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The success stories of TCS, Tisco bosses
Moneycontrol.com | October 13, 2006
One is the man of steel while the other is a techie. One heads India's largest steel company, Tata Steel, and the other is the force behind India's largest IT service provider, TCS.
B Muthuraman and S Ramadorai, different faces of the same group -- The Tata Group. Both are focussed towards driving growth in Tisco and Tata Consultancy Services and making them brands of excellence.
Muthuraman's journey with Tata Steel or Tisco started in 1966 as a graduate trainee. Having worked in various departments, he then embarked on Tata's cold rolling mill project in 1994.
After completing it in a record time, Muthuraman took on the responsibility of Tata Steel's major diversification projects. He then rose to become the Managing Director of Tata Steel in 2001 and since then, he has been instrumental in driving change at Tata Steel.
Subramanium Ramadorai, also known as Ram, joined Tata Consultancy Services or TCS in 1972. Instrumental in setting up TCS' operations in New York in 1979, Ramadorai took over as the CEO in 1996 and since then he has played an integral role in building TCS into India's first $1 billion IT services company.
Both these Tata titans are unabashedly vocal about the needs of their respective industries, but shy when it comes to the media. While Muthuraman is comfortable with the quarterly media's scrutiny, TCS Chief, Ramadorai is beginning to settle down and smile before the cameras.
The Tata titans, B Muthuraman and S Ramadorai share their respective stories on their successful journey in The Tata Group.
Excerpts of CNBC-TV18's exclusive interview with B Muthuraman and S Ramadorai:
What sort of a journey has it really been because both of you started of with the Tatas way back in the late 60s, the early 70s. It's been a phenomenal journey.
Ramadorai: We came at a time when there was no reason to come back from abroad.
I believe it was your father who actually told you about this job opening at the Tatas?
Ramadorai: Absolutely, and Mr Tobaccowala, who used to be the president of Tata Incorporated in New York interviewed me, then I decided to take a plunge and come here.
You got married at the same time I believe?
Ramadorai: Yes, I got married in the same year. So there were two reasons, parents wanted to me come back to have a job and then to get married, so they were all the good reasons to be back.
Your have pretty much been in Tatas from the late 60s as well. Right out of IIT Madras, for you, what was it that drove you to the Tata Group?
Muthuraman: I did my training at Tata Steel when I was a student in IIT Madras and I had an opportunity to go abroad for higher studies. I went and talked to my professor and then he said that if you had got a job with Tatas, you should do not go abroad. That's exactly the reason why I joined Tata Steel and I have never regretted it. It's a great institution; it's a great company.
Both of you decided not to stay abroad. Both of you decided to come back home and contribute to the growth and contribute to the Tata vision. What was that one turning point when you (Ramadorai) began in 1972 that sums up the philosophy of the Tatas and for you, what is the turning point in your life?
Ramadorai: When it came to technology and the kind of investment we made in the early 70s; 1974 to be exact, we started on, when computers were unheard of in this country. So looking beyond the immediate future, that is one single thing that stands out clearly.
Were you always a tech person; did you always want to make a career out of technology, encoding, programming and things like that?
Ramadorai: Absolutely, I was in Computer Science; I was fond of technology and then applying technology to a set of problems; that is what excited me.
Almost two decades of heading the sales and marketing team at Tisco, your endeavour and passion has been to get the public to recognize that commodities can be branded as well; that is how Tata Shakti and Tisco have come. Why is there a need to brand commodities?
Muthuraman: Commodity is a mindset, it's not a product. Anything can be decommoditized as long as one is able to communicate and bring to the customer, the overall value that the entity has; whether it is a product or a service, you can decommoditize.
How hard was it for you to convince your own sales and marketing people and the board at that time that this was something that could be done; that you could actually go out and brand steel and create a niche and get value for that kind of branding?
Muthuraman: It is something that I am passionate about and the steel industry is 150 years old. And for most of the time, most of the companies have treated steel as a commodity. But steel has plenty of variations, it has got tremendous differentiation, it's actually an ideal product to brand and position in the market place.
To start with, many of us didn't believe it, even I didn't believe it.
So where did the idea come from?
Muthuraman: The idea really came about ten years ago. And the idea has caught on in the last five-six years. We have gained tremendously with the branding of steel and positioning of the product.
Are you satisfied now that everybody believes in your theory and everybody buys into the argument that you try to sell to them?
Muthuraman: We believe in it. Steel is always looked upon as a cyclical industry. But one way of getting out of the cyclicality of steel is to decommoditize steel because there are as many varieties of steel as there are varieties of anything else that you can mention. It has been an extremely exciting experience, and an extremely exciting journey and we have a long way to go.
Speaking of exciting journeys and exciting moments, you (Ramadorai) are now sitting at a company that is $3 billion. But way back then, when you were trying to bring in global clients, when you tried to go to New York and did your sales speech, the India tech story was unknown, how difficult was it really for you to bring people in?
Ramadorai: In a way, it was the most exciting time and most difficult time; both within the group as well as outside the group in terms of meeting the prospects.
So when I went to the United States in 1979 to set-up our first branch or operations, I was told, why had we come here, when there was no need for us to be here because it was an expense.'
They used to ask that what was India all about, were they in the technology space? So to that extent, it was very exciting time and a very difficult time. The only thing and the best lesson is 'Never give up, keep at it.'
'Keep at it,' so that seems to be the philosophy at Tisco as well. Because there was a fair amount of downsizing or rightsizing, as the case may be, the company turned around considerably and now, it is one of the most low cost most efficient producers of steel in the world; but it hasn't been an easy journey for you as well?
Muthuraman: Tata Steel is almost 100 years old. Next year we will be 100 and till 1991, for something like 80 of these 100 years, we have been under price control of the government. It is really after the economic liberalisation of 1991, the company had opportunities and between 1991-2000, the company used that opportunity to lay the foundation.
By the year 2000, we had become one of the lowest cost producers of steel in the world, we had become efficient, our plant was modern, we had modern processes and from 2000 onwards, we started looking out.
We are currently sitting in an environment where there are strikes, where one has industrial problems in most of the major companies in India or several of the major companies in India. But one of the most interesting things about Tata Steel is that there has been no industrial strike despite the fact that you have to cut down your workforce so substantially. What is the secret?
Muthuraman: One of the greatest strengths of Tata Steel has been the people of Tata Steel and the relationship between the management and the union, and the understanding that has been developed between the management and the union.
Reducing workforce from something like 78,000 to the current level of 38,000 is not easy anywhere in the world, leave alone India. It has been done because of the fact that the employees understood where the company is growing.
And we reduced those numbers at a time when the company didn't have an opportunity to grow. But today, we are adding people. There are growths, we are building greenfield plants, and we are making acquisitions and there are great opportunities.
So you have come up a full circle in that case?
What about the competition? You are battling with companies like Infosys and Wipro. And it is not only about bagging the multimillion dollar deals, it is also about attracting or focussing attention on the mindshare, getting as much mindshare as possible? Would you say that has been a gap really because maybe TCS has only just listed and you have been sort of the quiet software czar in that sense? Are you now beginning to open up a lot more in the quest for mindshare as well?
Ramadorai: I think after the listing we have been forced to be a lot more visible in the media.
You don't like to talk to the media?
Ramadorai: That was not what we used to do in the past and so to that extent, we are learning to interact with the media and to interact with analysts.
Are you uncomfortable with the media?
Ramadorai: I used to be uncomfortable in the beginning, but I am no longer uncomfortable with the media.
Are you enjoying it?
Ramadorai: When you start interacting, you like it, you enjoy it, and then you have an occasion to communicate what you want to.
What about you, Mr Muthuraman? Because essentially at this point in time given the advantage of you being backward integrated, Tisco has a fair amount of advantages. You have been able to beat the price cycle in comparison to other steel players, what would you say are the biggest advantages of Tata Steel at this point?
Muthuraman: Steel is a difficult business, it is not an easy business and it is not for the light hearted. One will have to go through downturns; one has to be mentally strong, one has to have a lot of technological breakthroughs in the process of manufacture and one must have good marketing efforts.
I think Tata Steel is well positioned; it is looking forward to becoming something like a 40-50 million tonne company in the next ten years. It is planning to go beyond the shores of India, build some greenfield projects in India and make some acquisitions in India and overseas. I think we are on track.
There has been criticism or scepticism about the fact that well entrenched players like Tata Steel are opposed to international steel companies coming into India. Is there a sense of protectionism within the domestic steel lobby at this point in time, or is it an open field?
Muthuraman: Tata Steel is not opposed to anyone coming to India. It is important for this country to preserve its minerals. Mineral resources are scarce and it is important that iron ore is converted into steel in this country.
But then you are saying that no Indian producer should also be allowed to export iron ore, right, so it should be across the board, don't allow foreigners to do it and don't allow Indians to do it as well?
Muthuraman: India has a great future in steel. Indian steel consumption will go to 300-400 million tonnes maybe in the next thirty-forty years, just as it has happened in China.
How does a new economy react to an argument?
Ramadorai: It is a great argument because if you look at our industry itself, the export of resources in terms of people was the earliest way we grew. But today, we never just send people across, we ask them what is the value addition that they will bring and what is the intellectual property content that they have in their services. That's what will determine the value creation for the company and the shareholders.
I believe you still wake up at 4 o'clock in the morning, is that true?
Ramadorai: Yes, I wake up very early, sometimes at 4 o'clock or sometimes 5 o'clock.
But why, because you are trying to log on to analyst calls in the US?
Ramadorai: Yes, it is if we want to connect with the US or Australia very early in the day. I think when you are a global company, 24 x 7 you need to find time.
What does the 24 x 7 lifestyle do to your own lifestyle, to your family life, to your personal life, how hard has it been?
Ramadorai: It has been very hard. One doesn't get time for what he or she wants to do, or even to spend time with the family, or to take a vacation as an example.
Mr Muthuraman, is it a 24 x 7 lifestyle for you as well?
Muthuraman: First of all I must tell you that I do not get up at 4:00 am. I get up at 7:00-7:30 am because I go to sleep at about 1:30-2:00. But it has been a lot of hard work and I believe that the contribution and the support that one gets from the family is extremely important. I have been lucky in that and if I say so, Mr Ramadorai has been very lucky in that.
Even though both of you have spent all of your careers in Tatas, you just got to know each other about ten years ago, is that right? What was your first impression when you met each other?
Ramadorai: Being a senior colleague from Tata, I have a lot of respect for Mr Muthuraman, which is the first impression. But I had heard about him for quite a while as my family members, whether from my wife's side or from my side, all of them have been in the steel business.
Give us a deep dark secret that you had heard about him?
Ramadorai: I had heard a lot of good things about his technical capabilities and his managerial capabilities. It is good to know such things and that is how one forms an opinion whether they are exactly seeing the person who they have been told about. I think he is better than that, for sure.
What about you Mr Muthuraman?
Muthuraman: When I had not met Mr Ramadorai and when I had only heard of him, I had imagined him to be a very serious person. That is the impression I had till I actually met him. I thought that I would meet a person who never smiled.
Mr Ramadorai, why do you have this sort of almost reclusive image?
Ramadorai: As an example I would say that if one feels very comfortable in smaller groups, immediately people relate to that person slightly differently. But as one goes out a lot more, interacts with a lot more people, or gives speeches, suddenly one sees a big crowd and his or her attitude towards things changes completely.
You watch cricket pretty avidly. How often do you actually take time out to indulge in the things that you enjoy doing? Did you actually keep up with the latest India-Pakistan series for instance?
Ramadorai: Yes, I did keep up with most of the scores, most of the happenings in cricket. We do encourage cricket teams within the company itself and we hold inter-city cricket matches within the company.
So I think it's a passion where one takes interest in sports, music, drama or dance. I think one definitely finds the time and whichever city one is in; I try to either get the scores or attend to the game.
If there was sport that you could actually use as a metaphor for the way that you run your business and the way that you do your business, what would it be? Would it be cricket?
Ramadorai: It would be American football.
What about you? He is using rugby as a metaphor, what would you use?
Muthuraman: The metaphor for success from the steel industry is a marathon race. You need to have the stamina to last the decision and patience. You need to have the will power and the sustainability to succeed.
The way that you have gone about building Jamshedpur. It is being held up as an example for most other cities. Jisco (Jindal Iron and Steel Company) is a model of public-private partnership as far as utility service is concerned. What more can we expect from the Tatas, from Tisco on that front?
Muthuraman: Jamshedpur is really a modern city, which is the only town in India, where one can drink water from the tap; where one can breathe fresh air and lots of greenery, open spaces, plenty of sport complexes. It's a fantastic city and it is an example of how an industrial town can be run by an industrial organization. We have the municipalities and the government is trying to run towns and cities and so on.
What is your advice to buzzing entrepreneurs, to people who are getting into the workforce at this point in time. Because as you said, you have seen several downturns, your life has come a full circle, your company has come a full circle. What would your advice for them be?
Muthuraman: When I see more and more of youngsters now-a-days, charging and wanting to become CEOs in three-five years' time, I always tell them that life is a marathon race and if you start off in a marathon race with a mindset of a 100 meter race, you are not going to complete it, leave alone winning it.
So one needs to build stamina for a marathon race and imagine that you are running a marathon race and not a 100 meter dash. A 100-meter runner in a marathon race will collapse in 200 meters.
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