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Driving force

January 29, 2008 10:11 IST

The Tatas are coming. They've launched the world's cheapest "people's car"; they are bidding to own Jaguar cars and Land Rover. They are, increasingly, global players. But what are their origins?

Tata Steel is the vanguard company in the Tata empire and The Romance of Tata Steel fills in the background by telling the saga of India's industrialisation. Russi Lala, a Mumbai author, has written before about the house of Tata and gives a well-researched account here.

India entered the industrial age when its first steel ingots rolled out at the Tata Iron and Steel Company in Sakchi in 1912. Tata's steel city was soon renamed Jamshedpur, in honour of Jamsetji Tata, the textile owner whose vision was that India should stand tall as an industrial power.

Jamsetji did not live to see the steel company launched. It fell on his son, Dorab, to make it a reality. He fulfilled his father's vision by building a city that supplied welfare for all its employees: housing, hospitals, tree-lined streets and parks, temples, mosques and churches.

It was a bold initiative in the tradition of 19th-century paternalistic employers and laid the foundations of Tata's ethos. The company pioneered the world's first eight-hour working day (when 12 was the norm), established a provident fund and paid leave in 1920, and maternity benefit in 1928, "innovations way ahead of Britain and the USA".

Some members of the British Raj were patronising about India's ability to produce steel. But Lord Hamilton, secretary of state for India, was supportive and the Raj came to realise the vital contribution of Indian steel during the two world wars.

Before Tisco, India had imported all its steel. By 1934 the country produced 70 per cent of its requirements. Since then, writes Lala, "the company has been associated with the development of the Indian nation as no other company in India".

Yet Tisco faced crisis in the 1980s. Price controls so squeezed profits that the company had no reserves to update its plant. Jamshed Irani, managing director from 1991 to 2000, turned the company around, establishing a culture of quality to meet global competition.

The EU also played a part. Its restrictions on Europe's steel-making capacity left Portugal with an unwanted new blast furnace, which Irani bought cheaply. Modernisation also cut the number of employees from 78,000 to today's 38,000. Tata steel is now consistently ranked among the world's most efficient plants.

Lala concludes with Tata Steel's knife-edge bid against Brazil to take over the Anglo-Dutch steel company, Corus, last year. Its final sealed offer in the ninth round of bidding was 608 pence per share, beating Brazil by 5 pence.

Tata Steel marked its centenary last year. Lala brings its colourful story surprisingly alive with details such as the early Sakchi builders confined to tents at night while "wild animals howled and prowled all around". Above all, he focuses on Tata's social conscience. Lala offers a valuable insight for all those interested in India's growth as Tatas stride the world stage.

Michael Smith is the author of 'Trust and Integrity in the Global Economy'
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