“Temples of progress”

I refer to the review titled "Temples of progress” of the book The Romance of Tata Steel by Russi Lala (Books, Parsiana, August 21, 2008). It is both remarkable and unfortunate that the book has been written, as the author puts it, "based on interviews with those who have written the history of Tata Steel with their deeds.” Had the author interviewed several of my colleagues who lived through this part of the company’s history, or gone through pertinent company documents, a much more balanced book would have emerged.

Lala’s book makes only a passing reference to the period between the mid 1950s and the mid 1980s when the company went through very trying times, both financially and technically. The poor performance during this period is attributed to the Licence Raj. This is only partly true. There were technical constraints as well. However, the company’s productivity remained the highest among all the steel plants in the country.

Lala has correctly pointed out that the company had made two earlier attempts at modernizing the plant, once in the 1960s (Atkins Report) and then in the mid 1970s (NSC Report). Both these attempts could not fructify due to financial constraints. Yet, he later mentions that modernization, which eventually took off in the early 1980s, was due to a conversation Jamshed Irani had with J. R. D. Tata. As soon as the financial constraints were removed the plant was modernized.

There is mention of a turnaround in the nineties. A turnaround takes place when a corporate changes the direction in which it is heading — from down to up. Annual reports of the company will indicate that the real turnaround took place in the 1970s when, after 13 consecutive years of paying dividends by dipping into the company’s reserves, it finally paid dividends without needing to do so. By the 1990s the company was already on an upward swing.

Russi Mody has been described as a non-technical person but a great team builder, which is complimentary. But to ascribe the success of all technical decisions to one or two individuals is grossly unfair to other members of the team who contributed to this success. Mody was guilty of doing some very foolish things at the end of his tenure for which he was rightly punished. However, this cannot obliterate his contribution to the success of the company.

The current managing director B. Muthuraman has showered handsome praise on Mody’s successor Jamshed Irani, and rightly so. Had Irani not downsized the workforce, the company would not have become as competitive as it is today. But did this save the company from extinction? This assertion seems to be based on a report by an internationally recognized consultant who obviously did not reckon with the tremendous upsurge in the demand for steel starting from the early 1990s and which persists to this day, causing the prices of steel and raw materials to soar. Tata Steel gained on both counts. Because of its captive raw material base, the prices of its raw materials are amongst the lowest in the world. The question of extinction does not arise.

Lala correctly refers to the assessment of World Steel Dynamics that Tata Steel is among the best plants in the world. But he forgets that this success is the result of constant improvements over the years and cannot be attributed to the efforts of one individual alone.

While judging the performance of a corporate or an individual it is imperative to take into account the context in which it was achieved. In the recent past the Steel Authority of India Limited has wiped out losses of several hundred crores accumulated over several decades and is making good profits. Tata Steel’s performance needs to be judged with this perspective in mind.

Lala rightly concludes that Irani laid the foundations for Muthuraman’s success but fails to give credit to Mody for laying the foundations for Irani’s success.

YEZAD KAPADIA

ysk@airtelmail.in

(Extracts from a letter printed with the author’s consent.)