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`No greenfield steel capacity must be allowed for next few years'


Rabindra Nath Sinha

KOLKATA, July 23

DR JAMSHED J. IRANI retired as Tata Steel's Managing Director on July 22, 2001. On his last day in office at Jamshedpur, Dr Irani spoke to Business Line on his innings, his satisfaction at seeing the steel plant emerge most modern and its future plans. H e moves to Mumbai to take up responsibilities that may be assigned by Mr Ratan Tata. But, he says he will settle down in Jamshedpur. Excerpts:

How would you assess your 33 year-long innings at Tata Steel? Please say a few words on your transition from Sheffield to Jamshedpur.

In the UK, there was no control on the steel industry, whereas it was the opposite in India. There, I was not living in a company township, but at Jamshedpur, it was a different situation. (Before joining Tata Steel on January 13, 1968, Dr Irani was Grou p Leader in British Iron & Steel Research Association in Sheffield).

I must say my innings at Tata Steel has been very satisfying. If I had to go through it again I don't think it will be any different. There was no problem in the transition from Sheffield to Jamshedpur.

Your innings as Managing Director began when the steel industry had just been decontrolled. What kind of directional changes did the new situation warrant? What were your priorities? Was there a need for mid-course correction?

Obviously, the company had to become more competitive. Costs had to be controlled and the cost-plus approach had to be given up. The mindset of the employees had to be changed.

There had to be a break from all that we practiced in an era of protection. The concept of marketing had to change and the situation called for a drastic change in our attitude towards customers. It was not a question of mid-course correction, it was a q uestion of accelerating the pace of change. The modernisation process, already initiated, had to be taken to its logical conclusion.

Have the results of your action plans been entirely to your satisfaction? What are Tata Steel's key achievements under your stewardship?

It's not right to talk about 100 per cent satisfaction. If we do, we run the risk of becoming complacent. Well, I may say I am 90 per cent satisfied. The company has the determination to continuously strive to move up the value chain. (The annual report for 2000-01 notes that it is emerging as the world's lowest-cost producer of hot-rolled coils).

Any reason for you to think that you are retiring with an unfinished agenda?

See, it's a continuous process. It will now be carried forward by Mr Muthuraman. But, I must say I would have been happier if the Jamshedpur lease-renewal issue could be resolved with the Jharkhand administration. I hope, before long a solution would be found. The time sought by the Jharkhand Government from the court would come to an end shortly. Also, despite my earnestness, PEP (performance ethic programme) could not cover the junior levels. So far, only the senior levels have been covered.

Where do you see Tata Steel, say, 10 years hence?

We already have in Jamshedpur the most modern steel plant. Not much has to be done in Jamshedpur in the next 10 years. But, I see growth through acquisitions, mergers and new allied businesses.

We have in view a titanium project in Tamil Nadu, for which steps to facilitate a detailed survey will hopefully be initiated in the near future. We also have in view a chrome ore-based project, in either South Africa or Australia. Of course, Tata Steel will stay focussed on steel.

Your tenure as MD saw Bombay House considerably enhance its holding in Tata Steel .... Has Bombay House reached a comfortable level of holding?

Yes, it was single digit (8 or 9 per cent) stake. Now, it is 26.22 per cent. (As per the annual report for 2000-01, the stake rose to this level from 24.24 per cent at the close of 1999-2000). I suppose this is a comfortable level.

What will be your new responsibility in the Tata Group ? I suppose your association with Tata Steel will continue ...Where will you settle down?

I will be on the board of Tata Steel and, therefore, my association with the company will continue from that strategic level. I will now move to Mumbai. I am on the board of Tata Sons. I will have more time to devote to Tata Sons. I am sure I will be abl e to utilise my time fruitfully. I may have to spend some five years in Mumbai. But, I will finally settle down in Jamshedpur.

What is message to the Tata Steel collective?

We have come through a great period of difficulty and change. Tata Steel is today a world-class steel maker. Once you reach the top, it is difficult to maintain that position. The employees and workers must be prepared to change and face challenges.

How do you find the global steel scene in general and the domestic steel scene, in particular?

See, steel is a cyclical industry. Earlier, it used to be a five-year cycle. Then it became a three-year cycle. Now you may see a two-year cycle or even less. The Indian steel industry is not isolated. It will go through such cycles. Now, we at the botto m of a cycle. It can only improve, it can't be worse than what it is today.

How do you view the recent intervention by FIs in two private sector steel companies, Malavika and Bellary ? Of course, the promoters consented to the FI move .... Do you think new steel capacity should be ruled out for, say, 5-7 years?

It's an unfortunate development, but the seeds were sown in uncalled for enthusiasm that marked the beginning of reforms in our country. It was not wise to allow huge capacity addition in one industry. The economy has not expanded to the extent it should have. We are not free to export. The US has turned protective. Yes, I think greenfield capacity should not be allowed for the next 5-7 years. Only brownfield expansion will be okay.

Pic.: Dr J.J. Irani: I am 90 pc satisfied

Picture by Parth Sanyal

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