TV Narendran, the crisis man driving a cultural change in Tata Steel

Posted on 17 July 2019


 It was not a start that a Managing Director would wish for. But TV Narendran had no choice. The first crisis hit within two weeks of him taking over at the helm of Tata Steel's India and South East Asia businesses, in November 2013.

There was a huge explosion in Jamshedpur, the company's iconic steelmaking facility. It was a heavy dent on a company that prided on its safety record and employee welfare. As Narendran said, "It was a huge issue, and had never happened."

The crisis was just one of the many that were to come. A little over a year later, the government passed the Mines and Minerals (Development and Regulation) Act, which temporarily closed down mines of Tata Steel. The company was forced to import iron ore, again a first for the steelmaker.

Just when things were getting back to normal, and Tata Steel got to reopen the mines, China - the world's largest steelmaker and consumer - went into a tailspin in 2015. "Within six months, steel prices went to the levels of 2003," recalls the Tata Steel chief.

If the start was not great, the end of his first five-year tenure was marked by another serious setback. The proposed joint venture with thyssenkrupp, which would have merged the European businesses of the two companies, couldn't clear the regulatory hurdle. It was called off earlier this year.

"Sometimes things work your way, sometimes they don’t. One has to keep chin up and move on," Narendran told Moneycontrol in a recent interview in Mumbai. "We never like to waste a crisis. We want to become stronger coming out of a crisis," he added.

Chin up, he did. Over these five years, and despite the many setbacks, Tata Steel has become a leaner company by expanding its India business, and shedding much of the weight of its European operations.

From 18 million tons, the European unit now makes 10 million tons of steel. The UK facility, a bigger part of the challenge, now manufactures 3 million tons a year, down from the earlier 11 million tons. The rest comes from the more profitable, Netherlands-based unit.

"Today we are seen as a very serious player in Europe's auto industry which was not our reputation a few years back. In fact, the JV with thyssenkrupp may have been cleared if we hadn't been such a strong player," said Narendran. One of the objections raised by the European Commission, which was investigating the JV, was over the monopolistic position of the venture in Europe's auto sector.

In India, the annual capacity has grown to 18 million tons over the five years, especially thanks to the acquisition of Usha Martin and Bhushan Steel. Equally important was the commissioning of the Kalinganagar facility - which was in the works for over a decade - in 2016.

The achievements were noticed, and Narendran  - who Tata Group insiders said has the backing of Chairman N Chandrasekaran - was elevated as Global CEO & Managing Director of Tata Steel in 2017.

His second tenure comes up for shareholders' approval in the upcoming AGM on July 19.

The unlikely candidate

Narendran's appointment as the Tata Steel MD was a surprise for many in the industry.

Not because he lacked the qualifications. After completing his engineering from National Institute of Technology, Tiruchirappalli and MBA from IIM Calcutta, Narendran joined Tata Steel in 1988, as a trainee.

But while his predecessors were "operations guys", Narendran was seen as a marketing veteran, who had spent considerable years outside India. Just before taking the top job, he was heading the South East Asia business.

The choice though has helped refocus the company to produce more of what can be sold profitably. In some of the segments, it now operates like a consumer durables company, bringing in higher margins.

Personally too, Narendran has eased into the role. Even as he shuttles between Jamshedpur, Mumbai and Europe, the 54-year-old manages to keep aside time for himself. A 5am-riser, Narendran goes for 10k runs  - 'am not Chandra (the Chairman, who is a known marathoner),' he clarified with a chuckle.

In Jamshedpur, the wicketkeeper-turned all rounder-turned batsman ('my arms don't let me bowl anymore') manages to squeeze in an innings or two.

What he misses most is his Labrador Zoey, whom he prefers to keep in Jamshedpur. "A flat in Mumbai would be too constraining for her."

Irrespective of the location though, Narendran has managed to continue some of his most passionate initiatives, including the informal meetings with company's young executives.

It was a practice he started in Singapore, where he was heading the South East Asia business. "As you become more senior you get disconnected from people on the ground. And these are not people you would see regularly in meetings," said Narendran.

It helped in several ways. One he was able to engage young professionals below 30 years, who have been most prone to leave the company. "Our attrition rates are highest with people who have spent less than five years in the company," said the global MD & CEO.

Second, these conversations sparked new ideas. While the company's LGBT policy was developed and framed after one such meeting, another gathering highlighted the need for a further and wider cultural change.

"Once, I had a group breakfast meeting with the youngsters and one of them asked me, "Pioneering is one of our values but all the pioneering stuff you are talking about was done 100 years ago. What is the pioneering stuff that you are doing now?' It was a very valid question," recounted Narendran.

The next five

And that is what Narendran wants to do in the next five years of his tenure as Tata Steel's Global MD & CEO.

"To me the last five years have been about dealing with the challenges and also dealing with the structural strength of Tata Steel. That ball is rolling and will continue to roll. The next five years is more about cultural issues and new businesses," he said.

Among the new business, Tata Steel has ventured into scrap recycling, a first for a major steelmaker in India. "These are to me seeds that we are planting for the future," says Narendran, about the project that he accepts is close to his heart. The new vertical, called new materials business, will also manufacture fibre reinforced polymer that are used in auto and infrastructure sectors.

Another big initiative is to make Tata Steel among the top 5 in the world in R&D. "We have a team working on that," he said of the transformation project that will take at least five years. "If you see South Korean steelmaker POSCO, they were nobody in technology, but today they are one of the leaders."

Overall, he wants Tata Steel to be agile, a difficult task otherwise for an organisation that is as colossal as the steel company.

"Tata Steel is a battleship, you can’t drive it like a power boat. But at the same time the world is becoming more volatile, so you need to be agile... So, to me these are the changes that we want to drive in Tata Steel over the next few years."

That will very well underline his legacy.

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