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Tata Steel bets on cost control, marketing drive

Our Bureau

BANGALORE, Oct. 22

COST control and increased focus on marketing branded products are expected to help Tata Iron and Steel Company Ltd (Tata Steel) to show improved sales in the second half of fiscal 2001-02, according to its Managing Director, Mr B. Muthuraman.

He, however, declined to give any figures and said that the numbers would be revealed when the company announced its results for the first half of the current financial year.

Sales volumes, Mr Muthuraman said, had picked up from October and cold-rolled production was also on the upswing. ``We have reduced costs. We are going to reduce costs further in the second half more than the first half,'' he added. The company has been cutting costs every year for the last four years.

On the new marketing initiatives, Mr Muthuraman said ``Our efforts in the market place are better and we are branding our products now. Higher proportion of sales is coming from branded products. Such sales get us better prices.''

Mr Muthuraman is expected to unveil the company's Vision 2010 soon wherein it would be looking at a diversified portfolio. However, he declined to give details.

Meanwhile, Tata Steel has identified titanium dioxide deposits in Tamil Nadu and has applied for mining leases. ``The mining leases are about to come and we are hopeful of signing a memorandum of understanding with the Tamil Nadu Government in November i n this regard,'' he said.

The company is also planning to set up ferro chrome manufacturing plant at Richards Bay in South Africa. ``We are in the process of buying land and decide on technology and the investments would start happening from next year,'' he said.

Tata Steel plans to invest close to Rs 300 crore in this new ferro chrome plant.

On the economic outlook, Mr Muthuraman said: ``The economy continues to be the same as what it was and I don't expect any changes. I do not think you can depend on the domestic economy for profits and keep saying that the economy will improve or not impr ove. It looks like a very marginal improvement.''

Tata Steel reported 80 per cent decline in net profit at Rs 20.80 crore on a sales of Rs 1,611.41 crore during the first quarter ended June 30, 2001, compared to a profit of Rs 101.40 crore on a sales of Rs 1,728.27 crore in the corresponding period last year.

The decline was primarily on account of a fall in sale of steel due to general slowdown in the domestic economy leading to subdued prices.

Spends Rs 400 crore on consultancy fees

IN its bid to transform into a high-performing and growing organisation, Tata Steel has spent nearly Rs 400 crore on consultancy fees in the last ten years.

Revealing this at a seminar on `HR challenges in the changing environment,' Mr B. Muthuraman, Managing Director, Tata Steel said: ``At the same time, we've learnt to disengage ourselves from them.''

He spoke at length on the by now well-known restructuring and separation scheme that the company has undertaken to increase its profitability.

Cutting down its manpower from 78,000 to 40,000 was no mean task. But Tata Steel, he emphasised, did it with a lot of communication with the employees.

The company, through its `Performance Ethic Programme' intends to cut management staff from 4,000 to 3,000. A new compensation package based on performance will be implemented from November 1, this year, he added.

For any company to be successful, it should move away from following a socialistic type of compensation system, make the reporting structure flat and increase responsibility with every promotion.

Tata Steel has reduced the number of hierarchical levels from 13 to 5. ``Youngsters are getting higher salary than some of the seniors, and after the restructuring, the average age of the managers has fallen by 10 years,'' he revealed.

Earlier, inaugurating the seminar, Mr R.V. Deshpande, State Minister for Large and Medium Industries, said management of late has changed from an art to a science.

Talking of reforms, he said, in India, sometimes we believe in it, sometimes we do not. ``What is more important is the implementation of the reforms process.''

Introducing the theme of the seminar, Mr V. Krishnan, General Manager, HR, Mico Bosch, highlighted some elements of the economy that have come about in the age of uncertainty and complexity.

The list included enlightened customers, global competition, information dissemination, volatile currency, multicultural companies, feminisation of workplace and technological breakthroughs.