over 5 million tonnes at its Jamshedpur Steel Works and has plans to set up greenfield steel plants in other parts of Jharkhand, Orissa and Chhattisgarh in India, and Iran and Bangladesh. The company has also invested in Lanka Special Steel in Sri Lanka and NatSteel Asia in Singapore.

The first private sector steel plant of the country, which started with a production capacity of 1,00,000 tonnes a year, has today transformed itself into a global player. From its present global capacity of 28 million tonnes the company has projected an annual manufacturing capacity of 50 million tonnes by 2015, and has set its eyes on achieving a target of 100 million tonnes. Through investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Asia, the company has created a manufacturing and marketing network in Europe, South-East Asia and the Pacific Rim countries.

Corus, which manufactured 18.3 million tonnes of steel in 2006, has operations in the United Kingdom, the Netherlands, Germany, France, Norway and Belgium. Tata Steel Thailand is the largest producer of long steel products in Thailand, with a manufacturing capacity of 1.7 million tonnes. NatSteel Asia produces about 2 million tonnes of steel products annually through its regional operations across seven countries. Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market.

The company also plans to expand the capacity of its existing steel works in Jamshedpur. It has set up joint ventures to procure high-quality limestone and low-ash coal from Thailand and Australia. Today, Tata Steel has over 5 lakh shareholders all over the world. The company has recorded consistent dividend payouts since 1935-36, while its performance in the share markets has been stable and profitable throughout its existence.

For the centenary celebrations, Prime Minister Manmohan Singh visited Jamshedpur and release a postage stamp that was specially brought out by the Government of Indias Ministry of Communications. It is a tribute to the companys commitment and dedication.

In his address, Manmohan Singh said, Today, Tata Steel is a symbol of a new phase in the growth of Indian industry. One hundred years ago, India was just beginning to industrialise. It industrialised in an environment of hostility where the playing fields were tilted against domestic enterprise. We must salute the patriotism, the enterprise, the business acumen and the spirit of adventure of that great generation of pioneers who laid the foundation of Indian industrialization. Jamsetji Tata was one such visionary who made India proud.

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