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Muthuraman may strike a balance in TISCO's product portfolio

Y Siva Sankar in Bombay
and Basharat Peer in New Delhi

In an era marked by hype about the New Economy, the opportunity to head a company of Old Economy leader Tata Group is still considered a privilege in Corporate India.

If the concern happens to be the Tata Iron and Steel Company, one of the group's twin crown-jewels (the other is TELCO), the privilege acquires shades of once-in-an-Indian-lifetime honour. For it implies rising to the position hitherto held by celebrated corporate chieftains such as Russi Modi and J J Irani. B Muthuraman, 56, has just been chosen for such an honour. Come July 22, he will take over as managing director of TISCO or Tata Steel.

The rise to TISCO's executive pinnacle marks the fruition of Muthuraman's long association with the Tata empire that began in 1966.

There is no denying that Muthuraman's new role will be different from the one his predecessors played. The challenges brought about by the New Economy, and the change in Corporate India's mindset in the wake of the ongoing democratisation of businesses, have put paid to virtual fiefdoms.

From a visionary captain-led company, TISCO will now seek to reinvent itself as a team-led company, with the MD playing the role of the first-among-equals on the management ladder.

If the TISCO MD-ship were a circle, the circle will be made up of three sectors. The sector of steel production, worth Rs 55 billion, is likely to be headed by Muthuraman's colleague, Dr T Mukherjee, considered one of the best managers in the Tata group.

F A Vandrevala is tipped to replace Muthuraman as head, special projects, a sector worth Rs 15 billion.

The two sectors collectively account for TISCO's net worth. That might leave Muthuraman with the sector that involves tasks like dealing with the government, cultivating the powers-that-be of the newly created Jharkhand state. For technical operations have been apparently left outside his purview.

This does not necessarily mean the new MD will have to rest content with a mere glamorous designation.

Far from it. TISCO believes steel will continue to retain its 'pre-eminence as a material of choice for humankind.' It would be Muthuraman's challenge to help TISCO to 'usher in an era where steel will find usage in a whole gamut of new applications at least cost.' This is expected to coincide with TISCO's dream to make 'greener steel' with better environmental management practices.

With no immediate threat to TISCO's status as the market-leader in India, the steel major has been saying it wants to become the cheapest steel producer in the world, besides dominating the niche cold-rolled steel market in India.

Muthuraman has the credentials to pilot TISCO till such time that it reaches its destination.

From a graduate trainee to managing director, he has traversed the whole gamut of corporate roles, and is seen as the sheet anchor of the steel major.

A metallurgist with a B Tech from the Indian Institute of Technology, Madras, Muthuraman also holds a post-graduate diploma in business management (with specialisation in marketing and finance) from the Xavier's Labour Research Institute, Jamshedpur.

His track record is punctuated with achievements like execution of a project for 1.2 million tonne cold rolled mill at Jamshedpur three months before schedule.

Enroute to the top, Muthuraman had worked eight years overseeing operations of blast furnaces, new projects and planning, served as director on the boards of Tata Pigments and Tata Ryerson, worked 19 years in TISCO's sales and marketing divisions, before rising eventually to the top of marketing division.

His role in executing the Gopalpur Steel Project, which was later abandoned, had then come under analysts's scrutiny. Although Irani was at the TISCO helm, Muthuraman oversaw the project implementation. That lack of port facilities and rail links affected the project is a widely accepted fact. Muthuraman, it is said, had to take part of the flak for not ensuring that necessary facilities were set up in time.

All that is history. The present and the future might see Muthuraman striving to take Tata Steel through its forward integration plans, besides attempting to make the company a truly global player.

Of special significance would be the company's ambitious plans to: a. set up a $ 50 million greenfield ferro-chrome facility in Australia; and b. go on an acquisition-spree for accelerated growth.

The immediate post-July term might see Muthuraman guiding his workforce to finish work on the galvanised cold rolled mill. The project is tipped to make high-quality galvanised steel for the automobile and white goods sectors.

A bigger challenge for Muthuraman could be the targets envisaged by Irani.

Analysts expect Tata Steel to coast on its CRM plant to produce 180,000 tonnes of cold rolled steel in Q4 of 2000-01. The company had produced 3.25 million tonnes of steel in 1999-00; the figure may marginally rise to 3.31 MT this fiscal. Under Muthuraman, TISCO would aim at 3.5 MT in 2001-02.

Currently, the cold rolled mill accounts for 12 per cent of TISCO's production, the hot rolled mill accounts for 52 per cent, semis 8 per cent and longs 28 per cent.

Muthuraman would seek to strike a fine balance in Tata Steel's product portfolio. The composition might alter: If the cold rolled mill's share in total production may go up to 34 per cent, the hot rolled mill may account for 28 per cent, semis 8 per cent and longs 30 per cent.

Muthuraman would draw comfort from the fact that the downtrend in international prices has slowed, and within India, price movements, thankfully, do not exactly mimic a roller-coaster.

By and large, TISCO has outperformed the industry whose production and exports have grown by 8 to 10 per cent in H1 of 2000-01. Prices of steel and cement are seeing an uptrend, thanks to rising constructions of buildings, long-delayed motorways and power plants.

Encouragement is also likely to come in October when Tata Steel would part with Rs 7 billion to repay a 10-year loan in five years itself. Another Rs 5 billion will retire Tata Trust Bonds which carry a 17 per cent interest rate.

But those healthy signs are Irani's legacy that Muthuraman would inherit. In his stable domestic front, he has a good support system -- he is married, has a son, loves sport, especially cricket and golf, and music and has a wide range of interests. Now, he might be tempted to try and measure up to the larger-than-life image that successive TISCO MDs have enjoyed in public perception.

He is said to be an eloquent conversationalist, and adept at converting adverse situations into opportunities.

To his advantage is the fact that the succession to the Tisco hot seat has never been a peaceful affair. However, Irani had begun the efforts to find his successor almost a year ago. Muthuraman has now been chosen over three other contenders -- T Mukherjee, executive director, operations; A N Singh, ED, town, medical and social services; F A Vandrevala, ED, marketing and sales. Ratan Tata and Irani are keen on a peaceful transition, and that is a big help.

The level of expectations, in terms of providing a technological edge or vision to TISCO, is not very high. For, the Ratan Tata-led board of holding company Tata Sons has set up a corporate executive office for the entire group, with corporate celebrities such as K Gopalakrishnan, Ishat Hussain and Kishore Chauker offering leadership and long-term vision.

The New Economy Vs Old Economy debate may enthrall the media, but Muthuraman may seek continuity in the tradition of TISCO not getting swayed by the stock market's lofty expectations. Industry observers expect the company to hold its ground; any impact on TISCO stock sentiment would be due to the company's performance, not the other way round.

CV of B Muthuraman

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