Branding a Commodity - The Tata Steel Way

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Case Details:

Case Code : MKTG083
Case Length : 13 Pages
Period : 1990-2003
Pub Date : 2004
Teaching Note : Available
Organization : Tata Steel
Industry : Manufacturing
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note Contd...

In 1983, it acquired the Indian Tube Co. Ltd., a manufacturer of seamless and welded tubes. In 1991, it acquired the ferro-chrome unit of OMC Alloys Ltd near Bamnipal in Orissa. Today, Tata Steel produces a wide range of products (See Exhibit I) including hot rolled/cold rolled (HR/CR) coils⁵ and sheets, tubes, construction bars, forging quality steel, rods, structurals, strips and bearings. It also manufactures material handling equipment, ferro alloys and other minerals, software for process controls, and provides cargo-handling services.

In the early 1980s, the company initiated a modernization program for its steel plants (See Exhibit II). Explaining the need for modernization, J. J. Irani, the then managing director of Tata Steel said, "We would have been finished otherwise.... you cannot fight a modern-day war with weapons of the Mahabharata.

We would have been annihilated had we not modernized. We realized this and embarked on the four phases of modernization. We addressed our drawbacks like the steel making process, our weakest link."⁶ By the mid-1990s, Tata Steel was Asia's first and India's largest integrated steel producer (ISP)⁷ in the private sector.

By 2000, eight divisions of Tata Steel were ISO-14001⁸ certified; the divisions were the Noamundi Iron Operations, West Bokaro Collieries, Ferro Alloy Plant, Joda, Sukinda Chromite Mines, Joda East Iron Mines, Tubes Division, and Growth Shop & Steel Works.

By early 2000, Tata Steel had completed four phases of the modernization program with an investment of about Rs 60 billion⁹. The company spent Rs 4 billion on consultancy fees between 1990 and 2000. The fifth phase of the program commenced in April 2000.

This phase focused on attracting, developing and retaining the company's most valuable asset, its people, under its Performance Ethic Program (Refer Exhibit III). In April 2000, Tata Steel also commissioned its Cold Rolling Mill (CRM) plant at Jamshedpur. Together with its operational excellence drive, Tata Steel also focused on garnering more market share and increase revenues.

By April 2001, Tata Steel was the world's lowest-cost producer of steel. Tata Steel's operating cost at the 'hot metal' (liquid) stage was $75 per tonne. The company's cost per tonne of finished steel stood at $152, for the financial year ending March 2001. World Steel Dynamics (WSD) identified and ranked 12 companies as World Class Steel Makers...

Excerpts >>

5] Hot rolled coil is a coil of steel rolled on a hot-strip mill (hot-rolled steel). It can be sold in this form to customers or be processed further into other finished products. Cold rolling is a process where the shape and structure of the steel can be changed by rolling, hammering, or stretching it at a low temperature (often room temperature).

6] Interview with J. J. Irani, Advertising & Marketing, September 15, 2001.

7] Integrated steel producers have the facilities to manufacture steel, from the iron ore stage right up to the finished steel stage.

8] ISO 14000 is a series of environmental management standards developed and published by the International Organization for Standardization (ISO) for organizations. The ISO 14000 standards provide a guideline or framework for organizations that need to systematize and improve their environmental management efforts. The ISO 14000 standards are not designed to aid the enforcement of environmental laws and do not regulate the environmental activities of organizations. Adherence to these standards is voluntary.

9] In September 2003, Rs 45.91 equaled 1 US $.