With steel as the lynchpin of his global plans, Ratan Tata ensured a dramatic transformation of Tata Steel. By a. paul, s. nahata
Not being a historian and giving a commentary about any event that occurred in the year 1907 would have qui
te a tardy and drudging exercise, had it not been for a small little company called Tata Steel that was founded in that year. Come to think of it, for a better part of the century, this company remained in the shadows, lacking both hype and lustre, but still retaining its unique identity of being one of the most ethical and people-friendly companies the world had ever seen. But that, as Alice would have wonderously realised, was then... A 101 years later, the same company wins the B&E Most Global Indian Company Award! And the key credit for the same goes indisputably to India’s most global visionary, Ratan Naval Tata!
1962 was the year when this raring-to-go trainee joined the Tata Group! Through the subsequent years, he was shuffled between various companies within the group with the sole objective of making him completely conversant with the group’s operations. But it was perhaps the year 1971, which was the turning point in the history of Tatas, when the 34-year-old Ratan Tata was made the Director-in-Charge of Nelco, a top Tata group company. Exactly twenty years later, in 1991, he was made Chairman in the main holding company, Tata Sons Ltd., and in the other main group companies, namely Tata Consultancy Services, Tata Motors, Tata Teleservices, Tata Power, Indian Hotels and of course, the protagonist of our award, Tata Steel.
Ratan Tata’s visionary thought process has never been below outstanding benchmarks. Even competitors talk high of this head honcho. Aditya Mittal, CFO, Arcelor-Mittal, conversing exclusively with B&E, divulged, “I have great admiration for Mr. Tata. He is an entrepreneur with great vision.” But truly speaking, though Tata Steel has been exporting steel for many of those years (they formed their first structured global export cell way back in 1986), it was only in the past four years that the corporation’s global endeavours have attained noteworthy proportions.
Alison Richard, Vice Chancellor, University of Cambridge told B&E, “Whenever a company decides to go global, it has to start from the thought process of the leader. Very small details can play a major issue in playing globally.” It was in the year 2004 that the Ratan Tata led Tata Steel – which had at that time a steel producing capacity of 4 million tonnes per annum (MTPA) – took the most praiseworthy giant stride for any Indian steel corporation when it gobbled up the considerably significant Singapore based NatSteel Asia, a 2 MTPA steel producer, for $343 million. Ratan Tata’s shrewdest focus was on transforming the steel value chain dramatically. His tactic was to supply low cost steel produced in India to NatSteel, which would then churn out a high-value finished product to cater to quality-intensive global industries like aerospace, automobiles, construction etc. In 2005, the target for was the 1.7 MTPA Thailand based Millennium Steel, which Ratan Tata successfully negotiated for $130 million! In the same year, he also acquired a significant 5% stake in Australian Coal Mines.
But the most brilliant of all moves Ratan Tata has ever made came in the year 2006, when this exemplar leader bid for Corus – a mammoth 18.3 MTPA UK based steel corporation. He closed the deal at a whopping $12.1 billion in January 2007. Though he became an immediate toast of the nation, random criticism for the overly priced deal by experts and analysts alike came in from all quarters. In fact, Standard & Poors immediately downgraded Tata Steel’s credit rating from BBB to BB, a grading that holds even today for the firm because of the massive debt servicing levels due to the Corus buyout. Even the share price of Tata Steel suffered massively at that time, going down from Rs.537 on October 5, 2006, to Rs.419 on March 6, 2007, what with shareholders on a selling spree. But the ever-confident Ratan Tata had then told his detractors that shareholders, who’re thinking in the short term, will rue their decision to sell Tata Steel’s shares. Prophetically, exactly one year after the deal, the share value rose thunderingly to Rs.988, settling to more sensible levels as on February 3, 2008, to Rs.776.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Not being a historian and giving a commentary about any event that occurred in the year 1907 would have qui
te a tardy and drudging exercise, had it not been for a small little company called Tata Steel that was founded in that year. Come to think of it, for a better part of the century, this company remained in the shadows, lacking both hype and lustre, but still retaining its unique identity of being one of the most ethical and people-friendly companies the world had ever seen. But that, as Alice would have wonderously realised, was then... A 101 years later, the same company wins the B&E Most Global Indian Company Award! And the key credit for the same goes indisputably to India’s most global visionary, Ratan Naval Tata!1962 was the year when this raring-to-go trainee joined the Tata Group! Through the subsequent years, he was shuffled between various companies within the group with the sole objective of making him completely conversant with the group’s operations. But it was perhaps the year 1971, which was the turning point in the history of Tatas, when the 34-year-old Ratan Tata was made the Director-in-Charge of Nelco, a top Tata group company. Exactly twenty years later, in 1991, he was made Chairman in the main holding company, Tata Sons Ltd., and in the other main group companies, namely Tata Consultancy Services, Tata Motors, Tata Teleservices, Tata Power, Indian Hotels and of course, the protagonist of our award, Tata Steel.
Ratan Tata’s visionary thought process has never been below outstanding benchmarks. Even competitors talk high of this head honcho. Aditya Mittal, CFO, Arcelor-Mittal, conversing exclusively with B&E, divulged, “I have great admiration for Mr. Tata. He is an entrepreneur with great vision.” But truly speaking, though Tata Steel has been exporting steel for many of those years (they formed their first structured global export cell way back in 1986), it was only in the past four years that the corporation’s global endeavours have attained noteworthy proportions.
Alison Richard, Vice Chancellor, University of Cambridge told B&E, “Whenever a company decides to go global, it has to start from the thought process of the leader. Very small details can play a major issue in playing globally.” It was in the year 2004 that the Ratan Tata led Tata Steel – which had at that time a steel producing capacity of 4 million tonnes per annum (MTPA) – took the most praiseworthy giant stride for any Indian steel corporation when it gobbled up the considerably significant Singapore based NatSteel Asia, a 2 MTPA steel producer, for $343 million. Ratan Tata’s shrewdest focus was on transforming the steel value chain dramatically. His tactic was to supply low cost steel produced in India to NatSteel, which would then churn out a high-value finished product to cater to quality-intensive global industries like aerospace, automobiles, construction etc. In 2005, the target for was the 1.7 MTPA Thailand based Millennium Steel, which Ratan Tata successfully negotiated for $130 million! In the same year, he also acquired a significant 5% stake in Australian Coal Mines.
But the most brilliant of all moves Ratan Tata has ever made came in the year 2006, when this exemplar leader bid for Corus – a mammoth 18.3 MTPA UK based steel corporation. He closed the deal at a whopping $12.1 billion in January 2007. Though he became an immediate toast of the nation, random criticism for the overly priced deal by experts and analysts alike came in from all quarters. In fact, Standard & Poors immediately downgraded Tata Steel’s credit rating from BBB to BB, a grading that holds even today for the firm because of the massive debt servicing levels due to the Corus buyout. Even the share price of Tata Steel suffered massively at that time, going down from Rs.537 on October 5, 2006, to Rs.419 on March 6, 2007, what with shareholders on a selling spree. But the ever-confident Ratan Tata had then told his detractors that shareholders, who’re thinking in the short term, will rue their decision to sell Tata Steel’s shares. Prophetically, exactly one year after the deal, the share value rose thunderingly to Rs.988, settling to more sensible levels as on February 3, 2008, to Rs.776.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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