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From the editor
A
s I write this editorial, monsoon showers have started lashing
Mumbai, the trees and grass are lush green and there is a
refreshingly cool breeze in the air — a welcome change from the
sweltering summer heat.
On the business front, too, winds of change are blowing through the offices
of Tata International. Set up in 1962 as Tata Exports, this group company was
among the first to venture overseas and now has a presence in 39 countries
all over the world. And now, having strategically mined its core competencies,
Tata International has metamorphosed and created a new identity for itself as a
global trading and distribution company. Our cover feature in this edition of Tata
Review attempts to track the recasting expedition of this $1.2-billion enterprise.
In an accompanying interview, Noel Tata, the company’s managing
director, tells us more about the transformation: “Having set the agenda,
now it’s all about execution — putting people and processes in place,
making investments where they are required, adopting risk assessment and
control systems built around information technology, and most importantly,
building the business in a profitable manner.”
This edition of Tata Review has a lot more, besides, on its menu: a
special report on the affirmative action programme that has been gaining in
strength and reach across the group; coverage of the annual Innovista event
that recognises and rewards creativity in Tata companies, as expressed
through the fashioning of breakthrough products, processes and services;
and an extensive account — from Munnar and Coorg, Assam and Sri Lanka
— of the tea and coffee plantation operations of Tata Global Beverages.
Our visits to these plantations were a very interesting experience. We were
amazed to see how each of these plantations are changing in a bid to keep
ahead of the times — adopting contemporary cultivation techniques and derisking for climate change to new ownership and management models.
Also in this issue is the heartwarming story of Tata Medical Center, the
cancer hospital set up in Kolkata a few years ago, which is serving a very
real need in that entire region. It has patients not just from the eastern parts
of India but even from neighbouring countries such as Bangladesh and
Bhutan. Speaking to Tata Review about the project he refers to as a “labour
of love”, RK Krishna Kumar, former director, Tata Sons, shares expansion
plans for the hospital he was so closely involved in setting up.
An eclectic spread is what we have tried to put together, and I do hope
you, dear reader, find it stimulating.
Warm regards,
Christabelle Norohna
Contents
VOL 51 | Issue 2
JuLy 2013
Cover story
37 The page Turns for
a company recasT
Tata International is betting
that a change in strategy
and approach will enable
it to make the most of its
potential
— Christabelle Noronha,
Cynthia Rodrigues, Gayatri
Kamath and Nithin Rao
Business stories
6
an eye for innovaTion
— Vibha Rao
9
Special report
TiTan eye plus:
59 affirmaTive acTion:
91 TaTa innovisTa 2013:
Tapping inTo posiTive
every one a
and inclusive growTh
winner
TaTa global beverages:
The Tata group’s affirmative
It’s that time of the year
leaf and bean in seas
action efforts have been
when standout innovations
of green
gaining in reach and
from across the Tata
— Philip Chacko, Shubha
effectiveness
group are recognised and
Madhukar, Nithin Rao and
— Suchita Vemuri
rewarded
Sangeeta Menon
— Gayatri Kamath, Nithin Rao
71 ‘we musT correcT a
28 TaTa sky: ‘our focus is
service, service and
service’
Harit Nagpal speaks to
Debjani Ray
31 TaTa business supporT
services:
cusTomer care in The
cloud
— Nithin Rao
34 mounT everesT mineral
waTer: wellness in
waTer
Pradeep Poddar speaks to
Suchita Vemuri
hisToric injusTice’
— Interview with B Muthuraman
and Suchita Vemuri
Case study
103 TaTa managemenT
Training cenTre: when
The connecT is noT
Editor
Christabelle Noronha
Email: [email protected]
AssistANt Editor
Sujata Agrawal
jusT commercial
— Radha Ganesh, Dr Richa Vyas
EditoriAl tEAm
and S Sharda Ratna
Anjali Mathur
Cynthia Rodrigues
Gayatri Kamath
Jai Wadia
Strategy
106 TaTa sTraTegic
managemenT group:
secure Those skills To
Photofeature
Philip Chacko
Sangeeta Menon
Shalini Menon
Shubha Madhukar
Suchita Vemuri
reap big rewards
CoNtributors
— Raman Kalyanakrishnan
Debjani Ray
Nithin Rao
Vibha Rao
75 TaTa power:
walwhan and The
Book review
Abraham K John
world wiThin
— Jai Wadia
dEsigN
110 so you’re righT? slow
Shilpa Naresh
down, Think again
— Debjani Ray
Marketing
88 volTas: cooling minds,
ProduCtioN
Mukund Moghe
EditEd ANd CrEAtEd by
winning hearTs
in association with
The Voltas turnaround and
The Information Company
resurgence story
Email: [email protected]
— Sujata Agrawal
Website: www.tata.com
CoNtACt
Tata Sons
Community
80 ‘This has been The
unfolding of a vision’
rK Krishna Kumar speaks to
Christabelle Noronha
Bombay House
24, Homi Mody Street
Mumbai 400 001
Phone: 91-22-6665 8282
disClAimEr
All matter in Tata Review is
copyrighted. Material published
84 TaTa medical cenTer:
in it can be reproduced with
a hearT for healing
permission. To know more,
— Sangeeta Menon
please email the editor.
BUSINESS
An eye for innovation
The youngest brand in the Titan stable, Titan Eye
Plus has successfully engineered a blend of style,
technology and outstanding product quality
A
n estimated 450 million
people in India need
vision correction, but the
actual number of those
who use optical lenses is less than
25 percent of that, says S Ravi Kant,
chief executive officer of the eyewear
division at Titan Industries. The
shockingly high number of people
with untreated vision-correction
requirements speaks volumes
about the state of ocular health in
the country and about access to
ophthalmic health care.
For the people at Titan Eye
Plus, the challenge is not just to
bring to the market eyewear that
blends style and functionality, but
also to address the immediate need
to increase awareness about ocular
health. It is a challenge that they
have met with considerable success.
6 Tata Review
n
July 2013
In an attempt to create awareness
— and reach out especially to people
who are not even aware that they need
vision correction — the company
launched an online vision testing
portal, a first and one-of-a-kind
service from a retail chain anywhere
in the world. Created in-house, this
simple test has been used by more
than 250,000 visitors since its launch
in October 2012 (it can be accessed in
all major Indian languages).
Says Mr Kant: “Most people
are unaware that they need vision
correction till they experience
symptoms such as headaches, which
is generally one or two years late.
Being the leader in the industry, I
think it is our responsibility to bring
about awareness on this issue and
our innovative online test is a step in
that direction.”
Anybody over six years can
take the online vision test, which
does not give out a prescription but
is able to identify four different types
of vision problems. If the test reveals
a problem — and if the participant
agrees — a trained Titan Eye Plus
professional contacts him or her.
Another interesting innovation
that has helped create widespread
awareness is the Titan Vision
Screener, which is a portable eye
screening unit. The unit is used at
the healthcare camps the company
organises in residential complexes
and in offices in select Indian cities.
trained personnel
A big differentiator for Titan Eye
Plus is that is has trained and
certified optometrists and eyewear
consultants at all its stores. Titan
Eye Plus is also closely associated
with Sankara Nethralaya, a
prominent eye hospital in Chennai.
Sankara Nethralaya runs a twomonth training programme for
eyewear employees at Titan Eye
BUSINESS
Plus outlets. Each of these outlets
offers free zero-error eye testing
in a state-of-the-art testing facility
that is managed by optometrists.
“This is an important focus area
for us,” says Mr Kant. “We have
set up an exclusive training
centre in Hosur [in Tamil Nadu],
where, in close association with
Sankara Nethralaya, we train all
our optometrists and our eyewear
consultants.”
Every Titan store has a
qualified optometrist, trained
technicians and eyewear
consultants, and all employees have
to undergo a strict certification
examination conducted by a panel
of experts from the company and
Sankara Nethralaya. The consultants
undergo comprehensive training in
technical and product knowledge,
personal grooming, communication
skills, etc so that they are able to
understand the needs of customers
and prescribe the best suited
product to them.
“This is our biggest strength,”
says Mr Kant. “People who walk into
our stores feel that they are talking
to somebody knowledgeable, who
is able to guide them through the
entire process by recommending the
best optical solution.”
That solution rides on quality
and creativity. Titan Eye Plus
manufactures some of the most
innovative optical lenses (with
advanced lens coating) at its state-ofthe-art lens manufacturing facility
An experience to store
Titan Eye Plus stores offer customers a great shopping
experience. The pioneers of the ‘browse, select and buy’
format in eyewear retailing, where all frames are laid out
on the wall with their respective price tags, Titan Eye Plus
is known for its transparent pricing as much as for its wide
variety of frames and lenses.
The brand’s style consultants, knowledgeable and
qualified, are trained to help the customer choose the
right product. Each store offers free, zero-error eye testing
in a state-of-the-art facility run by optometrists specially
trained by Sankara Nethralaya. With its friendly staff, quick
turnaround time and an impressive variety of frames and
lenses, Titan Eye Plus has successfully transformed the
eyewear retail experience in India.
in Chikkaballapur, near Bengaluru.
This is a first-of-its-kind facility in
India and it uses advanced freeform manufacturing technology to
make lenses. Lenses manufactured
using this technology offer about
30 percent wider vision than those
that are made using conventional
lens technology. With products that
range from the normal hard-coat
lenses to customised signature lenses
that are designed specifically for an
individual consumer’s eye and head
movement, the plant has developed
several highly innovative and
differentiated products.
advantage titan
The Chikkaballapur facility also
houses advanced lens-coating
We were seen as a premium brand
because of the look and feel of our stores.
But the fact is that we are premium in
terms of quality, not pricing.
S Ravi Kant, chief executive officer, eyewear division, Titan Industries
equipment that can turn ordinary
lenses into unique and innovative
products. One such product is called
Titan Advantage, which are special
lenses that repel water and dust and
are scratch resistant. These antifogging lenses are a boon where
there is high humidity.
The brand’s ‘sun protection
factor’ lenses, on the other hand,
protect users from ultraviolet
radiation, with a special coating
on both sides of the lens offering
360-degree protection against
radiation. “There are similar products
worldwide but few international
brands manufacture these specialised
lens,” says Mr Kant. “It is all about
striking the right balance between the
price of the product and its value.”
The lens manufacturing unit
has an output of about 600,000
lenses a year and caters to all
Titan Eye Plus stores across the
country. With 228 stores in 78 cities,
managing the order inventory and
delivery on time is a complex task.
All the stores are connected to
July 2013
n
Tata Review
7
BUSINESS
the manufacturing plant through
SAP and every order punched in
is immediately downloaded at
the plant. The factory operates in
three shifts and most lenses — 98
percent of the orders, says Mr Kant
— are produced within 24 hours of
receiving the order.
Titan Eye Plus caters to the
style-conscious Indian with its
wide range of trendy products
that draw on Titan’s well-honed
design expertise. With more than
a thousand styles, frames are made
from a wide variety of materials.
Titan Eye Plus regularly adds new
design collections to keep the range
as fashionable as possible.
The challenge in this segment
is to address the age-old stereotype
that glasses are unfashionable. Over
the last few years, Titan has launched
Titan Eye Plus manufactures lenses that are scratch-resistant, repel water
and dust, do not fog, and also lenses with ‘sun protection factor’ coating
8 Tata Review
n
July 2013
specific collections targeted at
different consumer segments.
Product design has always been a
strength at Titan and the marketing
team at Titan Eye Plus creates
products for different occasions, for
that official function, for parties, for
weekends and so on.
saying it for style
Titan aims at getting consumers to
start looking at the eyewear category
differently — as a style accessory,
rather than a medical appurtenance.
As Mr Kant explains, “Style is
important to the Indian consumer
and our effort has been to get these
consumers to consider eyewear as
a style accessory and not just as a
functional product. We have done
that by launching collections that the
Indian market has not seen till now.
Our communication has been about
style and how users can enhance
their looks with our products.”
The youngest brand in the Titan
stable, Titan Eye Plus has evolved
over the six years of its existence
— from a fresh entrant in India’s
highly unorganised eyewear market
to becoming the country’s No 1
eyewear retailer brand and largest
eyewear retail chain. In the process
Titan Eye Plus has matured in terms
of overall strategy and pricing and in
its understanding of the market.
“We were seen as a premium
brand because of the look and feel
of our stores,” says Mr Kant. “But
the fact is that we are premium
in terms of quality, not pricing.”
With plans for store expansions,
new design and the development
of several novel lenses on the anvil,
Titan Eye Plus is now eyeing greater
successes. ¨
— Vibha Rao
business
Leaf and bean in
seas of green
Seeded and nurtured in the Tata tradition, the
plantation operations of Tata Global Beverages
have plenty in common. Yet there is much that sets
them apart as distinct entities: their geographical
location, the culture that defines them and the
produce itself. Tata Review takes a slow sip of
delights on offer at these four tea and coffee
estates — in Assam, in Coorg in Karnataka and in
Munnar in Kerala (all in India) and in Sri Lanka.
July 2013
n
Tata Review
9
business
A new brew comes of age
Staying true to the Tata tradition that led to
its creation, the Kanan Devan Hills Plantation
Company has emerged from adversity to find
its place in the tea garden sun
I
t has been the theme of a World
Bank evaluation, the subject
matter of case studies and has
won praise from a cabinet
minister and industry eminences,
yet the transformation of the
erstwhile Tata Tea’s plantation
operations in the mountain
ranges of Munnar, Kerala, into an
independently profitable enterprise
has escaped emulation in a business
10 Tata Review
n
July 2013
crying out for similar narratives
of rejuvenation.
The reasons for that are the
uniqueness of the Kanan Devan Hills
Plantations Company (KDHP) story,
the Tata heritage that spawned it
and, probably of most consequence,
the fortitude of the people who made
it possible. A good place to begin
the telling of this story would be the
circumstances that led to Tata Global
Beverages (TGB, then known as
Tata Tea) deciding around the turn
of the millennium that it wanted
to concentrate on the branded
beverages business.
The four years prior to the
formation of KDHP in April
2005 saw tea plantations taking
one body blow after another.
A global oversupply of tea,
increasing production costs and an
unreasonable escalation in labour
wages combined to push tea gardens
to the wall. Tata Tea was at this point
veering around to focusing on the
branded beverages business and this
meant it had to find an alternate
approach to the complex business of
managing tea estates.
business
One option, obvious and
straightforward, before the Tata
Tea management was an outright
sale of its South India plantations,
spread over 24,000 hectares of
‘perpetual lease’ land in Munnar and
in Annamalai in Tamil Nadu. That
was never going to be an attractive
choice, mainly because finding a
buyer who would continue doing
all that Tata Tea had committed
itself to — including a slew of social
welfare activities and environment
protection initiatives — may have
been impossible.
RK Krishna Kumar, the vice
chairman of TGB, was clear that
the new model should have the
welfare of the plantation workers
at heart. That’s when the concept of
an alternative began to take seed.
The man who planted and nurtured
this concept was the late TV
Alexander (see box: The titan who
saw tomorrow), a remarkable leader
of people and a visionary who had
sensed long before that something
out of the ordinary was required
for the plantation operations in
Munnar to, first, survive and then
thrive. Mr Alexander pushed for
what has come to be known as the
participatory management model,
the elixir that culminated in the
setting up of KDHP. “This was his
brainchild and he made it work,”
says Chacko P Thomas, who took
over as the company’s managing
director when Mr Alexander
passed away unexpectedly in
February 2012.
Tata Tea was sure that some
kind of partnership with its
employees was the way forward for
its tea plantations in South India, but
there were stumbles along the way
to implementing the participatory
management model. “We tried out
a cooperative arrangement at one
of our better-run estates, but that
failed,” says Mr Thomas. “It proved
difficult for our workers to run
things on their own, to be masters of
their destiny. We went through a fair
bit of soul-searching.”
That’s when Mr Alexander’s
plan began to take shape and it was
borrowed in significant measure
from what he had come across in
Tata Steel, which then had different
‘committees’ looking after various
operations at its Jamshedpur plant.
“That was the building block
on which the KDHP model was
formulated,” says Mr Thomas. “It was
a rough kind of thing we took from
Tata Steel and we refined it.” The
refinement happened over an eightmonth period and the details, when
the plan was given its final shape and
implemented, were radical.
The participatory management
model now operational saw a new
company, KDHP, being established,
with Tata Tea handing over the
management of the enterprise to
its employees. Which is how it has
been since 2005, its employees
owning 58 percent of KDHP’s
shares, Tata Tea (now TGB) keeping
a 28.5 percent stake and the rest
being parked with a special purpose
trust and others. Every KDHP
employee holds a minimum of 300
shares in the company, each with
a face value of `10 and now worth
`66 (2011-12 figures).
A raft of other measures were
introduced to slash costs, improve
productivity and instil the necessary
belief in employees that, as owners,
the rules of game would be different.
The 24 estates of Tata Tea became
seven estates under KDHP and a
voluntary retirement scheme was
offered to employees. “We had about
18,000 people on our rolls then and
we reduced the number by 3,500,”
adds Mr Thomas. That figure would
dip further in the following years
— KDHP now has some 11,500
employees — even as productivity
was enhanced substantially (see box:
From then to now).
Mechanisation, replanting,
incentive schemes, communication
initiatives — the agenda for change
embraced every aspect of tea
growing. From the estates to the
divisions within them to the fields
that comprise these divisions, KDHP
overhauled its operations to get
more efficient. Alongside, the
company’s management, with
Mr Alexander leading the line, spent
a huge amount of time and effort in
convincing the workers that a better
tomorrow was sure to dawn. It was
far from easy, though.
July 2013
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Tata Review
11
business
The titan who saw tomorrow
Maybe he knew the end
was near or, more likely,
Thattupurackal Varghese
Alexander did not care as
much about his own mortality
as he did about bringing to
life — and finding the means
of sustenance for — the
Kanan Devan Hills Plantation
Company (KDHP).
It is fair to say that
Mr Alexander, who was passed
away at age 59 following a
heart attack in February 2012,
was a tea industry institution,
an extraordinary personality
whose commitment to the
cause of the company he
served and, more than anyone
else, helped create has left a
profound imprint on the people
whose lives he touched and the
high ranges of Munnar that he
had made his home.
“What we are today is
because of this one person,”
says Chacko P Thomas, who
succeeded Mr Alexander as
KDHP’s managing director.
“His was one of the sharpest
minds I have ever encountered.
He had this boundless energy
and a rare clarity of vision. He
could foresee what the future
held for us as an independent
enterprise.”
The setting up of KDHP in
the form that it has taken was
Mr Alexander’s idea, and it was
a baby he carried in his capable
arms to the day he died. “He
was the reason all of us went
blindly with this new concept,”
recalls Mr Thomas. “We all had
options and we could have left,
12 Tata Review
n
July 2013
but we had unwavering faith
in this man and his ability to
ensure that KDHP would be a
viable and successful entity.”
It was not just in the upper
reaches of management that
the memory of Mr Alexander
lingers. The ordinary tea estate
worker in Munnar is just as
likely to have a story to tell
about him, a deed to remember
or a personal anecdote that
illuminates the considerate and
caring nature of a born leader
who, on the surface, appeared
gruff and forbidding.
Mr Alexander joined the
company as an assistant
manager back in 1976, when
it called Tata Finlay. He came
through the ranks to become
general manager of Tata Tea’s
South Indian plantation division
in 2002. This was about the
time Tata Tea had decided
to get out of the tea-growing
business and concentrate on
the marketing of its branded
products. Mr Alexander it was
who drew up and implemented
the blueprint that made the
transition from Tata Tea to
KDHP possible and profitable.
There was more to
Mr Alexander than being a
masterful hand in the tea
business. He served on various
industry bodies and was a
member of the Kerala State
Biodiversity Board. Finding time
for all and more could not have
been easy, but Mr Alexander
had an unusual capacity for
efficiency and hard work, often,
it has been said, at the cost of
his health.
Mr Alexander’s greatest
accomplishment, though, has
to be the enterprise that is his
truest legacy. “He was born,
I believe, to create KDHP,”
says BP Kariappa, a senior
tea estate manager with the
company. “Nobody could even
have thought of something
like this. When everybody
wanted to jump ship, he stood
up and said, ‘Let’s start a new
company.’ I consider him to be
the godfather of this place.”
Admiration of this sort can
seem fulsome but not when
the subject is Mr Alexander
and the setting is Munnar. “He
was 10 years ahead of the
world in his thinking about what
needed to be done to turn the
KDHP dream into reality,” adds
Mr Kariappa. “My guess is he
knew he would not be around
for long and that is probably
why he was so driven in
realising his vision.”
business
A nutrition class in progress (left) and a traditionally dressed tribal woman undergoing a health check-up (right)
“The challenge was enormous,”
explains Mr Thomas. “For long
years we had been under the very
protective umbrella of Tata Tea.
Now we were telling our people that
Tata Tea would no longer be paying
our salaries, that we were on our
own. We undertook an elaborate
communication exercise that
reached every worker in every one of
our 82 divisions.” There was no panic
among the employees, but there
were plenty of queries. “What are we
going to do? Are we going to be paid
our salaries? What about our other
benefits? “They were bewildered.”
It became clear soon enough
that there would be no cutbacks,
not in salaries or benefits, not in the
welfare efforts that are integral to
the Tata way, and not in the peoplecentred philosophy of the past. Tata
Tea would continue to support the
general hospital, the school and
most of the welfare activities, either
directly or through KDHP. A new
business plan took shape, a bank
loan was secured and Tata Tea also
pitched in with monetary backing.
The Tata Steel method was
improved upon and implemented
and the participatory management
structure was cemented. Each
of KDHP’s 82 divisions and its
16 factories has an advisory
committee — consisting of worker
representatives elected through
secret ballot — to oversee dayto-day affairs. A level above these
bodies is what are called consultative
committees and, further up, an apex
central management committee.
Bottom up rather than top down is
the dispensation and it has worked
like a dream for KDHP.
Involving employees from
all echelons of the company in
the decision-making process has
fostered a culture of openness
and created a sense of belonging.
Productivity, turnover and profits
have become rosier with every
passing day, the bank loan has been
repaid (in five years rather than
the originally scheduled ten), and
KDHP has even been able to cope
with two wage revision jumps that
would have crippled it financially
had the enterprise been in less
robust health.
A big factor here has been
enthusiasm of the workers for the
recast project. “I have a workforce
that is more motivated than ever
before,” says senior estate manager
BP Kariappa, a Coorgi who appears
to be to the tea plantation born.
“It is the same group of people we
had earlier but what has changed is
this feeling they have, that it is now
their company. All of us, workers,
managers and staff, felt a bit sad
when the Tatas left us, but we took
it as a challenge and it pushed us
to prove that we could achieve
something significant with this new
set up.”
Mr Kariappa is referring to
people like Pottiamma, a 58-yearold plantation veteran who has
been working in the tea gardens
of Munnar for nearly 40 years, just
as her father and her grandfather
did. “There were these ‘classes’ we
attended where it was explained
to us what would happen and how
everybody could benefit from the
July 2013
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Tata Review
13
business
From then to now — how the transition panned out
A comparison of KDHP’s numbers for 2004-05 and 2012-13 shows the progress the company has
made on six crucial parameters since moving to the participative management model
2004-05
2012-13
Employee strength
16,126
11,912
Production (million kg)
19.48
20.23
Worker productivity (kg-per day)
33.31
48.88
Turnover
`1,012.5 million
`2,606.0 million
Net profit
Loss of `80 million
`123.02 million
Dividend
None given
15%*
*The dividend for 2011-12 was 10% and for 2010-11 it was 25%.
new arrangement,” she says. “As
a shareholder, in a small way, I
have felt my sense of responsibility
towards the company increase. Our
contribution has certainly got better
and so, correspondingly, have our
earnings.”
Kovil, another thirdgeneration tea garden worker, says
he and some others were shaken
up when the news came through
that the Tatas were planning to get
out of the plantations business.
“We were apprehensive about
what was going to happen to us
ordinary workers,” he says, “but
the communications drive that the
management undertook helped get
rid of our concerns. I for one was
soon convinced that things would
get better.”
The contributions of workers
like Mr Kovil and Ms Pottiamma are
a big reason why KDHP has been
able to consistently outperform the
industry by a huge margin. “Our
productivity levels are far higher
than others and that is mostly
down to our people feeling this is
their company,” says Mr Thomas.
14 Tata Review
n
July 2013
“Secondly, we have very friendly
policies in terms of how we reward
our people. Our worker incentive
schemes are so designed that in a
high-crop month a worker can earn
close to `9,000.”
There are other advantages
that KDHP can bank on. “Our
entire operations are in Munnar
and that translates into being faster
than everybody else,” explains
Mr Thomas. “Also, we have been
the only company in the entire
tea industry in India to make
investments — in mechanisation,
in replanting, in ensuring that our
products are far ahead of what the
competition has to offer — even
when the going was less than good
in terms of returns.”
Standing steady by the
company’s side through all of this has
been TGB, ever the protective parent
guiding its child from baby steps to
maturity. Before KDHP got started,
TGB sourced 12 million kg of tea a
year from its Munnar operations.
That figure is at present close to 4
million kg, about 13 percent of the
company’s annual produce from a
total of 25 million kg (it has a capacity
of some 27 million kg).
“Initially we were hesitant to
go elsewhere with our tea, but now
we have gained in confidence,”
says Mr Thomas. “That said, TGB
is a benevolent and supportive
customer; they have never said
they will not take our produce. The
choice to spread our wings has been
ours and we are thankful that they
have allowed us to go about it in a
manner that suited us.”
Its future, in the context, will
be for KDHP to frame. Taking the
company public is an option but not
for the present, simply because it
does need the money right now. The
priority is consolidation and, down
the line, non-tea operations such as
dairy farming, growing medicinal
plants and tourism. “Nothing that
we do is, or will ever be, against
the land or the laws that govern
it,” says Mr Thomas. Nor the wider
community, it must be added. That
much remains as traditional — and
as Tata — as it was. ¨
— Philip Chacko
business
A renewal in tea country
With a heritage steeped in history, Assam’s tea
plantations are evolving new business models,
complete with employee ownership, technological
innovations and organic cultivation
T
he morning siren goes off
at 5:30am, signalling the
dawn of a new day at the
Amalgamated Plantations
(APPL) tea estates in Assam, a
state in India’s northeast. Voices
arise amid a flurry of activity in the
workers colony — people getting
ready to report at the tea garden at
8am, younger kids getting ready for
the crèche, older ones for school...
By 6am the lights are on in the
estate offices and the daily kaamjari
(operations) meeting is conducted
by the jamaadar babu (supervisor).
APPL is a unique company.
Comprising 25 tea estates, the
plantation is not only India’s largest
integrated tea operation and second
largest tea producer, it is also partly
owned by its employees — 21,000 of
them — making it one of the largest
employee shareholder companies
in India. The estates, covering more
than 14,000 hectares, belonged
to Tata Tea (now Tata Global
Beverages, or TGB) until April
2007, when Tata Tea divested from
the plantation business and APPL
emerged. In the six years since, while
acreage and tea production have
remained more or less the same,
revenue has grown by 45 percent
and the company has forayed
into new business streams such as
aquaculture. APPL now sells about
a third of the over 35 million kg
of tea it produces to TGB. The rest
typically goes to auction markets in
Kolkata, Guwahati and Siliguri.
Much has changed at APPL
yet much remains the same. The
employees still feel ‘Tata’ at heart,
the company continues to follow
the Tata Code of Conduct and many
Tata policies are still in place.
The name and ownership
change started in 2005 after Tata Tea
successfully transferred 17 tea estates
from its South India plantation
operations in Munnar, Kerala, to a
new company called Kanan Devan
July 2013
n
Tata Review
15
business
Visualise lush green tea
bushes spread over about 480
hectares, glistening golden in
the sunshine. Imagine a herd
of elephants or the occasional
one-horned rhinoceros moving
slowly through the tea garden.
There is silence as nature likes
it, broken only by bird song and
the buzz of insects. This is the
Hathikuli tea estate, situated
in the Kaziranga National Park,
a world heritage site in Assam
that is also home to the biggest
organic tea garden in India.
Established in 1908, the
Hathikuli tea estate opted to go
organic in 2007 and received
its organic certification in
2010. “Organic conversion is a
time-taking process,” explains
Daljeet Singh, manager of the
Hathikuli tea estate. “It takes
at least three years for the soil
to be rid of residual chemicals
from fertilisers and to rebuild its
inherent nutrient levels.”
The organic route is
complicated and labour
intensive. Instead of spraying
ready pesticides, the tea estate
uses herbal concoctions made
in-house using traditional
methods. Local exotic herbs
with anti-pest properties
are plucked, collected, cut,
chopped and fermented for
72 hours. One method of pest
management is to introduce
natural predators (such as birds)
to control pests. Several fruit
trees (other than the shade
trees) are being planted in the
estate for birds to nest.
Instead of chemical
fertilisers, the tea bushes are fed
with vermicompost. The making
of vermicompost involves
collecting the dung of lactating
cows and mixing it with water
hyacinth or banana tree trunk.
No soaps or detergents are
allowed in the processing unit
and reetha (soap nuts) is used
for cleaning. “Training workers
in these traditional cultural
practices is a continuous
process,” says Mr Singh. “The
process requires 20 percent
more workers for the same
amount of work.”
Going organic also meant
that the yield dropped to less
than half: from 1.06 million kg
in 2006-2007 to 0.4 million kg
in 2013. These are the reasons
why organic teas are priced
higher. “Organic and green teas
are meant for the fastidious
palettes of connoisseurs,” says
Mr Singh, who expects the
organic operation to become
profitable in the next five years.
Hathikuli also introduced
green tea in 2007 and this year
it produced nearly 4,000kg of
organic green tea. Visitors to
Kaziranga often stop to buy
Hathikuli organic black and
green teas from the kiosk
outside the tea estate.
Hills Plantation Company under
the employee buyout model. A
similar route was considered for the
company’s Assam and West Bengal
plantations; in 2006 a proposal
was mooted to incorporate a new
enterprise where employees would
own the company along with
International Finance Corporation
(IFC) and some partner investors.
The proposal caused panic
among the employees. There was
confusion, uncertainty and a sense
of betrayal as rumours of employees
losing jobs did the rounds. Tata Tea
continued to proceed very carefully.
It accelerated the communication
drive and got IFC to conduct a
series of workshops across the tea
estates on savings and investment,
the primary objective of which was
Going the organic way in Hathikuli
16 Tata Review
n
July 2013
business
to encourage ownership among all
of the company’s employees.
However, educating and
convincing the workers, most of
them illiterate, proved tough even
though the management tried
several methods. What did evoke
some response was the assurance of
returns of 6 percent per annum or
dividend declared on equity shares,
whichever was higher.
A stAke for All
Tata Tea was keen on all workers
having a stake in the new company.
“All employees were offered
preference shares,” says Rana Barua,
manager of the Chubwa tea estate.
“APPL provided interest-free loans
to fund the shares to be bought.
Workers were eligible to buy `8,000
worth of shares and the clerical staff
`20,000. For the management a slabbased formula was worked out.”
When the offer opened in
2009, 19,000 employees subscribed;
a further 2,000 employees followed
suit when the offer was reopened in
2010. The benefits of having shares
became clear to all only when the
company announced dividends in
August 2010.
As of today TGB remains the
single largest shareholder with
49.66 percent equity (IFC has
19.06 percent and the balance is
with investor partners). There is no
operational interference, with TGB
guiding the company only at the
board level.
The initial days were tough for
APPL, as Sanjeev Verma, deputy
general manager at the Powai tea
estate, recalls: “The changeover
happened at a time when the tea
industry was reeling after years
of steep price decline.” Several tea
gardens had to either close down
or suspend operations for some
time. But in spite of challenging
market conditions, the company has
managed to transition successfully.
Says Anup Mehra, senior manager of
the Kelleyden tea estate: “We proved
ourselves as a quality tea producer
and made a name within two years.”
APPL’s heritage goes back
to 1836, when the Britishowned Chubwa Tea Company
first successfully planted and
commercialised tea in Chabua (in
upper Assam). The company’s name
has changed several times (Tata
Finlay in 1976, Tata Tea in 1983
and APPL in 2007) but the estates
are still proud of their heritage.
Says Mr Barua: “Several eminent
personalities, including Lord Curzon
and Jawaharlal Nehru, visited and
planted tea bushes in Chubwa. In
their honour, we have the sections
named after them.”
Assam contributes 51 percent of
the annual tea production in India,
but many of the older tea estates
are struggling with low yields. At
APPL’s tea estates help comes from
the Toklai Tea Research Centre
and the APPL R&D centre (set up
by Tata Tea in 1988) at Teok tea
estate. While the former is dedicated
to scientific research in the areas
of manufacturing techniques,
clones, soil, drainage, etc, the latter
works to improve productivity
in the company’s tea estates
through soil testing and fertiliser
recommendations (see box: Going the
organic way in Hathikuli).
technology to the fore
Technology has made a huge
difference in streamlining daily
operations at APPL. Since 2010 all
estate workers use an RFID-enabled
smart card that is linked to the central
system for their attendance, daily
productivity and wages. Since the
estates are located in remote rural
areas, each tea estate has its own VSAT
system and power backup. Says
Mr Verma: “Technology has brought
in accuracy, transparency and savings
in time and money.”
In 2007-08, to optimise land
usage, APPL decided to develop
unutilised tracts of land, especially
in low-lying areas to implement an
aquaculture project. Ponds were
created close to perennial water
Amalgamated Plantations: A fact file
• Founded: In 1836 as Chubwa Tea Company
• Turnover (2012-13): `5.186 billion
• Annual tea production (2012-13): 35.09 million kg
• Types of tea: CTC, orthodox, green and organic varieties
• Number of tea estates: 25
• Number of tea processing units: 24
• Number of tea packeting centres: Three (Kelleyden,
Nonoi and Damdim)
• Number of employees: 33,500
• Average age of the plantations (tea bushes): 50-55 years
July 2013
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Tata Review
17
business
sources to cultivate rohu and katla of
the carp family across 15 estates, and
multiple carp hatchery units were set
up in six estates as captive sources
of quality fish. Additionally, a black
pepper project was undertaken in
all 25 tea estates with each having its
own nursery.
These activities have generated
employment of close to 1,80,000
workdays in the last one year, and
additional revenues of `22 million. In
2011, a separate agri-business division
was set up to look after all non-tea
crops in the estates and to work with
local communities across the northeastern states for aggregating, adding
value and marketing indigenous
spices and fruits (the plans of setting
up a spice and fruit processing unit in
Assam is in the final stage).
APPL owns three tea-packeting
centres, in Kelleyden, Nonoi (both
in Assam) and in Damdim (in
West Bengal), which packaged
over 31 million kg of tea in 201213. Varieties of tea, sourced from
various tea estates in Assam, come to
the packeting centres, where they are
blended according to specification
and packed in different sizes (from
as small as 18gm to as large as 5kg)
as branded packets of Tata Tea
Premium and Tata Tea Gold.
the sociAl network
APPL’s tea estates are social
institutions that care for their
workforce. Apart from employment,
the plantations provide free housing,
potable water, medical facilities,
crèches and primary education, and
food rations are subsidised. The estate
workers are also entitled to provident
fund, annual leave of 20 days and a
leave travel allowance. What about
labour problems of the kind common
in the tea business? “We do have
problems from time to time, but less
of it (in comparison with other tea
estates) and they are manageable,”
says Mr Barua.
In true Tata style, APPL carries
forward the legacy of Tata Tea’s
A specialist with a child patient after her cleft lip surgery at the Referral
Hospital and Research Centre in the Chubwa tea estate
18 Tata Review
n
July 2013
corporate sustainability work and
continues to add to it. Says Mr Mehra:
“We focus on improving the quality of
lives in the communities we operate
in through initiatives in education,
health and livelihood.”
APPL has a scholarship
programme for meritorious students
(children of employees) called
Applaud. The trade centre at Chubwa
tea estate provides free training to
local youngsters to become tailors,
beauticians, artisans, plumbers and
lab technicians. At the Damdim tea
estate, the vocational training centre
trains differently-abled people in
making varieties of stationery (the
finished products made by them
are bought by the estates). And the
technical college in Rotwa trains
youngsters in different trades.
The Referral Hospital and
Research Centre, a 75-bed, multispeciality hospital, set up at Chubwa
tea estate by Tata Tea in 1994, works
on a nonprofit basis, offering free
treatment to all APPL employees and
at minimal cost to the general public.
In early 2013 APPL collaborated
with Operation Smile to facilitate
free cleft lip surgeries for 73
underprivileged kids.
Under the ‘land to lab’
initiative, most tea estates help
local villagers by supplying highyield seeds for cash crops, winter
vegetables and poultry. The initiative
was started in 1990 by Tata Tea with
technical assistance from the Assam
Agriculture University.
The serene green vastness of
APPL has seen history unfold and
change is part of the natural scheme
of things. APPL’s tea estates are places
where old ways and new march
together in harmony. ¨
—Shubha Madhukar
business
The Watawala way
Agronomic best practices, mechanisation and
diversity of crop portfolio are working more than
well for Watawala Plantation in Sri Lanka
L
ocated barely 750km north of
the equator, Sri Lanka faces
the full impact of inclement
tropical weather. Every year
its plantations are at the mercy of the
rain gods — when the skies open up
the torrential rainfall has the power
to destroy crops; when clouds are
scarce the soil and plants dry up.
“Just a few days ago there
was 10 inches of rainfall recorded
in just one hour and one of our
factories were six feet under water,”
says Dan Seevaratnam, director
and chief executive of Watawala
Plantation (WPL). “The threat
from unpredictable weather poses a
constant danger.”
WPL, one of the largest
plantation companies in Sri Lanka,
is a joint venture involving Sunshine
Holdings, a leading Lankan business
group, and Tata Global Beverages,
which has a 49 percent stake in
Estate Management Services, the
parent company of WPL.
WPL manages more than
12,000 hectares of tea, rubber and
oil palm plantations in the island
nation. These three crops account
for two-thirds of the company’s
plantations, with the balance
comprising timber, fuel wood, spices
and conservation forestry.
Wealth from the soil
Although unpredictable weather
is inevitable, WPL is one of those
plantation companies that has
managed to overcome challenges
through the use of modern
technology and innovative practices.
“Fiscal 2012-13 was a bad year
for the plantation sector in Sri
Lanka because of the vagaries of
the weather,” says Dr Seevaratnam.
“In spite of this we recorded an 8
percent increase in yield, the highest
in Sri Lanka. This was due to our
excellent agronomic practices.” The
year (2012-13) was also exceptional
in terms of yields of tea and oil palm.
Dr Seevaratnam attributes the
improved performance to simple
measures that were undertaken by
the company, such as ensuring water
retention, planting on contours and
establishing cover crops. Cover crops
protect the topsoil from erosion
caused by heavy rains and also help
conserve soil moisture during dry
weather. WPL has adopted other
agronomic best practices, too.
“When there was a drought
and other estates were drying up, we
fared well because of measures such
as trenching, draining and forking,
which enhance the soil’s water
retention capacity,” explains
Dr Seevaratnam, “and when the rain
came down in buckets, our drains —
which run deep — were able to lock
July 2013
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Tata Review
19
business
Undulating mountain slopes carpeted with the green of tea bushes
the water.” The plantation company
has also initiated soil management
practices such as recycling of pruned
stalks and other farm waste for
compost.
The impact of such practices is
clear. According to Dr Seevaratnam,
WPL’s plantations are “head and
shoulders above the rest of the
industry in terms of productivity,
yields and profits.”
While tea accounts for 70
percent of WPL’s top line, its share
in the company’s profit is just 25
percent. It’s oil palm that contributes
nearly 70 percent of the bottom line.
In 2012-13 both these crops propped
up the company’s profits, although
rubber, another of its products,
slackened in demand.
high on exports
While most of the oil palm and
rubber that is produced at WPL’s
plantations is sold in the domestic
market, 99 percent of the tea is
exported through auctions in
Colombo. The low-grown, largeleaf teas — which are thick and
strong — are much sought after
in the Middle East, while high-
20 Tata Review
n
July 2013
grown, light liquoring, quality tea
is shipped to Europe and other
discerning markets.
WPL also has its own brand of
tea, Zesta, launched about 10 years
ago. “We are today the No 2 brand
in Sri Lanka,” says Dr Seevaratnam.
“The No 1 brand has been around
for 80 years, and we aim to be in the
top slot very soon.”
Plantations are a labourintensive business and one of the
significant challenges to profitability
is the upward trend in wages.
“Unfortunately, wage fixation is not
tied to productivity, but is a political
decision,” says Dr Seevaratnam. “We
have to work hard to contain costs
and improve worker productivity.”
Sri Lankan labour costs are at least
30 percent higher than in India and
Kenya, the other two leading teagrowing countries, he points out.
Tea estates require four
workers per hectare, whereas oil
palms are easier to manage, with
just one worker for 10 hectares.
WPL has 12,000 people on its
rolls and wage increases can have
a devastating impact on profits.
But it is not just high wages that
hurt the industry. The restoration
of peace in Sri Lanka has thrown
up opportunities for employment
in many parts of the country, and
plantation workers — especially the
younger ones — are moving out to
new sectors.
WPL, which has been a
pioneer in Sri Lanka in introducing
mechanised plucking across
tea plantations, is increasingly
looking at mechanisation as the
route to lower costs and increase
productivity. Now the plantations
use mechanical pruners with
motorised blades that not only slash
the vegetation but also cut costs
by half. Backhoes and bulldozers
have helped dispense with manual
digging, forking and levelling.
a fine facility
The company has invested in a
showpiece factory at Waltrim, a
three-and-a-half hour drive from
Colombo. It is one of the most
modern tea processing facilities
in the world, designed to optimise
natural light and breeze and reduce
the need for daytime lighting and
fans. The automated processing
facility features a conveyor system
that takes tea leaves in the raw and
churns out black tea at the other
end. “It is not rocket science but
we have built an ergonomically
advanced factory,” explains
Dr Seevaratnam. “There are very
few workers in the factory and we
save a lot on energy.”
This Sri Lankan plantation
business has clearly demonstrated
the value in adopting new advances
in agriculture practices. Whether
the rain gods smile or not, WPL is
definitely not under the weather. ¨
—Nithin Rao
business
Where coffee is king
The bean is a big thing in the verdant mountain
district of Kodagu, or Coorg, an island of sweetsmelling tranquillity that sits high and majestic in the
ecologically sensitive Western Ghats of India
T
he mountain district of
Kodagu, or Coorg, in
Karnataka in South India,
has long been one of the
main coffee-growing regions of
India. Some of the oldest coffee
estates in the country can be found
here, with plantations dating back to
the mid-19th century, when British
planters went about setting up these
sprawling estates. Often described
as the Scotland of India, this is the
home of Tata Coffee, a subsidiary of
Tata Global Beverages.
Tata Coffee has 19 coffee estates
and 13 of these are in Coorg, the
place where the company has its
registered office, in Pollibetta, as
also its Kushalnagar curing facility.
Coorg’s rolling hills, salubrious
climes, fertile earth and cloudy skies,
with the right amount of rainfall and
sunshine, create a perfect blend of
conditions to grow fine coffees. Here,
under the canopy of towering trees,
Tata Coffee’s plantations produce
some of the finest varieties of
Arabica and Robusta coffees.
The Bean Business
Tata Coffee produces about 9,000
tonnes of coffee — 30 percent
Arabica and 70 percent Robusta
— from its plantations. Of this
the Coorg plantations contribute
2,500 tonnes of Arabica and 6,000
tonnes of Robusta. “50 percent of
the coffee we produce is exported as
commodity while the instant coffee
business accounts for the remaining
50 percent,” says Tata Coffee’s
managing director, Hameed Huq.
The company’s speciality coffees find
their way to such discerning and
far-off markets as the United States,
Japan and Germany.
Tata Coffee’s speciality coffees
— a significant number being from
the Coorg plantations — have
consistently won domestic and
international awards, an achievement
Mr Huq attributes to the great care
that goes into every bit of the making
of the coffees, from planting and
picking to drying and processing.
“Since we are not in the branded
business, where it is easier to create
a differentiation, we have always
focused on quality as a differentiator,”
says Mr Huq.
“We produce good coffee that
has high traceability,” adds MA
Sampath, the senior general manager
for plantations at Tata Coffee. “We
July 2013
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Tata Review
21
business
Ripe coffee berries from the plantations are carefully picked, sun-dried and de-pulped before being ground to powder
can trace the coffee in a cup to
the estate it has come from. We
have around 757 blocks across our
plantations and all our coffee can be
traced back to their estates.”
Grown in shade, Coorg coffees
have a distinct aroma and character,
imbibing the flavours from the
surroundings. Despite the higher
costs involved, the plantations
undertake multiple rounds of
picking to ensure that only fully ripe
berries are plucked. This lends an
even tone, taste and quality to the
coffee. The pulping and fermentation
process are equally meticulous.
The coffees are entirely sun-dried,
another unique touch that goes into
making the perfect cup.
All the coffee produced at its
plantations is cured at the company’s
state-of-the-art Kushalnagar
works facility in Coorg, the largest
such plant in the country, with an
installed capacity of 20,000mt.
“This unit is the final interface
with global customers; products
22 Tata Review
n
July 2013
from the plantation division are
processed and certified at our
modern laboratory to standards that
are acceptable to our buyers around
the world,” explains SM Madaiah,
general manager, curing division.
The first curing unit in India to
receive the ISO 9002 certification,
the facility processes around 9,000
tonnes of coffee (some of the excess
capacity is used to process coffee for
independent planters in the region).
Tata Coffee has also shifted
its roasting and grinding unit from
Bengaluru to Kushalnagar. With an
installed capacity of 1,200mt per
annum, the unit produces Mr Bean,
a coffee-chicory blend that is hugely
popular in south India, and the 100
percent pure filter coffee, Coorg Pure.
The minT in pepper
In recent years pepper has become
an important piece of Tata Coffee’s
business sustainability efforts.
Grown in shade — amply available
in the plantations — pepper is an
extremely remunerative crop, given
its high margins, and has proved to
be a great de-risking initiative for
the company. “Pepper used to be
a minor crop for us not long ago;
today it provides a significant share
of our turnover,” says Mr Huq. “It
also helps us guard against the ups
and downs in the coffee business.
And we are the largest producer of
pepper in India.”
Tata Coffee’s plantations across
locations cumulatively produce
1,200mt of pepper, most of it from
the South Coorg plantations, all
of which is sent to a dedicated
pepper processing unit set up at
Kushalnagar, where it is processed,
graded and packaged. Thirty
percent of the pepper is converted
into premium white, which fetches
much higher margins.
If their location in the Western
Ghats gives Tata Coffee’s plantations
a natural advantage, it also comes
with a huge responsibility. “Early
on we took a decision to make this
business
A star in the making
No visit to the Kushalnagar works is complete without a look
at the spanking new roasting and packaging unit that supplies
coffee for Starbucks stores in India. Starbucks entered India last
year through a joint venture with Tata Global Beverages. As part
of the Starbucks coffee sourcing and roasting agreement with
Tata Coffee, an imported roastery, dedicated to the Starbucks
business, has been set up at Kushalnagar in Karnataka.
Spread across 8,258 sq ft with an installed capacity of 375
metric tonnes, the unit roasts and packages high-value Arabica
beans for the Starbucks cafés that are being rolled out across
India. “We have been supplying coffee to Starbucks since
2004/05, and now as part of a sourcing agreement; this plant
takes that relationship forward,” says Tata Coffee managing
director Hameed Huq, adding that the venture has yielded
tremendous learning for Tata Coffee, given the American
company’s stringent quality and process requirements.
business sustainable, not just in
terms of profitability, but also in
preserving the surroundings,” says
Mr Huq. “We decided that we would
do everything required to leave the
Western Ghats in a better condition
than we found them in.”
The plantations adopt
sustainable practices in irrigation,
water management, pest control
and so on. Since water will be the
biggest challenge in the years to
come, the plantations practise
extensive rainwater harvesting;
120 large irrigation tanks have
been built across the estates to
collect rainwater, which is used for
blossom irrigation and processing.
“The tanks ensure that we do not
use any groundwater for irrigation,”
says Mr Sampath. “We also
discourage the digging of borewells
in our plantations as they deplete
the groundwater rapidly; instead,
we build ring wells.”
Rather than indiscriminately
using pesticides and fungicides for
pest and disease management, the
plantations follow an integrated
pest management approach that
involves just one or two need-based
sprays. Waste is turned into wealth
as coffee fruit skin and pulp is used
to make compost: 7,000 metric
tonnes of compost is made this way
every year.
Bees in The mix
Of late, there has also been much
buzz around the bee-keeping
projects undertaken at some of
the Coorg plantations of Tata
Coffee. The plantations have been
mandated to set up bee hives
to increase the dwindling bee
population and bee activity, which,
in turn, will serve the purpose of
cross pollination, especially for
the Robusta.
Sustainable practices have
their benefits, including important
certifications: among these, the Utz
Kapeh certification (literally, good
coffee), which validates that coffees
from the Tata Coffee plantations
have not been exposed to harmful
chemicals and processes, and the
Rainforest Alliance certification,
which validates the company’s
sourcing and growing practices. Tata
Coffee was also the first plantation
company in the world to get SA 8000
certification, which recognises a
company’s fair employment practices.
The main deal at Coorg, though,
remains the coffee, tempting the
palate, soothing the conscience and
pleasing the soul. ¨
—Sangeeta Menon
July 2013
n
Tata Review
23
BUSINESS
Tranquil trails
Tata Coffee’s Plantation Trails is a unique holiday proposition,
combining the grace and grandeur of a bygone era with
contemporary comforts and warm service. History and heritage
blend gently here with the fragrance of fresh coffee and the cool
mountain air to give visitors an unforgettable experience.
By Sangeeta Menon
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July 2013
business
he sprawling plantations
of Tata Coffee in Coorg
and Chikmagalur in Karnataka in
South India hold a delectable
little secret: a handful of
charming colonial bungalows
and cottages that offer a tranquil
getaway to those looking for a
refreshing break from stressful
urban lives and predictable,
impersonal hotel stays.
T
Built by their original
inhabitants, the plantation
managers, some of these
bungalows date back to over
a hundred years and come
with all the happy trappings
of a lifestyle of luxury and
indulgence: spacious rooms,
large windows, pretty verandahs
and stunning views all around.
July 2013
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BUSINESS
There’s more to complete the
picture: attentive butlers, expert
cooks, delicate chinaware,
candles and chandeliers,
fireplaces, old-world reclining
chairs that invite you to sink into
them, and inner courtyards that
tempt you to lie back and gaze
at the stars.
Plantation Trails currently offers
seven colonial-style bungalows
with 31 well-appointed
rooms, with more bungalows
currently under renovation
and restoration. Choose your
experience from a bunch of
options sporting charming
names: Arabidacool Bungalow
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business
(Chikmagalur), Cottabetta
Bungalow, Glenlorna Bungalow,
Surgi Bungalow, Thaneerhulla
Bungalow and Cottage, and
Woshully Bungalow (all in
Coorg). All the properties
seek to recreate the authentic
plantation experience, including
a luxurious stay in a planter’s
bungalow and a coffee or tea
plantation visit where one gets
a bean-to-cup journey in the
true sense.
to lounge about the bungalow
or tee off at the nine-hole golf
course a short drive away.
Sun-kissed, rain-drenched or
covered in mist, whichever way
you like your holiday, Plantation
Trails offers a holiday experience
to suit your senses. ¨
Photographs: Tata Coffee
Nature lovers can take a lazy
walk down the meandering
plantation paths, occasionally
stopping to smell the flowers,
bask in the cool shade of the
towering trees or listen to the
endless chirping of the birds.
A Plantation Trails naturalist
will take you on a tour of the
plantation — and guide you
safely back to your bungalow
should you come across an
elephant that has strayed from
its herd!
Plantation Trails is an excellent
base to explore the tourist spots
of Coorg, such as the Dubare
elephant camp (right, bottom),
the Buddhist monastery (right,
middle) in Kushalnagar, the
attractions in Madikeri and so
on. Else, you can simply choose
July 2013
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business
‘Our focus is service,
service and service’
In the nine years of its
existence, Tata Sky has built a
solid reputation for itself and
captured a substantial market
share on the strength of its
innovative products, best-inclass services and ‘choice,
control and convenience’ it
offers viewers. With the next
phase of digitisation slated to
happen by the end of the year,
Tata Sky’s chief executive,
28 Tata Review
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July 2013
Harit Nagpal, tells Debjani
Ray how the company plans to
capture more hearts and minds
across India.
How has the direct-to-home (DTH)
business changed in the past few
years and what has this meant for
Tata Sky?
The segment is coming into its own with the
long overdue regulatory support for digitisation.
Not only will this bring greater transparency
to the business — in terms of establishing the
exact subscriber base and, thereby, various
financials such as dues to broadcasters and
business
taxes to the government — it is likely to attract
more investment to this growing segment. The
government has helped boost this transparent
process by making digitisation mandatory. This
is being implemented in phases thus far and its
success so far has been patchy. However, the
mandate itself is important and indicative of
intent. Digitisation is to be completed through
the country by end-2014.
DTH platforms have been digitising for
about six years and have captured about
28 percent of the pay TV market already. At
Tata Sky the change has been in the extent of
our reach. Today Tata Sky is present in almost
every town with a 10,000-plus population. We
have about eight million subscribers, and this
is counting only active subscribers, people who
paid to watch Tata Sky channels the previous
night. We also have the best retention and our
‘average revenue per user’ is among the highest
because of our differentiation in services.
What is the key feature that Tata Sky
offers its customers?
Service really is our key core differentiator.
Pricing is not a sustainable competitive
advantage in a competitive market, and
since channels operating in India are not
permitted to strike exclusive deals, there is no
differentiation possible in terms of content.
Thus, the only differentiation that is
sustainable is service quality. For Tata Sky
distribution means having a sales presence as
well as a trained service presence at the point
of sale. Putting these systems in place has taken
time, but we have achieved it over the past few
years. In addition to service quality there are
product differentiations.
Initially differentiation was mainly about
the digital vs the analogue-cable picture and
sound quality. Then it became about innovative
products such as our ‘active’ services in
cooking, knowledge, music, etc. We became the
first to launch the digital video recorder, with
which shows can be recorded and watched at
one’s convenience. We were the first to launch
hi-definition television and on-demand videos.
Apart from our differentiation as a solid,
enduring brand backed by best-in-class service,
we have constantly endeavoured to excite the
customer with new and innovative products.
Each product innovation takes one-two years to
reach the customer, which is why we work on a
road map for the next one-two years. And there
are many new products in the pipeline.
Tata Sky’s ‘active’ services are a
huge hit. What helps you decide
which service to launch?
Listening to our customers helps us decide the
services we introduce. We recently launched a
Vedic maths service because we found that many
parents struggle to teach children maths. So we
tied up with a Vedic maths institute that provides
the content.
The Tata Sky mobile app, launched recently,
enables the customer to use mobile phones as a
universal remote for the TV. Our spoken English
service, primarily launched for homemakers, has
been a huge enabler. Active darshan, also very
popular, was launched because we found that
many families have elderly people who like to
visit religious places. So we decided to bring the
religious places to them.
What led to the launch of the ‘do it
yourself’ video-on-demand service?
YouTube has been a huge hit with the youth
and they use it to figure out things they can do
by themselves. Now, for various things — like
learning how to play the guitar — our subscribers
can look up Tata Sky’s library of videos. I bought
a puzzle the other day and found a 30-second
video teaching me how to solve it.
What about 3D?
We can carry 3D, but there are limitations in
The challenge is to develop products
for every segment of the population, the
different regions, languages, etc. Apart from
having to cater to customers from every
segment, the challenge is to win their loyalty.
July 2013
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business
Tata Sky’s ‘active’ range of interactive services has something for every member of the family
the availability of content and bandwidth. Also,
people have to wear special glasses to watch
the programme; so while normal TV can stop
conversations, 3D can stop people from even
seeing one another.
How do you win over the customer?
Service requires a mindset, technology and
local infrastructure; none of these is easy to put
in place. Dealers recommend Tata Sky because
the product hardly gets any complaints from
the customer.
When there is a complaint it is handled by
trained Tata Sky staff who explain the solution
to the customer on the phone itself; not often
do we need to schedule a visit to the customer’s
site. And we promise a definite turnaround
time for the solution.
We learn from every complaint and take
the training up a notch accordingly. Our
products are subject to rigorous testing and
our focus is completely on providing service,
service and service.
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What are the challenges the Indian
market poses?
India is a continent in itself. The challenge is
to develop products for every segment of the
population, the different regions, languages, etc.
Apart from having to cater to customers from
every segment, the challenge is to win their
loyalty.
Why is it that Tata Sky does not
have as much penetration in some
markets as others?
That is by choice. There are 19 official
languages in India and several dialects, and
there isn’t enough bandwidth. The choice
was: should we make everybody marginally
unhappy or make most people happy? So we
took a call and decided to make most — not all
— people happy.
However, we have recently got additional
bandwidth and are using this to boost content in
under-served markets such as Tamil Nadu
and Kerala. ¨
business
Customer care
in the cloud
Delivering unique and fulfilling experiences to
its customers — that’s the objective for Tata
Business Support Services as it banks on newage digital tools to mine and manage information
A
run Sharma is a business
executive who travels
extensively on work.
Unfortunately, every time
he heads for the Mumbai airport he
loses cellphone connectivity. For
Mr Sharma this is a multiple
whammy: he gets billed for a full
minute even though his call dropped
within a few seconds; he is irritated
with the poor telecom service, there
are frequent disruptions in his
conversations with key clients, and
his stress and anxiety levels go up.
The telecom service provider,
receiving his complaints via the call
centre, resolves the technological
issues to ensure that signal quality
improves. But the engagement does
not end there. The service provider
also analyses Mr Sharma’s call
records and social media profile
to determine, for instance, that he
generally does not make many calls
after 8pm and that he is a cricket fan.
Two days later, an executive
from the telecom firm telephones
Mr Sharma around 8pm to apologise
and assure him that his complaints
have been resolved. The executive
also gifts Mr Sharma complementary
tickets for the next big cricket match
in Mumbai. Mr Sharma is obviously
delighted; he becomes a long-term
customer and also persuades several
friends to shift their business to the
savvy telecom service provider.
The case above is a fictitious
example, but the day is not far off
when service providers can offer
unusual user engagements like
these to customers. Says Sarajit
Jha, chief operating officer (and
holding interim charge as managing
director), Tata Business Support
Services (TBSS): “Today it may
look fantastic, but this kind of an
experience will be par for the course
in five years. It is easy to bring
all customer-related information
together in a virtual customer
relationship management model.”
Geared up to Grow
Hyderabad-headquartered TBSS,
a wholly-owned subsidiary of Tata
Sons, is what in industry parlance
is called a third-party-outsourced
customer service provider. It is one
of those companies that has geared
up to meet the challenges that Indian
and international service providers
will face in the coming years.
July 2013
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business
“We want to specialise in
customer experience and marketing
execution,” says Mr Jha. “It is
relatively easy for companies to
replicate products and services;
the differentiation will, then, be
in customer experience. What
matters most to the customer is the
experience he or she gets. And that
is what they will talk about, and
increasingly so on social media.”
TBSS is positioning itself in that
crucial space of providing not just
customer care, but being a customer
contact point and ensuring customer
experience. One of the areas that
TBSS is looking at is the evolving
new IT architecture called SMAC:
Rural setting scores on stability
Costs and high attrition rates in urban India have encouraged
many BPO companies, including Tata Business Support
Services (TBSS), to shift operations to rural areas. “We ensure
that three things — convenience, safety and hygiene — are not
compromised,” explains TBSS chief Sarajit Jha. “But for the rest
we innovate.” Thus, a rural BPO may not have air conditioning,
but will have infrastructure for back-up power supply.
Typically, rural BPOs do not handle international voicerelated work because spoken English is not a strong point.
The centres are good at repetitive tasks. “We have become
the Adam Smith of the modern-day world in terms of division
of labour,” says Mr Jha. “Our expertise is in taking a task and
breaking it down into simple components, and giving the
components to different people.”
The relatively low attrition rate is a big plus point in
favour of rural BPOs. According to Mr Jha, rural employees
— especially women from disadvantaged communities —
are less likely to shift jobs and tend to stick to the job that
has given them self-respect and identity in society. “There
are components of loyalty, comfort, ego and emotions and
they have got amalgamated at some level,” says Mr Jha,
explaining the success of the rural BPO.
32 Tata Review
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social, mobile, analytics and cloud,
or big data.
“These are the main drivers and
they encompass the entire milieu of
how to connect with the customer.
And unless you have a strategy
for this, you will get smacked and
badly,” says Mr Jha, who says that a
fundamental driver of change in the
way companies market themselves is
digitalisation of society.
More companies are today
conscious about SMAC, but are
not able to get their act right. For
example, a telecom service provider
has three ‘buckets’ of data — sourced
from billing, network and the call
centre — but this data is not collated
in a proper manner.
flawed processes
Telecom firms are aware that if a
post-paid customer dials a call centre
10 times with complaints, there is a
50 percent chance that he will switch
over to another service provider.
And that this probability increases
to 90 percent once the number
of complaints touches 17. Yet the
processes for customer engagement
do not take this data into account.
Another aspect is the low
comfort level that many companies
have with new technologies such
as cloud computing, in spite of the
fact that social media — Google+,
Facebook, LinkedIn, etc — are
increasingly at home in the cloud.
TBSS, which was set up in
May 2004, does not offer SMAC
to its customers, but has started
engaging with its clients along with
technology partners in a bid to roll
out more services for customer
experience. About 90 percent of its
business is in voice.
TBSS offers its clients the
facility of employees being able
business
TBSS story
Headquartered in
Hyderabad, India.
Eighteen delivery
centres in 15 locations;
able to accommodate
nearly 6,500 seats.
The recreation room at one of the Tata Business Support Services centres
to answer customer queries in 17
different languages, and all through
a single, all-India call centre number.
It also offers services in seven foreign
languages out of its India centres.
TBSS is on a growth path. It has
43 clients, 11 of whom (including
three international clients) were
acquired over the past six months.
The Tata group accounts for 85
percent of its customer base and 70
percent of its profits. “We want to
increase our footprint within the
Tata group, and also increase our
non-Tata business, which is more
profitable for us,” says Mr Jha.
With revenues of `3.7 billion
(about $67 million) in FY 2012-13,
TBSS aims to grow at a phenomenal
rate of 40 to 45 percent annually (as
against an average industry growth
rate of 15 percent) to touch the `25
billion-mark in about five years.
Currently ranked 23rd, the vision
is to be among the fastest growing
BPOs in India and among the top 10
operating out of the country.
More importantly, TBSS is one
of the few domestic BPOs in India
that is making money. “The market
is getting very challenging, but we
hope to hold our bottom-line growth
consistently,” says Mr Jha.
fillinG those seats
TBSS employs 11,000 people
across 18 delivery centres. The
BPO business is people-intensive,
and one of the biggest challenges is
the extraordinarily high employee
attrition rate(as much as 8-12 percent
a month). TBSS is tackling this by
increasing its seats in non-urban
centres. “We are probably India’s
largest rural BPO, with 2,000 people
across seven centres,” says Mr Jha.
The company’s rural centres — in
Khopoli (Maharashtra), Ethakota
(Andhra Pradesh) and Munnar
(Kerala) — have 300 people each and
what matters most to the customer
is the experience he or she gets. and
that is what they will talk about, and
increasingly so on social media.
Inbound and outbound
services in English,
German, French
and Spanish for
international clients.
Pan-India coverage and
services in 14 regional
Indian languages for
domestic clients.
Revenues of `3.7 billion
(FY 2012-13)
TBSS is building the world’s largest
rural BPO in Chhindwara in Madhya
Pradesh, a 500-seater that will be
scaled up to 1,000 seats in due course.
One of the company’s strong
points is its affirmative action track
record. As of April 2013, about 18
percent of its workforce comprise
candidates from disadvantaged
communities (primarily scheduled
castes and scheduled tribes). Mr Jha
says the company has set ambitious
goals in this direction, with a target
of 80 percent of employees from
the SWAM (single woman, Adivasi,
Muslim) segment.
In many ways, TBSS exemplifies
the unique path that Indian BPOs
need to walk — with its head in the
cloud, its heart with the customer
and its feet in several places across
India’s heartland. ¨
Sarajit Jha, chief operating officer, Tata Business Support Services
— Nithin Rao
July 2013
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business
Wellness in water
Mount Everest Mineral Water
(MEMW) is in the business of
healthy hydration. Its brand,
Himalayan, already distinct
from the crowd of regular
bottled water options, offers
natural mineral water sourced
from an aquifer located about
400 feet underground in the
Shivalik Hills of the lower
Himalayas, the creation of
a two-decade-long natural
process of monsoon waters
seeping through various
ground levels and acting as
34 Tata Review
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natural filters. Himalayan is
India’s only internationally
accepted natural mineral
water brand.
MEMW, a company in
which Tata Global Beverages
has a 51 percent stake, is now
taking the business of water
deeper into the arena of health.
Talking to Suchita Vemuri,
MEMW managing director
Pradeep Poddar explains how
customer needs have evolved
and why water is best suited to
provide wellness.
business
There has been talk for some time
about MEMW’s plans to expand the
market for Himalayan. How far have
these plans matured?
We’ve recently tied up with Starbucks in India
and beyond, particularly in Singapore, to serve
Himalayan at its outlets. While Starbucks is a
recent entrant in India, with just 15 outlets, it
has 70 outlets in Singapore. We plan to leverage
the brand in other countries progressively,
through Starbucks outlets as well as other
tie-ups. Towards this end we’ve been working
on product and packaging design to target
international markets. For example, we have
recently introduced carbonated and flavoured
varieties of Himalayan: Sparkling Himalayan
and Himalayan distinguished with apple, peach
and strawberry flavours. These, we expect, will
enhance our appeal in international markets.
At the same time, we’ve retained recall of
the origins of Himalayan by choosing flavours
of fruits that are native to the region from where
we source our water. These flavours also go
well with the richness of our natural mineral
water. Himalayan is a ‘light’ mineral water, with
‘total dissolved solids’ measuring 300-330 and
containing less than 35 minerals, which makes the
flavouring easier.
There’s a lot of talk about MEMW’s
new products. What are these?
Water is a ‘do good’ product by itself … it’s
probably also the most consumed product
worldwide. But, in addition, water lends itself
most easily as a carrier of ‘wellness’. Water is not
just H2O; it’s H2O plus natural minerals absorbed
from the soil. While most of the potable and
bottled water that we have today is depleted of
minerals in the course of the treatment that makes
it potable, Himalayan natural mineral water —
because it is sourced from a natural aquifer in
the Himalayan foothills — retains the richness of
natural minerals.
Now our plans are to actually enhance
this richness. We plan to add more minerals
— micronutrients — and make water a carrier
of greater ‘wellness’. Thus, it’s not just water; it’s
water-plus.
What is the need for this product?
Micronutrient deficiency is one of the biggest
health challenges in India and most other
countries as well, maybe for different reasons.
What we realised is that water is the best, most
effective carrier for micronutrients. Water is
highly ‘bio available’: salts and minerals are most
easily soluble in water and they retain stability.
Moreover, they are most easily absorbed by the
human body through water.
Our intent has been to create alternate
beverages underpinned by ‘wellness’. For the
last four years we’ve been engaged in high-end
research in partnership with over a dozen expert
bodies, among them worldwide research firms
and institutions.
The priority in this has been to look through
the eye of the consumer and identify points of
confluence between product development and
affordability, starting with categories at the bottom
of the pyramid. We asked ourselves how we could
create a neutral product — water as water, but
with micronutrients. We identified the challenge
of micronutrient deficiency and set out to develop
ways to use water as a carrier for micronutrients.
We have introduced zinc-enhanced mineral
water as Tata Water Plus in South India a year
ago and have had excellent feedback. This year
we plan to launch bottled water enhanced with
chromium and boron and separate products, each
of which has added calcium, iron and electrolytes.
The technology has been patented in the Tata
name worldwide.
What other product innovations are
under way at MEMW?
We are continuing to research ways to deliver
micronutrients more efficiently. MEMW bought
a California company called Rising Beverages
in 2010. With this we have acquired the capdosing technology, which allows the user to
add inputs such as flavours and nutrients to the
water at the time of drinking. This technology
helps to keep the flavours and nutrients fresh and
stable. Rising Beverages, which has been using
cap-dosing technology to sell vitamin-enriched
as well as flavoured beverages under the brand
name ‘ACTIvATE’, has had enormous success in
July 2013
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business
The MEMW stable has a variety of water on offer: still, carbonated, flavoured and fortified
California. We plan to start marketing it across
the United States, taking it first to the New York
market, where it is currently being launched.
The cap-dosing system is one way, but we
are also focused on research into nanotechnology
to more efficaciously deliver the ‘wellness’
elements. Even the cap-dosing system would
work better with nanotechnology. We have tied
up with a number of similar frontier technology
research companies to deliver various ‘wellness’
products channelled through life’s elixir, pure
mineral water. For example, not only can we
use the cap-dosing technology to offer vitaminenriched beverages, we could use it for other
enhancements as well. We have already designed
products that bring pharmaceutical knowledge
to beverages; called Tata Lyfe, these will address
‘wellness’ needs for lifestyle-led health conditions
linked to the metabolic syndrome, such as
obesity, hypertension, diabetes and cardiovascular
conditions. These would be great tasting while
delivering fantastic functionality.
On another tack, we are also working on
delivering certain ayurvedic preparations on our
water platform. We’ve entered into a partnership
with a Kerala firm for this and have already
applied for patents.
How affordable are these products?
And how do you educate people
who may see these products as ‘just
water’?
We have been engaged in educating people about
the speciality of natural mineral water over other
bottled and non-bottled waters. Himalayan has
been accepted as a ‘lifestyle’ product, a lifestyle
that embraces the goodness of nature over
chemically treated products.
Now we are taking this forward to explain
how minerals, which are micronutrients essential
36 Tata Review
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July 2013
for physical and mental development, are best
absorbed by our bodies when delivered dissolved
in water. In India we already have the tradition of
drinking water stored in copper pots overnight, so
we have some basic knowledge of the importance
of absorbing minerals and of water as a carrier of
such minerals. We will build on that knowledge
and introduce more complex information.
We also aim to address the ‘demonisation’
of ill health that is so common worldwide. We
aim to show how certain lifestyle choices in food
and drink can actually mitigate the ill effects of
lifestyles that are sedentary, frenetic, stressful
and so on. Our marketing will also emphasise
‘goodness’ rather than disease, removing the fear
surrounding ill health. Above all, the messaging
with the Tata Water Plus and Tata Lyfe products
has been and will continue to be that ‘because we
are human, life is imperfect’ … but we are there
with you, as a friend rather than an advisor or
someone who pontificates.
What about regulatory requirements?
Where do you stand with regard to
the mandated standards?
In India we are regulated in the foods and
beverages category and have to meet mandated
standards for our processes, ingredients, etc.
In the United States the regulation includes
a category of ingredients listed as ‘generally
regarded as safe’; we have to meet these standards.
We do not claim that our products can
replace pharmaceutical products. We do claim,
however, that our products can improve wellness,
whether it is through introducing micronutrients
or pharmaceutical knowledge to beverages so that
these can improve certain health conditions. With
regulatory changes underway in India, we could
list some of our products as dietary supplements.
It’s a new and exciting space. ¨
COVER STORY
The page turns for
a company recast
A new strategy, a fresh approach and the experience of long
years in a globally dispersed and multi-hued business —
those are the attributes Tata International will be banking on
as it strives to achieve the objectives of a reconceptualised
vision of what it means to be an international trading and
distribution company in the modern age.
By Christabelle Noronha, Cynthia Rodrigues,
Gayatri Kamath and Nithin Rao
Tata International’s office in Chennai, India
July 2013
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Tata Review
37
COVER STORY
I
t’s a company with a unique business profile —
it makes millions of dollars worth of stylised
leather products and leather shoes and garments
for some of Europe’s leading fashion brands; it
markets stainless steel in Asia, module mounting
systems (solar) in India and SUVs in Africa; it buys
coal from Indonesia and pulses from Myanmar; it
has a stake in luxury hotels in Zambia and South
Africa; and it owns a design studio in Italy.
This is Tata International (TIL), set up in
1962 as the Tata group’s export arm and now a
$1.2-billion enterprise with a business presence
in 39 countries around the world. And it is
a company that is experiencing a new air of
expectancy, with a fresh sense of excitement in its
offices and factories. TIL had a turnover of `65.86
billion in 2012-13, coming on the back of a yearlong strategic planning exercise that concluded
recently. The company has redefined its mission
and set down a roadmap that will help it attain its
new vision — to be globally significant in each of
its chosen businesses by 2025.
The roadmap is in many ways a logical
extension of the path TIL has been treading. The
years of focus on exports and trading operations
in different parts of the world have made the
company a strong player in several areas: it is
India’s largest leather producer and exporter; it
is the ‘face and feet’ of the Tata group in Africa,
helping big Tata brands such as Tata Motors,
Tata Steel, Tata Communications, Indian Hotels
and Tata Consultancy Services establish their
base in the African sun; and it trades millions of
tonnes of steel and coal, among other metals and
minerals, annually.
These are the strengths that the company
will leverage as it tries to catapult itself to a
higher and faster growth trajectory and establish
its position as one of the world’s best trading
and distribution companies. Enabling this
... as a Tata executive you
can walk into any office.
People recognise that you are
committed to the continent.
Raman Dhawan, managing director, TAH
38 Tata Review
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July 2013
reinvention exercise are managing director Noel
N Tata and chairman B Muthuraman, who bring
their years of expertise in running customeroriented and globally dispersed organisations
into play as TIL focuses on tweaking its
organisational foundation.
Vertical growth
The transformation of TIL is based on a detailed
strategy exercise that created a best fit of the
company’s existing strengths and competencies
to opportunities in emerging markets. “Over
the last two years we have spent a lot of time in
redefining what TIL should aspire to and, more
importantly, having an agreed mandate within
the group,” says Mr Tata.
The strategic planning exercise looked at
leading trading companies, global opportunities,
business gaps in the group and at TIL’s own
businesses. “This exercise has led us to reorient
the company towards a global trading and
distribution company,” explains Mr Tata.
TIL has recast its business portfolio and
now operates in five verticals: leather and leather
products, distribution, metals trading, minerals
trading and new a business vertical, agricultural
trading. “I believe our goal can be to become
globally significant, by 2025, in each of our
chosen businesses,” adds Mr Tata.
Reinvention is not new for TIL. Historically
the company’s business profile has adapted
several times to stay in sync with government
economic policies and, correspondingly, the Tata
group’s business needs. Its oldest business, leather,
was set up as an export unit to bring in muchneeded foreign exchange. Today the business
— accounting for more than two-thirds of TIL’s
6,760-strong staff — is moving up the value
chain, from finished leather to branded footwear,
designer garments and high-end automotive
seating. Contributing about $188 million to
TIL’s top line, the leather business is looking to
add a new dimension to its profile by branding
and distributing its own products as well as in
partnerships with well-known international
brands such as Wolverine.
Another big legacy business for TIL is the
Africa distribution network, established under
COVER STORY
its subsidiary, Tata Africa Holdings (TAH). Over
the years TAH has given Tata Motors vehicles
extensive traction in as many as 12 African
countries through its network of distributorship,
dealership and workshops, and an assembly plant
in South Africa.
TAH is well-entrenched in this
multicultural geography it operates in. Tata
veteran Raman Dhawan, the subsidiary’s
managing director and the man who has led
the African expansion front for 35 years, recalls
how during his first 10 years in the continent
he would have to spend hours in government
offices waiting for appointments. “But today, as
a Tata executive you can walk into any office,” he
says. “People recognise that you are committed
to the continent,” he adds, summing up the
reputation of the Tata brand in the market.
This strength is now being leveraged for
growth by pushing new products through the
pipeline. TAH has signed up not only Jaguar
Land Rover as a distribution partner, but also
John Deere, thus adding agricultural and
construction vehicles to its auto portfolio. TAH
moved about $350 million worth of products
in 2012-13 and is also looking at expanding its
reach to cover the entire continent — starting
with central Africa, primarily Angola, Cameroon
and Equatorial Guinea — while consolidating
its businesses in geographies such as South East
Asia in order to become globally more relevant.
“We are well positioned as a company to be able
to take advantage of developments in Africa
We are well positioned ... to be able
to take advantage of developments
in Africa and provide the products
and technologies that are required.
Thamsanqa Mbele, managing director-designate TAH
and provide the products and technologies that
are required, whether in mining, agriculture
or infrastructure,” says Thamsanqa Mbele, the
managing director-designate of TAH.
Global village
TIL’s decades-long experience as an exporter
allows it to treat the world as its comfort zone.
It was the first company from India to set up
a representative office in Berlin (in divided
Germany), trade with Vietnam, start a business
in Burma, and set up enterprises in the erswhile
Yugoslavia and a host of other globally important
regions. Chairman Muthuraman emphasises the
potential in TIL’s network, especially in Africa
and South East Asia. The company, he says, “is
now building on this, creating its own businesses
and focusing on chosen verticals.”
The boundaries of TIL’s comfort zone are
being pushed further as the company consolidates
its three trading divisions: metals, minerals and
agricultural products. “The trading businesses
will be able to bank on TIL’s vast network, market
knowledge and relationships that have been
built up successfully through the company’s
Worldwide revenue of $1.2 billion for FY13
Vertical-wise turnover ($ million)
Consolidated sales breakup
15%
8%
29%
15%
34%
n
n
n
Leather and leather products
Distribution n Minerals
Metals n Strategic investments
450
400
350
300
250
200
150
100
50
0
408
349
292
243
170 188
164
178
93
25
Leather
and leather
products
Distribution
Minerals
n 2011-12 n
Metals
Strategic
investments
2012-13
July 2013
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Tata Review
39
COVER STORY
We’ve tried to ‘dollarise’ the
balance sheet so that we ... to a
large extent are insulated from
dollar-rupee fluctuations.
Ajay Ponkshe, CFO and company secretary
early entry into emerging and growth markets,”
explains Janaki Chaudhry, head, strategy and
business development.
Of the three divisions, metals constitute the
biggest chunk of TIL’s turnover (approximately
$408 million last year). The business, run by a
team of about 60 traders, operates out of London
with regional offices in Hong Kong, Dubai,
Chicago and India. Steel is the big item here, with
TIL moving nearly a million tonnes of steel to
markets across the world, including the United
States, Russia, India and a few African countries.
Coal accounts for the heaviest bit of TIL’s
$93-million minerals business (TIL’s traders
will do about 3 million tonnes of coal trades
this year, with India and China being the main
consuming economies). The company’s fifth
and newest vertical is the fledgling agri-trading
business. TIL intends to tap into the evergrowing food import business centred in Asia
and Africa. Pulses, cereals and oilseeds will be
the staple in this business bouquet.
Trading is probably the oldest business
known to humankind and TIL intends to
stand out in this space by differentiating itself.
“Modern communications have brought
suppliers and customers closer together
and reduced the need for an intermediary,”
explains Mr Muthuraman. “In today’s world
an intermediary needs to add value to his
offerings to make a meaningful contribution
to customers. This is the direction that Tata
The challenge is to ensure that we
have a solid core — our values,
the way we do business, how we
measure and reward performance.
Manish Kumar, head, human resources
40 Tata Review
n
July 2013
International will take in the future, much like
Mitsubishi Corporation of Japan.”
Blueprint for change
To add value to the trading business, TIL intends
to make investments in getting its back-end right.
“It’s all about execution — putting people and
processes in place, making investments where
they are required, adopting risk assessment
and control systems built around information
technology and, most importantly, building the
business in a profitable manner,” says Mr Tata.
New geographies for expansion have been
strategically finalised, mainly in South America,
the Middle East, South East Asia, China and
India. “If you draw a horizontal line across the
Mediterranean, everything south of that is where
economic activity is growing, where opportunities
exist and that really is going to be our focus over
the next decade,” says Mr Tata.
To fund its expansion moves, TIL has taken
a couple of significant steps. TIL Singapore
recently concluded a S$50-million (US$ 40.3)
bond issue, acquiring public funds for the first
time in the company’s history. Now on the anvil
is the divesting of businesses that do not fit in
with the company’s new growth strategy. The
business reinvention has meant changes in the
organisational structure as well. The five verticals
will run as decentralised business units, each with
its own structure and finance. Says Ajay Ponkshe,
TIL’s company secretary and chief financial officer,
“There’s a chief financial officer for every vertical
and this person will report to me functionally, and
administratively to the vertical head. Finance is
centralised but execution happens at locations. We
will give them the money and the limits within
which they must operate.”
Flows and ebbs
As TIL grows its trade volumes, money
management will become critical. Says
Mr Ponkshe, “We’ve tried to ‘dollarise’ the balance
sheet so that we earn and spend in dollars, and
to a large extent are insulated from dollar-rupee
fluctuations.We don’t make money out of currency
fluctuations. We are traders and our income
comes from the volumes we trade. Wherever
COVER STORY
possible, we try to pass on the risk, either to the
customer or the supplier. In both trading and
distribution, managing currency risk is critical.”
TIL’s money-management challenges are
complex, in that its cash flows are mostly nonIndia based; barely 10 percent of the company’s
turnover comes from the country. Even in leather,
which accounts for 15 percent of the business,
most of the revenues accrue from outside India,
places such as China and Europe. Which is why,
though TIL is headquartered in Mumbai, its
financial heart will henceforth beat in Singapore.
The new vision has brought with it new
human resources directions. “There are cultural
and locational challenges to overcome,” says
human resources head Manish Kumar. “The
businesses have different levels of maturity and
the competencies required are different. The
challenge is to ensure that we have a solid core
— our values, the way we do business, how we
measure and reward performance. These have
to be uniform, yet flexible enough to take care of
different market and customer realities.”
Dealing with five disparate businesses in
vastly different markets and customer bases
is going to be tough. The challenge, then, says
Mr Kumar, “is to know how much to integrate
and how much to let go. Each vertical is
independent, but we need to have a common
culture so that people can identify themselves
with TIL.” Many of the company’s human
resources and communication processes are
being revamped, and technology is coming
into play in a significant way. The managing
The trading businesses will be
able to bank on TIL’s vast network,
market knowledge and relationships
that have been built up successfully.
Janaki Chaudhry, head, strategy and business development
director’s town-hall addresses, for instance, are
now being webcast across all global locations.
The intranet is being reworked to promote
knowledge sharing, and campus recruitments
are on in India and Africa.
What hasn’t changed at TIL and never will
is the focus on maintaining and propagating
the values that Tata stands for — ethics,
community service and people. The leather
business, typically, employs, trains and
empowers significant numbers of people from
socio-economically poor communities, and
TIL’s affirmative action programmes in this
sphere are noteworthy. In Africa, TAH facilitates
higher education for merit students through
the Tata Africa Scholarship programme, which
covers disbursals of over 10 million rand across
hundreds of students in several universities.
In many ways TIL is a microcosm of
the Tata group, in the scope and depth of
its businesses, its geographic diversity and
the multicultural outlook of its people. The
aspiration is that TIL will be among the top
trading organisations of the world in the next
dozen years. In its restructured and refreshed
avatar, TIL is set to achieve that target. ¨
Tata International: Global locations
Offices
India, China, UK, Thailand,
Vietnam, Portugal, Ethiopia,
Myanmar, Poland, USA, Japan,
South Korea, Netherlands, Italy,
Indonesia, Spain, Russia, Taiwan
Subsidiaries
Hong Kong, UAE, Singapore, Brazil,
Cambodia, South Africa, Kenya,
Uganda, Zambia, Nigeria, Senegal,
Ghana, Mozambique, Tanzania,
Malawi, Zimbabwe, Cote d’Ivoire,
Namibia, Madagascar, Mauritius
July 2013
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Tata Review
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COVER STORY
Value is the watchword
A trading intermediary in today’s
world, says Tata International
(TIL) chairman B Muthuraman,
“needs to add value to its
offerings to make a meaningful
contribution to customers.”
The company has set itself up
to achieve that and a lot more
as it reframes its objectives
and remodels its operational
structure. Mr Muthuraman
speaks to Christabelle Noronha
about what TIL needs to do to
realise those objectives, and
how the company expects
42 Tata Review
n
July 2013
to benefit from the changed
perspective that informs the
course it is now taking.
TIL was set up at a time when most
Indian companies were inwardlooking and uninterested in overseas
businesses. With India and the world
having changed so much since those
days, how do you see the company
facing up to competition and
benefitting from its 50-plus years of
experience?
When TIL was set up in 1962 it was ahead of all
other Indian companies in promoting exports
and earning valuable foreign exchange for the
country. Over the years, especially following the
economic liberalisation of the early 1990s, its role
has changed. Over the last 50-odd years, TIL has
developed a good network and contacts around
COVER STORY
the world, especially in Africa and South East
Asia. It is now building on this, fashioning its
own businesses and focusing on chosen verticals.
Do you think TIL can be an Indian
version of sogo shosha, the large
general trading conglomerates of
Japan that dominate worldwide
trading in products and raw
materials?
Sogo shosha has been a successful business
model in Japan. But over time pure trading,
which originally defined sogo shosha, has given
way to trading with value addition and even
beyond this. The Japanese trading companies
that were originally based on the sogo shosha
model are now into owning various parts of the
value chain. This helps them create value-added
trading. They have also got into distribution and,
in some cases, manufacturing.
Modern communications have brought
suppliers and customers closer together,
reducing the need for an intermediary.
Consequently, an intermediary in today’s world
needs to add value to its offerings to make a
meaningful contribution to customers. This is
the direction that TIL will take in the future,
much like Mitsubishi Corporation of Japan.
TIL’s focus has shifted from merely
trading products manufactured by
Tata companies to sourcing metals
and minerals, acquiring overseas
assets and also representing leading
international designer brands in
India. Could you talk about the
reasons for this?
An organisation such as TIL needs to be in
several products, services and geographies. As
of now we have chosen certain verticals based
on existing presence and future markets, and
keeping in mind the need for value addition
in the supply chain. The chosen verticals are
leather and leather products, distribution, metals
trading, minerals trading and agri- trading. Some
of these require investments in certain assets in
the value chain (like minerals, and metals) and
some require strong support from the brands.
TIL has exited some businesses (for
instance, textiles). Are there plans to
get out of other non-core businesses
in the future?
Whatever businesses we are in currently are
being examined closely for their fit into our five
key verticals. We will exit those that are not part
of these verticals.
Considering TIL’s substantial
expansion plans, including a foray
into the international trade of
agricultural inputs, which is on the
anvil, is the company looking at a
possible listing in India or abroad?
We are not looking at a listing for now, but
we may need to think of it at a later date. The
company is still thinly capitalised and we believe
more funds will be required for our future plans.
What is the share of Tata group
businesses in TIL’s top line and
bottom line? Is this growing or
declining? And does the company
plan to engage more with non-Tata
companies in the future?
The share of Tata group businesses in TIL’s top
line is currently about 20-25 percent, most
of which comes from Tata Motors. This will
grow; we plan to engage with more Tata
companies and demonstrate that we can bring
value to them.
Having established a significant
presence in Africa and South East
Asia, will TIL consider expanding in a
big way into South America? Do you
see opportunities in that continent?
Our presence in some of the African countries
is strong and there are more countries in Africa
that we need to enter quickly. Our presence in
South East Asia is not strong at the moment. We
have opened an office in Myanmar (we believe
the country offers great opportunities) and
we intend to get started in Indonesia shortly.
Sometime back we had opened an office in
Brazil. We need to strengthen our presence in all
these countries. ¨
July 2013
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COVER STORY
‘Now it’s all about execution’
Deciphering the enigma that
is Tata International (TIL) has
been one of Noel N Tata’s
principal tasks since he
took over as the company’s
managing director in August
2010. That accomplished,
he has been occupied with
instilling in this global trading
enterprise the steadfast
resolve to realise its undoubted
potential, and in giving it a
focused sense of direction.
44 Tata Review
n
July 2013
Mr Tata, who is also the
vice chairman of Trent,
speaks in this interview with
Christabelle Noronha about
the company and its heritage,
the challenges it faces, and
the “huge opportunities” it has
to make its mark on what is
truly a global stage.
Could you explain where TIL stands
today and where it expects to be in
the next five years?
To understand where we are today, we have to
COVER STORY
look back over the last 10-15 years. We were
not clear about the company’s mission and its
role within the group. There have always been
conflicting views about what TIL should do,
where it should go and what it should invest in.
That is perhaps why we have not made the sort of
progress that we could have.
Over the last two years we have spent a lot
of time in redefining what TIL should aspire
to and, more importantly, having an agreed
mandate within the group. This would have to
last for a period of time, which means a longterm mandate. That’s where we are today, having
spent over a year going through a rather detailed
strategic planning exercise. We did this by
initially scanning the horizon, looking at what
opportunities there were globally, mapping group
activities and evaluating our own businesses.
This strategic planning exercise has led us to
reorient ourselves to becoming a global trading
and distribution company. We will now have
businesses in five verticals, two of which are part
of our heritage, two of which we operated in many
years ago and are now getting into again, and
one that is new. The two heritage operations are
leather and leather products and auto distribution,
the two we are back into are the minerals and
steel trading businesses, and the new vertical will
be agricultural trading (that said, we traded in
agricultural products some 30 years back).
Trading has pretty much been the
basic mandate that TIL always had.
There has been, over time, a lot of debate about
whether TIL ought to sell non-Tata products as
well as Tata products, whether we should trade or
not trade. Today the board, the management and
the group are fully aligned to pursuing this new
strategy, and the advantage is that we can spend
our time focusing on these five areas rather than
being distracted by opportunities that do not fall
into them.
If you take it as logical that any
international opportunity should land first at
TIL’s door, then there is a flood of opportunities
coming to you every day. This new approach will
allow us to separate those that align with our
strategic plan from those that do not.
What about combining with
companies such as Tata Power and
Tata Steel?
In our minerals business we do see synergies with
both Tata Power and Tata Steel in being able to
jointly approach suppliers for raw materials and
leveraging our combined strengths. They can take
these raw materials for their own use, or we could
take the same products and sell them to third
parties. But we think Tata Steel and Tata Power
require long-term investments to secure these
resources, and while TIL can help identify such
opportunities, we look at these opportunities on a
short-term trading basis.
Our mandate, in terms of investment, is
not to go out and buy coal mines to mine coal;
our mandate is to trade in coal. Consequently,
the only investment we will make is when it is
required to increase the profit on a particular
trade. So, if we need to make an investment in
somebody’s mine in order to get an allocation
of that product, we can consider it. If we need to
invest in a warehouse to serve a customer, we will
make an investment. Such investments enhance
our profits and the long-term sustainability of
the trade by adding value to either supplier or
customer or both.
What will it take for TIL to realise its
ambition of being among the world’s
top five trading enterprises? What
kind of transformation will the
company have to undergo for it to
reach that goal?
In the last 25 years we have seen the world’s
largest trading companies grow exponentially
across the globe. To be among the top five
would mean TIL gets bigger than the whole
Tata group put together. The fifth-largest
trading company in the world has a turnover of
more than $115 billion.
I believe our goal can be to become, by
2025, globally significant in each of our chosen
businesses. What being globally significant
means in the context of each of our verticals will
be different for every one of them and we could,
perhaps, in two of them — leather and auto
distribution — be in the global top 10 by 2025.
July 2013
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COVER STORY
For the other three, getting into the global top 25
in the same time frame could be an aspiration.
What does that entail?
Having set the agenda, now it’s all about
execution — putting people and processes
in place, making investments where they are
required, adopting risk assessment and control
systems built around information technology,
and, most importantly, building the business in a
profitable manner. We recognise and understand
that trading really is a people business and,
therefore, having the domain expertise and the
requisite experience are crucial to success.
Will there be a lot of restructuring?
Not in manpower, but there will with some of the
investments we have made. We will selectively
divest from these in line with our strategy.
In which areas are the challenges
facing TIL the most critical, and how
do you expect to deal with them?
Building expertise to drive growth in all
our verticals and expanding them profitably
are going to be the biggest challenges going
forward. Trading, as you know, has waferthin margins, and learning to prosper in
this environment is going to be our biggest
challenge. As I have said, people are critical
here and we have made significant progress on
this count, in minerals, and steel trading and
auto distribution. Where we have to build from
scratch is with our agriculture vertical.
What kind of investments will TIL be
making?
The only investments we will make are those that
help us enhance the profitability of our trading
and distribution (in Africa).
Do you have a figure for this?
No, we don’t have a figure. This will depend on
how fast the business grows. We will invest in
the value chain of the trade and only to enhance
profitability. If we need to market the product of
a coal mine and, in order to do that, we need to
make an investment in that mine, we would look
46 Tata Review
n
July 2013
at that. Or if we need to have a coal-handling yard
at a port in order to distribute coal to smaller
customers, that’s an investment we would make.
Obviously, in distribution, we have to make
investments in showrooms, in port locations and
with service centres to maintain the products of
our customers. It’s clear that there is investment
required on a continuing basis here. With
leather products, investments are required in
our factories for tanning and shoe production.
There is a big opportunity also in leather trading,
something that hasn’t been explored as yet and
one which could tie in our presence in Africa
with the centre of leather consumption, which is
the south of China.
In our distribution business we work on
a combination of models. In many countries
where the market isn’t large, we distribute as well
as own dealerships. In larger countries which
require a large number of dealers — South Africa,
for instance — we have many dealers (these
are independent entrepreneurs) and we restrict
ourselves to being distributors.
Will Africa continue to remain the
focus of the company’s distribution
business in the coming years?
Africa will be a continent of opportunity for the
company for the next 10 years and, certainly, the
roots of our distribution business are all there.
Having said that, we still have about half of
Africa where we do not have a presence, which
means there is a plenty of scope there, not only
to deepen our distribution business in countries
where we already exist, but to widen the business
into countries where we are not present.
Which are your other priority areas,
geographically speaking?
There’s South America, the Middle East, South East
Asia, India and China. If you draw a horizontal
line across the Mediterranean, everything south of
that is where economic activity is growing, where
opportunities exist and that really is going to be our
focus over the next decade.
What about the leather business?
We have to recognise that the leather industry
COVER STORY
worldwide is not as large as steel or coal.
Therefore our leather business is never going
to be as big as some of our other verticals. But
we are proud to be a leader in this vertical.
Leather will continue to expand in places that
have leather product manufacturers. It will
continue to get exported to China, to Indonesia,
and all the labour-intensive countries where
footwear or handbags are manufactured. Only a
small percentage of our leather goes to Europe,
because there are few consumers of leather
left there. However, I believe the footwear
business in India is likely to see significant
growth as China moves to less labour-intensive
manufacturing (due to increasingly high labour
costs) and, further, due to the recent devaluation
of the Indian rupee.
The Tashi venture does not seem to
have met expectations.
One of the consequences of the new strategy we
are pursuing is that Tashi (or footwear retail)
does not have a great fit in it. An important
reason for this is that as a retailer you don’t
necessarily want to get connected to, or be
part of, a company that owns factories. You
need a wide assortment of products in your
shops and for that you need to go and buy from
several vendors. A retailer of footwear requires
everything from formal and casual shoes to
ordinary sandals. One of the assumptions
made when Tashi was launched was that a large
portion of its offerings would be sourced from
our own factories. In reality, less than 10 percent
comes from our factories; 90 percent is being
sourced from others.
We would rather address the Indian
market by creating and building brands and
through a distribution network and leave the
retailing to businesses like Trent, which also
has the expertise in sourcing from a multitude
of vendors. This means, perhaps, moving more
towards distribution through multi-brand retail
and product creation.
Are you planning to hive off Tashi?
No, we will wind down the existing stores and
move to a branding and distribution model.
If you draw a horizontal line across the
Mediterranean, everything south of that is
where economic activity is growing... that
really is going to be our focus...
What happens to the people there?
Fortunately, we have only six shops and they are
small ones. We will make an attempt wherein
everybody who is currently employed with Tashi
is offered an opportunity somewhere in TIL or
in the group.
What’s your view about the foray into
the retailing of international brands?
We will concentrate on product development,
branding and wholesaling and not on retail.
That brings us to the automobiledistribution portfolio.
The bedrock of our distribution business has
been and will be Tata Motors. We have a history
of some 30 years of distributing Tata Motors
products and that will continue to be a major
focus. We are delighted to have launched our
first Jaguar Land Rover distributorship setup in
Zambia and are looking forward to opening one
in Ghana.
We believe there is a lot of opportunity to
increase our distribution business in adjacent
regions, as well as adding adjacent products to
July 2013
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Tata Review
47
COVER STORY
our portfolio. During the last 12 months we have
started marketing and distributing John Deere
tractors and farm equipment, as well as Trxbuild
mining and construction equipment. However,
for the foreseeable future a large majority of our
products will be from Tata companies; these will
remain a significant part of our business. I expect
that we will be able to continue to build the Tata
brand across Africa.
Coming to South America...
There is opportunity in the region but there is
only so much you can do. I would rather see us
addressing the other half of Africa and then look
at South America, for distribution.
TIL raised S$50 million in Singapore.
Are there plans for more such
exercises?
We have no plans to raise money currently.
Singapore was an exercise to get long-term
money and part of the S$50 million is being
used to pay some of the shorter-term debts that
we had in bits and pieces all over. Needless to
say, as we grow, we will continuously need to
strengthen our balance sheet.
Tell us a bit about the agriculture
business that TIL has got into.
We are at a stage here of studying the
opportunities that exist in the business and
understanding where we should be and what we
should be doing. While we study the business,
we are also taking some baby steps in it, by
trying out a few things, to see what works.
Our initial area for this is Myanmar, where we
have set up an office and where there is a large
amount of trade happening with India in pulses,
and we have started trading in that.
Our initial feel is that India is going to
require larger and larger imports of agricultural
commodities over the coming years and, hence,
our focus is going to be on trade between
sources of agricultural products and India. Our
presence in Africa will be a help in this context
and we will be looking at trade flows between
Africa and India, Myanmar and India. At the
same time, we are studying the commodity
48 Tata Review
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July 2013
business to see what shape it should have. It may
take a year for us to finalise our play here.
Which of the businesses TIL is in
holds the greatest potential?
I think all of them. Some have the potential to
deliver higher turnover, some to deliver higher
profitability. Some have potential in certain
geographies, some in others. I would not like to
single any one out, but all of them will contribute
to the global portfolio of verticals that we have.
The common thread, obviously, is that they are
international in nature and are trading businesses,
generally involving cross-border transactions.
Which one do you see as being the
most profitable?
Our leather business has the potential of being
the most profitable because, ultimately, it is a
manufacturing and not just a trading business.
Personally speaking, how is this
business different from the others
that you have been involved with?
What do you find most interesting
about it, and the most irritating?
In many ways it’s similar to what I did at Trent. I
see international trading and domestic retailing
as having a lot of similarities, and this was
driven home to me when, some months back,
we did a joint TBEM [Tata Business Excellence
Model] exercise involving Trent and TIL. Both
are trading businesses. One happens to be in
bulk, the other in single units. Both require the
bringing together of various sources of products
and offering a coherent offer to customers. Both
demand an intimate understanding of who your
customer is and what that customer wants.
What excites me is the huge opportunities
we have, especially the opportunity to grow. The
key will be our ability to address that opportunity.
As for the irritant, we are not moving fast enough
to make the most of these opportunities. I am
learning, in many ways, to operate in a business
that has wafer-thin margins — 1.5 to 2 percent
— to recognise and live with the risks of that
business. I can say, though, that we have made a
lot of progress over the last two years. ¨
COVER STORY
Leather and Leather Products division
The fashion trail
D
ewas was a nondescript little village
in Madhya Pradesh with nothing to
recommend it when Tata International
(TIL) set up operations there in 1972. It
was not close to raw material sources, markets,
ports or any industrial infrastructure. The
low water table and dry climate were, in fact,
unsuitable for the leather business.
Instead of letting these issues become
obstacles, TIL proceeded to develop its own
infrastructure and build what is now a worldclass facility, including India’s largest tannery.
The only organised player in the leather business
in India, the company has not only made Dewas
the hub of its performance leather, fashion
leather and leather garments businesses, it has
placed the town on the world map for footwear
and leather fashion.
Just as significant, TIL’s processes for water
recycling and conservation, environmentallyfriendly low chrome manufacturing and waste
recycling have won the Dewas unit accolades.
Says Chris Hansen, head, finished leather: “TIL
is now working to ensure global compliance on
ethical sourcing, environmental and corporate
social responsibility issues, and the use of
restricted substances.”
fashion and more
The factory in Dewas has the capacity to produce
48 million sq ft of fashion leather each year.
In addition, it has the distinction of being the
only performance leather facility in India for
automotive seats, furniture and athletic footwear
(it has a capacity of 12 million sq ft per annum).
The division has recently repositioned itself
to service the total needs of fewer clients. It is
innovating to deliver, in terms of quality and
consistency, the right kind of leather for the
end-product; leather that is perfect for a sofa, for
instance, is unsuitable for shoes or jackets.
The important bit is maintaining
consistency in the supply chain. “You cannot
make an innovative fashion
product unless you have your
entire supply chain with
you,” explains Mr Hansen. “If
the leather does not meet
expectations from a finish
standpoint, the final product will
fail.” To maintain standards the
team works with fewer vendors, and only
those that have been pre-approved for their
quality.
One of the biggest challenges that the
business faces is predicting and delivering
products that match fashion trends in Europe.
The role of the marketing team is to understand
thse trends so that TIL is able to stay on top of
the market and distinguish its offerings from
other commodity suppliers.
Leather garments are high-value products
and TIL plans to emphasise that. The garments
business, headed by Arun Thakur, services wellknown brands such as Calvin Klein and Diesel
and, with an annual production capacity of
140,000 leather garments, the division is poised
to go places. Says Mr Thakur, “We would like to
add value to our clients’ offerings by developing
new products and designs as well as by working
on new trends in fashion.”
Another area that holds great potential to
increase TIL’s margins is footwear. The company
makes 5 million pairs of shoes every year,
exporting its footwear to leading global brands
such as Zara and Marks & Spencers.
The company was one of the earliest
manufacturers to look towards the global
TIL is now working to ensure global
compliance on ethical sourcing,
environmental and corporate social
responsibility issues.
Chris Hansen, head, finished leather
July 2013
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Tata Review
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COVER STORY
In search of clean leather
At first sight the Tata International (TIL) facility at
Dewas, Madhya Pradesh, looks like a veritable
paradise of green. Not quite the setting for a
tannery and a leather factory.
The 100-acre site has green cover over 6070 percent of the entire area, with more than
200,000 trees providing leafy shade. Today the
sighting of peacocks and deer is a commonplace
occurrence, especially in the early hours of the
morning. But 50 years ago this was barren land,
with marshy soil that has been transformed
by a steady tree-planting drive and rainwater
harvesting.
Leather is a resource- energy- and waterintensive industry, one where most manufacturers
have a poor environmental record, typically
releasing solid waste and effluent into the open.
TIL, on the other hand, has repeatedly proven
its willingness to go beyond the industry-set
mandate of environmental protection.
Since 2002 Dewas is home to a high-rate
bio-methanation plant that processes solid
waste from the leather factory. The plant has a
recycling capacity of 900 tonnes per annum of
chromium-containing leather waste, producing
up to 200 cubic metres of methane gas per day
and recovering as much as 12MT of chromium
per annum for recycling.
Dr S Saravanabhavan, senior manager, R&D,
says, “We are constantly trying to upgrade our
environmental measures. Some of our efforts are
not even mandated by the regulatory bodies or
the norms. We have come up with these solutions
through intensive research efforts, and we share
our learning with the entire industry.”
The byproducts of leather processing include
chromium shavings and wet blue trimmings, which
are classified as hazardous waste. At TIL these
shavings are converted into protein and chromium.
The chromium is reused in the tanning process
and a TIL team is currently working on finding
industrial and fertiliser applications for the protein.
Water was one of the concerns, given the fact that
Dewas and Madhya Pradesh, in general, suffer from
water scarcity. Determined to do nothing that could
adversely affect the quality or quantity of available
water, the company established a reverse osmosis
plant. The plant, which has a capacity of 350 cubic
metres a day, treats the effluent and generates highquality water that meets the boiler requirements
without needing any softening or purification.
According to Dr Saravanabhavan, the company
does not use municipal water for its plant, relying
instead on recycled water alone. Incidentally, the
treated water that is finally discharged from the plant
contains only 20 parts per million (ppm) of impurities
and is used for cultivation (Indore’s tap water, by
comparison, contains 80ppm of impurities). These
efforts have garnered TIL a number of accolades
and awards from the government and from pollution
control organisations. The company has also been
awarded two patents for its processes.
More importantly, TIL has shown that it is possible
for a resource-intensive industry like leather to
generate value from waste, enable recycling of
water and arrest further damage to the environment.
The company’s efforts have enabled it to stand
out in an industry that has done precious little for
environment conservation.
50 Tata Review
n
July 2013
COVER STORY
market. In 1981 the fashion leather division
began by stitching shoe uppers for German
brand Bally, before moving on to brands like
Gabor and Salamander. Having made a mark
in Germany, the team entered other European
countries, among them Italy, Spain and Portugal.
In the past few years TIL has taken the
acquisition route for growth. Graziella became
a wholly owned TIL subsidiary in 2009. The
company also acquired Da-Vinci, a unit making
shoe uppers (the two units have been regrouped
under Tapti Leathers).
In 2010 the company acquired a 76 percent
stake each in the Chennai-based children’s shoe
manufacturing firms Bachi Shoes India and Euro
Shoe Components. A year later, in 2011, TIL
acquired Salco in Chennai through Bachi. It also
acquired Move-On, which retails and distributes
the Aerosoles brand footwear in Europe. And it
has a joint venture with Wolverine Worldwide.
Explaining TIL’s growth philosophy,
footwear head N Mohan says: “We chose to
build our reputation by working with tough
We chose to build our reputation
by working with tough customers,
rather than creating massproduced footwear.
N Mohan, head, footwear
customers, rather than creating mass-produced
footwear. Maintaining quality over large
volumes is a great challenge. Today we are
proud to say that our leathers have touched the
feet of people around the world, especially in
Latin America, North America, Europe, China
and the Far East.” This was no easy task.
The footwear business has set ambitious
goals for the future. There are plans to grow
the business into a 10-12 million pairs
manufacturing company. More important, TIL
intends to start branding its products in order
to occupy all points of the value chain. Having
made its mark all over the globe, the company
wants to ensure that the mark says Tata. ¨
Distribution division
African safari
F
or Tata International (TIL), distribution
is one of its oldest lines of business.
It began distributing the commercial
vehicles of Tata Motors in Africa in 1978
and today has operations across 12 countries in
the continent.
TIL introduced Tata Motors trucks and
chassis to Africa with the aim of taking on rivals
— including top names from the developed world
— with reasonably-priced products. Significantly,
it started distributing Jaguar Land Rover (JLR)
vehicles in Zambia in early 2013 and expects to
commence similar operations in Ghana by the
end of 2013.
The company is also involved in the
distribution of allied products, including
agricultural, infrastructure and construction
equipment. TIL distributes the tractors and
farming equipment of global major John
Deere in Uganda, Kenya and Nigeria, and
infrastructure and earthmoving equipment
manufactured by Singapore-based Trxbuild, and
Tata Hitachi and Aquarius from India.
The non-auto distribution side covers
healthcare, industrial chemicals, agriculture
(seeds and fertiliser and the buying and selling
of crops), and ad hoc trading of other products
that are in demand in different countries.
Automobile distribution accounts for 60
percent of business, allied products about 10
percent and the non-auto segment 30 percent.
July 2013
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Tata Review
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COVER STORY
What customers have to say
RT Wasan, head of international business,
Tata Motors (commercial vehicles business unit):
Africa is the second largest region in our
international business after South Asia. We have
found in Tata Africa a very strong and capable
channel partner who not only understands the
local market well but has built a strong local
presence in many countries, making them a
strategic fit for our growth plans in the continent.
We are confident that with the introduction of
more new products and supported by our strong
channel partner in Tata Africa, we will continue to
expand our footprint in this market.
Kevin Flynn, managing director of Jaguar Land
Rover SA and SSA, at the recent launch of the
company dealership in Zambia through Alliance
Motors, a wholly owned subsidiary of Tata Zambia:
We welcome Alliance Motors to the Jaguar
Land Rover team and will provide them with every
support to make our Zambian operation a success.
They are already close to our broader parent
company and we are confident of their abilities and
experience to deliver impeccable service to Jaguar
and Land Rover customers in Zambia.
Len Brand, managing director, John Deere
(South Africa):
We are proud to work with the Tata group to
make a real difference in Sub-Saharan Africa. The
power of having these well-known and respected
brands cooperating is going to be immense,
and I believe it will be seen as a best practice
in the near future. Both companies are fanatical
about taking care of the customer and do what
is necessary to ensure customers have a unique
ownership experience. Both also bring similar
philanthropic ideologies to the table, which will
be to the benefit of the people in the areas where
they cooperate. I am looking forward to a unique
and long-lasting relationship which will be seen as
a model of how Africa should be approached.
52 Tata Review
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July 2013
Thamsanqa Mbele, managing director-designate,
Tata Africa, looks forward to a 50:50 split of the
two arms of the vertical.
Mr Mbele is upbeat about the growth
potential of Africa and about the capability of the
distribution vertical to service the growing need.
“Africa is a high-growth area,” he says. “There is a
lot of untapped potential here, and most countries
grow on average at about 6-7 percent a year. In
my opinion, the biggest growth will come from
infrastructure development and agriculture.”
Political stability, maturing of democracies
and a wave of economic reforms will pave the
way for better opportunities. A McKinsey study
conducted two years ago indicated that the
middle class in Africa is growing extensively and
that by 2020 there could be a massive increase in
consumer spending.
continental challenge
Huge as the opportunity is, the challenges that
confront TIL in the region are just as big. The
sheer diversity of Africa, with 54 countries and
1,000 spoken languages, makes the continent a
formidable space.
Xavier Gobille, executive director, auto and
allied distribution, Tata Africa, points out that the
automotive market in the continent is growing.
“There is a great need for transportation,”
he explains. “The distances are great and
public transport is poor, so there is a need for
commercial vehicles and cars. The roads are poor
so there is a need for reliable vehicles.”
The availability of skilled manpower poses
another difficulty. Currently, 80 percent of the
1,700 employees in Africa are indigenous to their
specific countries. And TIL intends to increase
the percentage of local employees.
Varied as the challenges are, they present
an exciting opportunity for the company.
Having been in Africa for decades, the Tata
name has generated tremendous goodwill by
virtue of the contribution that TIL has made to
the development of Africa.
“Our efforts over the decades have been
acknowledged,” says Mr Mbele. “TIL has built
itself a reputation as a credible partner by
its willingness to invest in building long-term
COVER STORY
relationships and by its ability to demonstrate
success.”
It is a point that Raman Dhawan, the
outgoing managing director of Tata Africa, who
has spent 35 years in the continent, is quick to
corroborate: “The Tatas have a big commitment
to Africa, and that commitment is growing.
People here recognise the fact that we stayed and
fulfilled our commitment.”
Having established its presence in parts of
Africa, the distribution vertical is now gearing
up to figure out the niche that it needs to get into.
The Africa story assumes tremendous significance
given TIL’s goal of being globally significant in
each of its verticals by 2025. In this context,
Mr Mbele has spent the last few months
repositioning the team and aligning it to the new
vision. “We are planning to grow organically
in existing businesses,” he says. “We will also
expand to other places in Africa. Our aim is to
increase the number of countries in which we are
The distances are great and public
transport is poor, so there is a need
for commercial vehicles and cars.
Xavier Gobille, executive director, auto and allied
distribution, Tata Africa
physically present to 20-25 over the next threefive years. The immediate goal is to end the year
with a turnover of $400 million and double that
figure in three years. The longer-term objective is
to be a $2 billion business in five years.”
While Africa is important given the fact
that this is where the distribution business was
born, Mr Mbele is clear that the business must
spread. “Distribution is a global vertical,” he
points out. “We have to consolidate our position
on the African continent besides South and East
Asia. Thereafter, within three years, we will look
at expanding to other regions.” ¨
METALS TRADING division
Metals unlimited
I
n its new avatar, the biggest growth centre
for Tata International (TIL) will be its metals
trading division. In November 2012, TIL
consolidated three entities that were part of the
steel trading arm of Tata Steel Europe (TSE) with
itself. Primarily dealing in non-TSE products, the
units had a turnover of nearly $780 million (about
`36 billion), and will thus contribute heavily to
both TIL’s presence in this arena as well as its top
and bottom line.
TIL’s metals trading unit has now completely
restructured its operations. Headquartered
in London and with centres in India, Hong
Kong, Dubai and Chicago, the business now
encompasses five regions across the globe: the
Americas, Europe, the Middle East and Africa,
Asia, and the Indian subcontinent. Supported by
global sourcing, distribution and supply chain
management of various steel and related products,
the division caters to clients in more than 50
countries. While steel is the flagship business
of this unit, it also deals in pig iron, sponge
iron, scrap, aluminium bars and customised
engineering products (such as collector bars and
module mounting systems).
Steel accounts for the bulk of the unit’s
business, with trades of nearly 1 million tonnes
annually. This year will see a turnover of more
than `50 billion, with China (40 percent) and
Turkey (35 percent) accounting for much of the
buying. India is also an important player here,
with numerous steel products being exported and
special steel being a big import item.
Pig iron, a semi-finished metal produced
from iron ore, is also an important part of the mix.
This year the metal will account for `4.5 billion in
top line for the metals trading unit. TIL’s primary
source of pig iron in India is Tata Metaliks.
July 2013
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COVER STORY
Brazil is one of the largest
suppliers of pig iron, so we opened
an office there ... We now move pig
iron from Brazil to Asia.
Ramesh Mani, head, metals trading business
The country’s leading pig iron manufacturer,
Tata Metaliks initially approached TIL to act as
exporter as it did not have its own resources. The
metal was exported to neighbouring countries
such as Bangladesh and Nepal, but in recent times,
reduced supply from Tata Metaliks has meant that
TIL has had to diversify its sources. “Brazil is one
of the largest suppliers of pig iron, so we opened
an office there,” remarks Ramesh Mani, head of
the metals trading business at TIL. “We now move
pig iron from Brazil to Asia.”
The unit also exports sponge iron
sourced from Tata Sponge Iron, and steel rolls
manufactured by Tayo Rolls (a Tata Steel joint
venture). “Steel rolls is a niche business, but it gives
us good returns,” explains Mr Mani. Aluminum
smelter electrodes is another significant line for
the division. TIL supplies cathode and anode bars
to most of the large aluminium smelters in India
and has also made inroads in the aluminium
markets of the Middle East, Africa and Australia.
“We hope to take this to almost `1.2 billion in the
current fiscal,” says Mr Mani.
Saying yes to solar
As a sidebar to the metals trading business, TIL
has recently forayed into solar projects, primarily
offering solar module mounting systems. These
are ideal for rural electrification projects and gridconnect systems, and as replacement options for
the diesel gensets used by commercial companies
and telecom towers. “We provide the steel
structure on which the solar panels are placed,”
says Mr Mani. “We buy the steel, fabricate the
system and supply it to our clients.” India will be
the focus of this business. Last year, TIL provided
such systems for solar power projects of 100MW
capacity. It aims to double the supplies this year.
The metals trading business is a highly
volatile one, where although volumes and
54 Tata Review
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July 2013
tonnages are high, margins are normally low.
An international trader has to be alert 24x7,
monitoring markets, price movements and
headlines. John Caouki, London-based director of
TIL’s metals division says important qualities for a
trader are “innovation, intelligence and knowing
your markets and customers, coupled with the
ability to take quick decisions”.
call of the tough
Indeed, trading in international commodities is
not for the fainthearted. Murat Askin, the United
States-based president of TIL’s metals division
uses China as an illustrative example: “China is
a huge consuming market and, at the same time,
is the largest steel producer in the world. Any
change in the Chinese market dynamics, including
government import and export policies, makes a
huge impact. Other emerging markets like India
also have big influence on supply and demand.”
The business is highly competitive,
especially in the emerging markets of Africa and
Asia. Sava Popovic, general manager (Asia) of
TIL’s metals division, mentions new trends in the
trading world such as the rapid transformation
of China’s steel industry and steel trading in
general. He explains, “Chinese mills want to
have an international presence and they directly
provide service to regional customers. Some of
the big Chinese trading companies also have
relationships with Chinese mills, and they are
ready to work on small margins. We need to
develop new markets to maintain our sales.”
The impact of the changing external world is
reflected in the need for internal change. “Earlier
the cycle used to be once every five years, but
today there are two to three cycles in a year,” says
Mr Caouki. “And we are in a far more transparent
market due to the amount of information
available, and the speed with which it is available.
As a result we need to look at ways so that we can
differentiate ourselves from our competitors.”
Mr Popovic says TIL now has a better
focus on long-term strategy. “This is motivating,
considering the slowdown in our industry and in
the world economy in general,” he adds. “We can
see a much wider horizon in front of us; it is for us
to deliver and take the company to new levels.” ¨
COVER STORY
MINERALS TRADING division
A bright side to coal
T
he humungous demand for coal and
other critical minerals from two of the
world’s fastest-growing large economies,
India and China, keeps traders in the
minerals trading division of Tata International
(TIL) busy round the clock. Though small, the
12-member team is geographically dispersed and
operates out of six locations: India, Singapore,
Indonesia, China, Switzerland and Brazil.
TIL revived its mineral trading operation
just about a year ago and has already made a
mark in domestic coal imports in India. The
division aims to emerge as one of the largest coal
trading companies in the country, besides selling
the commodity in other parts of Asia, including
China and Thailand. “In 2012-13 we did about 1
million tonnes of business-to-business trades in
coal,” says Alfred Egli, head of the business. “This
year we are looking at figures of above
3 million tonnes and by 2015-16 we should be
doing 10 million tonnes.”
concentrating on india
India accounts for about 70 percent of the
minerals trading business and TIL will continue
to concentrate on it. “It is the market where we
see the largest growth potential,” says Mr Egli.
Only a part of this business comes from Tata
companies: “They buy coal from us only if we are
competitive.”
TIL’s clients include other power and cement
producers in India. It is inevitable that coal
comprises the largest volumes of TIL’s minerals
trading business; the shortage of the commodity
In 2012-13 we did about 1 million
tonnes of business-to-business trades
in coal ... This year we are looking at
figures of above 3 million tonnes.
Alfred Egli, head, minerals trading business
in India forces power producers to source it from
countries like Indonesia and Australia.
As a commodity coal is not an easy product
to trade in, not least because of its association
with pollution. Governments the world over —
both in producing and consuming economies
— try to find new ways to tax the energy source.
Coal is also a highly-regulated commodity and
governments seek to play a role in its trading.
The other major challenges are lack of credit
lines and concerns over the quality of coal. But
Mr Egli is bullish about the mid-term prospects
for minerals trading, especially as China and
India continue to grow at a pace above that of
many of the economies in the developed world.
While the division aims to focus on India
and China as its major markets, it will source
all kinds of solid fuel from Indonesia, Australia,
South Africa, the United States, Colombia,
Russia and Ukraine. “We will diversify into other
minerals,” says Mr Egli.
The division has other, smaller trading lines
in ores (iron and manganese), ferro-alloys and
base metals. Last year it did about 450,000 tonnes
of business in ores, about 4,500 tonnes in alloy
and about 2,000 tonnes in base metals. TIL is also
a boutique supplier of nickel, tin and other base
metals with direct tie-ups with smelters. “We aim
to achieve a target of 1.5 million tonnes of trading
in ores by 2015-16,” says Mr Egli. The alloys
business, it is expected, will increase to 14,000
tonnes and base metals to 16,000 tonnes.
With the demand for coal and other mineral
commodities on the rise, this division of TIL is
confident of securing a bright future. ¨
July 2013
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COVER STORY
Agri trading division
The fifth wheel
T
rading in agricultural products is
the new business that Tata
International (TIL) has entered, and
it is a business that is in a nascent and
exploratory phase.
The idea here is to tap into the everincreasing global trade in agricultural
commodities like cereals, pulses, oilseeds
and vegetable oils, a trade valued at over $1.5
trillion in 2010. The increase in global food
consumption is expected to be oriented strongly
towards developing regions such as Asia and
Africa, where TIL already has a strong presence
on the ground.
“While India is self-sufficient in most
staples, it imports pulses and oilseeds,” says
Janaki Chaudhry, head of strategy and business
development. “Africa is a large importer of food
from Asia and has the largest potential in terms
of increasing area under cultivation and yields
for cultivated crops,”
In short, the company is
looking at India and Africa
as markets to be developed,
and Myanmar and Africa as
source geographies. Managing
director Noel N Tata further
explains the
company’s
intent: “Our
focus is going
to be on trade
between sources
of agricultural
products and India.
Our presence in
Africa will be a
help in this context
and we will be looking
at trade flows between Africa and
India, Myanmar and India.”
Currently TIL is trying out a
few initiatives to see what works. As Mr Tata
56 Tata Review
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July 2013
explains, the company “is at a stage here of
studying the opportunities that exist in the
business and therefore to understand where
we should be and what we should be doing”.
Myanmar is one of the first outposts under this
business. TIL has already established an office
there to handle pulses trading with India.
a spread of crops
TIL subsidiary Tata Africa Holdings is also
in the process of exploring the potential of
this vertical, with plans to get the agriculture
business off and running this year. “On the
input side we will be looking at providing
seeds, fertilisers and farming implements,” says
Thamsanqa Mbele, managing director designate
at Tata Africa.“On the output side we are looking
at a number of crops that we think there is a
market for, and we will find those crops and sell
them to a market like India.”
The company is in talks with Tata
Chemicals and Rallis India to see whether the
Grow More Pulses project that was so successful
in India can be replicated in places like Tanzania.
Says Mr Mbele, “Together with USAID we are
looking for funding to start up a base project
in Tanzania where we will educate a number
of small-to-medium scale farmers in pulses
cultivation, the same model as in India.”
Although the agri-trade business is not
entirely new to TIL — the company was in the
same business space some 30 years ago — the
fact remains that this vertical will have to be
built up from scratch. “It may take a year for us
to finalise our play here,” says Mr Tata. ¨
COVER STORY
heart and sole
Tata International’s corporate sustainability initiatives have been a
boon for the communities living near and around its operations
A
t Tata International (TIL), Dewas
represents far more than the small
town in Madhya Pradesh where its
leather units are located. It stands for a
long-running legacy of community development
initiatives that have impacted the people of this
corner of Madhya Pradesh in many positive ways.
Here the local women live in a conservative
society where they have to cover their face in
the presence of males, including close family
members like fathers and brothers. Yet every
day some 700 women climb into buses that take
them to the TIL leather factory, where they have
been trained to stitch shoes and shoe uppers for
footwear that is exported all over the world. The
women earn well, have bank accounts and use
ATM cards. A few were even taken on a threemonth market visit to China, to understand
where and how customers actually use the
footwear they make.
The families are proud of their work, the
women are a step closer to social empowerment
and TIL has been able to change social mores in
a community where women traditionally do not
work outside their homes. To do this TIL has
invested years in changing perceptions, mainly by
providing both soft- and work-related training,
reassurances on the safety of the women, and
attention to hygiene and nutrition aspects.
The company has also set up cooperatives
and self-help groups at Indore, Dewas and
Mhow (all in Madhya Pradesh), where women
get skills training for the leather industry. Then
there is NavChetana, a training initiative (in
consultation with the Indian government’s
Department of Industrial Policy and Planning),
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COVER STORY
Young women being trained in shoemaking skills
where young women are trained in modern
shoemaking skills. Another key corporate
sustainability initiative is the Tata Affirmative
Action Programme, which aims to increase
the intake of employees from traditionally
disadvantaged communities such as scheduled
castes and tribes (SC/ST). Nearly one third of
TIL’s employees at Dewas come from SC/ST
communities, a figure that has doubled since
2011. At TIL’s Chennai unit, as much as 70
percent of the staff belong to underprivileged
communities. Says Mr Mohan, head of footwear,
“It fulfils a business imperative, but it’s also an
opportunity to help establish an inclusive society
in which there is no discrimination.”
chiLdren aLso BenefiT
Children are included under the canopy of
care. TIL has constructed and adopted school
buildings in Binjana and Amona villages,
providing them classroom infrastructure,
computers and sponsoring health, education
and other vocational activities. A public park for
children is maintained in Dewas and in Chennai
a computer learning school set up by TIL is
attended by the children of employees.
The helping hand extends beyond
employees. Defective shoe uppers that do not pass
quality standards are given free to local cobblers
58 Tata Review
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at Dewas. They finish the shoes and sell them for
`200-250 a pair, thus earning some extra money.
The company supports local initiatives to improve
women and infant health and undertakes skills
training for disabled and disadvantaged people at
the Army Welfare Centre in Mhow.
In Africa, TIL’s community initiatives
comprise a range of training initiatives:
hospitality skills training in Namibia, leather
skills training in Ethiopia, jewellery making
and ceramic ware skills for women. Tata Africa
Holdings, a TIL subsidiary, offers annual
scholarships to disadvantaged and financially
weaker students and sponsors vehicles for
schools for the disabled and a sports club for
the underprivileged. South African women
graduates are offered industry internships in
India and TIL has conducted pilot projects in
computer-based functional literacy.
Health is another focus area. The company
has organised the ‘Operation Smile Southern
Africa Programme in Malawi, the Democratic
Republic of Congo, Madagascar, Namibia, South
Africa and Lesotho.
TIL’s approach to community issues is best
summed up by Virendra Gupte, who leads the
affirmative action effort in the company: “We
look to make a difference in the community and
give our people a sense of dignity and pride.” ¨
special report
TAAPing into positive
and inclusive growth
The Tata Affirmative Action Programme, an endeavour that
strives to enable India’s scheduled castes and scheduled tribes,
has been an agent for change in multiple ways. In this special
report, Suchita Vemuri gives an overview of the programme
and how four Tata companies — Indian Hotels, Tata Business
Support Services, Tata Chemicals and Tata Motors — have
translated it into initiatives that benefit the people it is aimed at.
July 2013
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special report
I
ndia is a deeply hierarchical society, as it has
been for thousands of years ... this makes all
affirmative action initiatives for social equity
that much more difficult. And yet we cannot
be a strong society if we do not have a more
equitable structure.” It is with these words that
B Muthuraman, who leads the Tata Affirmative
Action Programme (TAAP), summed up
the motivation that drives the programme in
different Tata companies.
TAAP is an initiative that aims at taking
positive steps towards inclusive growth. It
commits Tata companies to exercise positive
discrimination in employing personnel from
the historically disadvantaged scheduled caste
and scheduled tribe (SC/ST) communities,
and in engaging them as business partners
without sacrificing merit or quality. The
programme attempts to address the prevailing
social inequities in India by encouraging
positive discrimination for the 300-plus million
members of the SC/ST communities.
TAAP is housed and administered in Tata
Quality Management Services (TQMS), in itself
a telling indication of how the group views the
programme and the importance it attaches to
it. The positive discrimination it advocates in
engendering social equity is seen as essential for a
sustainable business environment.
TAAP was started in 2007 and is based on
the ‘four Es’ model initiated by the affirmative
action group of the Confederation of Indian
Industry (CII), which targets employment,
employability, entrepreneurship and education
as the focus areas for improvement. It is led
by the Group Affirmative Action Forum
(chaired by Mr Muthuraman) and has
derived momentum from the rich tradition
in community development activities at all
Tata companies, which unfold as part of their
corporate social responsibility programmes.
Says Mr Muthuraman: “In the six years
since [2007] a lot has been achieved in terms
of commitment to affirmative action, strategies
and dedicated budgets to implement affirmative
action plans, and in taking forward the four Es,
but this is still very little … it is just a start.”
A robust start, though, as affirmative action
initiatives have been started in more than 50
Tata companies, of which 32 have been assessed
on their progress over the last three years. (The
external assessments are conducted along the
lines of the Tata Business Excellence Model
assessments carried out by TQMS.)
positive commitment
For the TAAP initiative, April was a momentous
month. The Tata Affirmative Action Convention
2013 was held in Mumbai on April 24. This was
preceded by a two-day ‘reflection workshop’ at
Khandala, near Mumbai, on April 22 and 23. At
the workshop, Mr Muthuraman (vice chairman,
A panel discussion in progress: (From left) TQMS advisor Ajay Kumar, Indian Hotels MD and CEO Raymond Bickson,
Tata Power Delhi Distribution MD Praveer Sinha, TQMS chairman Prasad Menon and Tata International MD Noel Tata
60 Tata Review
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special report
Tata Steel, and chairman, Tata Affirmative
Action Forum) who has been closely involved
with the affirmative action movement at CII,
said: “There cannot be economic progress
in India unless there is social equity. The
social equity issue in India has to be tackled
simultaneously while solving economic issues.”
The reality of Indian business, as
Mr Muthuraman pointed out, is that many
companies and chief executives are still to
appreciate the larger social and historic context
and its linkage to the economic context: “Many
of us who want to practise affirmative action
live in cities and do not know what is happening
in the villages and what has been happening in
the country over the past thousand years...
It is very important to understand the issue in
its entirety.”
While there is clear evidence of
commitment to the cause of affirmative action
across the group, some Tata companies have
identified the link between the programme
and their business sustainability more clearly
than others and expressed it more explicitly.
Tata Motors, for example, in the course of
the assessment, offered this statement in
explanation of what drives its affirmative action
initiatives: “The rationality of inclusive growth
is in Tata Motors’ DNA as it is important to the
existence of the organisation.” At Tata Steel,
which is fine-tuning the programme to include
ethnicity as a fifth ‘E’, the motivation is stated
thus: “Improving the quality and standard of life
of the targeted communities is important for
Tata Steel’s long-term business sustainability.”
in Sync with sustainability
At the Khandala workshop some 30 affirmative
action assessors from different Tata companies
brainstormed to refine the criteria for
assessment of companies on their performance.
The assessors split into seven teams, focusing
on the social context, leadership, strategy and
the paradigms of the four Es. The teams made
presentations, engaged in group discussions and
in lively interaction with senior Tata executives,
including Mr Muthuraman and Prasad Menon,
the chairman of TQMS.
It pays to be progressive
The Tata Affirmative Action Programme is based
on two mutually reinforcing strategic drivers:
promoting inclusive growth and embedding
affirmative action in the growth strategy of Tata
companies. This thinking underpins the efforts
across the Tata group to boost employment,
employability, entrepreneurship and education.
24 Tata companies have spent close to `70
million on more than 13,000 scholarships for
students from the marginalised communities;
in addition, 25 companies have spent `7million
per annum on 140-plus scholarships, given in
partnership with the Foundation for Academic
Access and Excellence to meritorious poor
students enrolled in professional colleges.
34 Tata companies have active skill
development programmes in which nearly
16,000 youth from SC/ST communities were
trained in various trades in 2011-12.
Many Tata companies have development
programmes to encourage vendor-entrepreneurs
from the marginalised communities, the most
proactive among these being Tata Motors,
Tata Chemicals, Tata Housing, Tata Projects,
Tata Consultancy Services, Tata Power, Indian
Hotels, Tata Chemicals, TRL Krosaki, Tata
International and Tata Sponge Iron.
More than 100 members of the Dalit Indian
Chamber of Commerce and Industry are
registered vendors of 10 Tata companies.
The value of business outsourced to vendors
under TAAP has grown from about `400 million
in 2010-11 to about `900 million in 2011-12.
(Figures for 2012-13 are being computed.)
Tata companies are engaged in generating
indirect employment through training and in
directly recruiting to create employment for
scheduled caste and tribe youth under TAAP;
direct employment is generated mainly in the
services segment.
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special report
Assessment scores for 25 Tata companies on TAAP
50
45
44
40
35
39
42
35
30
47
38
37
25
39
41
28
20
15
10
5
0
Average score
Employment score
Employability score
2011
The focus of the workshop was on how to
refine the criteria for the assessment as a key
driver of improving Tata companies’ affirmative
action activities. One of the key issues raised
was the importance of social context. Mr Menon
expounded on the need to make everyone aware
about the issues confronting underprivileged
and socially disadvantaged people. “In cities
we do not have a sense of this,” he said. “For
the affirmative action programme to be
effective there should be greater awareness and
knowledge about these issues.”
Ajay Kumar, advisor, TQMS, who has
been closely involved with TAAP from its
inception, said Tata companies should ensure
representation in their apex committees
to not just affirmative action assessors but
also to outside specialists. He said the apex
committees in all Tata companies should,
additionally, include important managers, for
instance executives handling large outsourcing
programmes. Mr Muthuraman also suggested
that it was necessary to enlist more outside
experts to help present the overall perspective
on the AA issue to Tata executives and
assessors.
The affirmative action convention held on
April 24 lauded the assessors for their efforts
and honoured the Tata companies with the best
records in affirmative action. Tata Motors and
Tata Steel were both honoured with the TAAP
jury award for crossing the threshold score of
60 (out of 100) in the assessment, reflecting the
relative maturity of their initiatives in the four
62 Tata Review
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Enterpreneurship score
Education score
2013
Es and the social impact of these initiatives. Tata
Motors was especially commended for its efforts
in developing vendors from the scheduled caste
and tribe communities, and Tata Steel for its
efforts in the education and skills development
of youth from these marginalised communities.
Other Tata companies that received special
recognition were Tata Business Support Services
(TBSS), Indian Hotels and Tata Chemicals.
While TBSS was singled out for strategically
linking its business growth with providing
employment for people from the marginalised
communities, Indian Hotels was recognised for
its innovative skills-development programme
and Tata Chemicals for its education initiatives
in partnership with SNDT University.
Much to be accomplished
Going forward, TAAP’s initiatives will
aim to embed affirmative action in every
Tata company, open conversations with
many more experts and leaders of the
marginalised communities, and enter into
more partnerships. Additionally, the strategy
is to strengthen the linkage to organisational
sustainability, highlighting the social context,
understanding different stakeholders,
pushing for participatory development,
mitigating risks related to the programme and
interlinking the four Es.
But the conclusive thinking on TAAP, as
voiced in the panel discussion at the convention,
was that the key deliverable really is a change in
mindsets. ¨
special report
Case study: IndIan HoteLs
Leg up for employment
By preparing a trained workforce, Indian Hotels has done
good for industry and for youth, and it has won over corporate
organisations to the cause of affirmative action, encouraging
them to take on people from marginalised communities
T
he jury at the Tata Affirmative Action
Programme recognised as a best practice
the Indian Hotels scheme of providing
vocational training in hospitality to large
numbers of young people from the marginalised
scheduled caste and tribe (SC/ST) communities.
Significantly, the jury also noted that most
of those trained (97 percent) got jobs almost
immediately after completing their course.
Indian Hotels, which runs the Taj, Vivanta
by Taj, Gateway and Ginger hotel chains, has
evolved a model that integrates industry needs
with affirmative action imperatives. Centred on
skills development, the model has built on the
high demand for trained staff in the hospitality
industry and the fact that 60 percent of its own
properties operate in tier-II and tier-III cities
and towns that have a sizeable population
belonging to the SC/ST communities.
The Indian Hotels approach was to use its
core competency — excellence in the hospitality
sector — to serve identified community needs,
principally the need for employment and
employable skills. Together with this, it identified
partnerships that could “work with multiple
forward and backward linkages for shared
growth and economic development of local
communities,” as the company’s sustainability
director, Vasant Ayyappan, explains.
Indian Hotels has focused on setting
up training centres (36 to date) that prepare
young people for employment in the hospitality
industry. In the process, the company has
entered into partnerships with government and
non-government organisations — including
the National Scheduled Caste Development
Foundation and the Don Bosco education
institutions — to conduct the training courses.
Additionally, the company’s hotels in Bengaluru
have recently entered into an agreement with the
Karnataka State Tourism Department to train
100 youth from the Hassan region who belong to
the SC/ST communities.
Indian Hotels has also tied up with various
companies to garner support, either in terms
of aid for the training centres or to employ
graduates emerging from these centres. While
a number of these are Tata companies, it has
also won over non-Tata corporate organisations
to the cause of affirmative action, encouraging
them to employ young people from the
marginalised communities as a deliberate policy.
Since 2009 more than 8,500 young people
have graduated from the 36 training centres run
by the company across India, of which some
25 percent belong to the SC/ST communities.
Remarkably, 97 percent of the 8,500-plus
graduates have been placed at various Indian
Hotels properties and other organisations.
In 2010 Indian Hotels took a conscious
decision to enhance its reach to the SC/ST
Indian Hotels took a conscious decision
to enhance its reach to the SC/ST
communities by setting up more training
centres in locations with a high density of
these marginalised people.
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special report
The Indian Hotels team poses with the Tata Affirmative Action Programme award for best
practices in the employability category: (from left) Foram Nagori, Vasant Ayyappan, Milind
Kamble (chairman, Dalit Indian Chamber of Commerce), HN Shrinivasan and Deepak Bhatia
communities by setting up more training
centres in locations with a high density of
these marginalised people. This led to the
establishment of new centres at Dimapur in
Nagaland, Umran in Meghalaya, Dibrugarh and
Guwahati in Assam, Kalimpong in West Bengal
and Dhamtari in Chhattisgarh.
Seven more centres are being planned.
Indian Hotels has partnered the Directorate
of Vocational Education and Training in
Maharashtra to adopt an industrial training
institute (ITI) at Lonavala and convert it into
a ‘centre of excellence for hospitality and
skills-training’. The company already runs a
similar centre at Khultabad, near Aurangabad,
Maharashtra, in partnership with the nongovernment organisation, Pratham.
The basic training focuses things such as
room and restaurant services, driving and auto
mechanics, bakery skills and spa services. The
courses emphasise practical, hands-on training
conducted in demonstration rooms at the
centres and also at the company’s properties.
The initiative also includes the training of
64 Tata Review
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trainers. More uniquely, Indian Hotels has also
been offering training in the crafts (some 300
crafts people have been trained so far). And, in
a tie-up with ITIs in Bengaluru and Nashik, the
hotel chain provides training for electricians
and auto mechanics.
Indian Hotels has led the hospitality
industry’s participation in the national skill
training scheme, ‘hunar se rozgar’ (employment
through skill), by piloting the process at its New
Delhi hotels. It has also taken a decision to step
up recruitment from the tribal regions of India’s
north-eastern states.
The downstream impact is considerable.
Not only have companies come forward
to support the centres, even hotels and
restaurants in the vicinity are joining in the
effort by asking for their staff to be trained
there. More interestingly, some of the women
trained in bakery skills have opted to become
entrepreneurs rather than employees at a hotel
or restaurant or shop; a group of older women
in Bengaluru have formed a self-help group to
sell their products. ¨
special report
Case study: tata BusIness support servIces
Business, socially speaking
What began with a search for cost-efficiency has led TBSS to a
strategy that not only addressed a critical commercial challenge
but also furthered the company’s affirmative action agenda
T
he Tata Affirmative Action Programme
jury honoured Tata Business Support
Services (TBSS) in recognition of its
initiative in strategically linking business
growth plans with boosting employment and
employability for people from the marginalised
scheduled caste and tribe (SC/ST) communities.
“The strategy is very simple,” says TBSS
chief executive (and holding interim charge
as managing director) Sarajit Jha. “It’s about
starting outsourcing centres in rural areas
where there are significant numbers of people
from the SC/ST communities. These centres
are where we can train and employ them. The
locations are more cost-effective and, with
access to talent in its natural domicile, ensure
low attrition rates.”
The commitment — or “sankalp”, as
Mr Jha terms it — is that the young people
trained at the TBSS centres will emerge as more
employable than when they entered the training
programme. The business benefit to TBSS
is lower attrition and higher cost-efficiency.
The synergy between the two goals makes the
strategy sustainable.
A wholly owned subsidiary of Tata Sons,
TBSS currently has a staff of more than 10,000
people at its 18 service delivery centres in 15
locations. What it does is provide business
process outsourcing (BPO) services: customer
-care administration services, direct marketing
and allied services, and specialised domaindriven helpline services. While cost-efficiency
is a key differentiator in this business sector,
the challenge here is the high attrition rate
(between 70 percent and 80 percent a year). TBSS
addressed both challenges with a strategy that
also served to take its affirmative action initiative
into more effective territory.
The initiative began with a search for cost
efficiency. Till 2007 TBSS had its call centres
located in bigger cities such as Pune and
Tata Business Support Services: The journey so far
rural centres
percentage
people
of sc/st
total population
from sc/st
population in
employed in
communities
the region as
FY 2013
employed in FY
per 2001 census
2013 (in %)
projection
of sc/st
headcount for
FY 2014 (in %)
Ethakota (Andhra Pradesh)
20%
160
51 (32%)
62 (35%)
Munnar (Kerala)
67%
308
191 (62%)
208 (66%)
Bellary (Karnataka)
36%
144
6 (34%)
14 (9%)
Khopoli (Maharashtra)
56%
276
77 (28%)
77 (28%)
Mithapur (Gujarat)
9%
151
37 (25%)
43 (25%)
Shrirampur (Maharashtra)
24%
208
21 (10%)
27 (12%)
Ambada (Andhra Pradesh)
—
—
—
70 (10%)
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special report
The TBSS team with the TAAP award for best practices in the strategy category: (from left) Sarajit
Jha, Milind Kamble (chairman, Dalit Indian Chamber of Commerce) and Anamika Sarma Iyer
Hyderabad. That year the company decided
that its future centres would be located in
smaller towns, situated close to rural areas.
TBSS identified six locations for this purpose:
Ethakota (Andhra Pradesh), Mithapur
(Gujarat), Khopoli (Maharashtra), Munnar
(Kerala), Bellary (Karnataka) and Shrirampur
(Maharashtra). In all these towns, some 35
percent of the population is from the targeted
SC/ST communities.
Today about 15 percent of the total TBSS
staff is located in Tier-IV cities and smaller
towns. That is a total of about 1,300 employees,
of whom about 400 (31 percent) are from the
SC/ST communities. Meanwhile, the number
of SC/ST employees is projected to rise sharply
and TBSS has, consequently, got down to
pinpointing places where it can set up more
such centres: Chhindwara (Madhya Pradesh),
Imphal (Manipur), Dehradun (Uttarakhand)
and Gopalpur (Odisha), all of them towns with
a high ratio (between 21 and 49 percent) of SC/
ST communities in the total population.
TBSS currently trains about 17,000 young
people every year in a range of BPO services;
over the last two years it has employed 3,000
young people from SC/ST communities who
66 Tata Review
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were trained at its centres. “Even those we don’t
employ directly,” says Mr Jha, “find it easy to get
jobs at other BPO centres once it is known that
they have trained with us.”
The training is empowering, “not only
because it leads to jobs, but also because it builds
social confidence,” says Mr Jha. The training
curriculum comprises core work related areas
like voice training and relevant skills to handle
work equipment.
Going forward, TBSS is looking to build
better rural connectivity, further lower costs
over time and strengthen its presence in social
mobile analytics and cloud computing services.
And the company’s eyes are focused on the
social benefits its presence brings. As Mr Jha
says: “ When employment grows in rural areas,
then money flows there, other businesses grow,
education improves, girls marry later, study
more and earn when they are employed. Thus,
gender equity improves!”
This far-reaching social impact is what the
BPO sector — led by the Nasscom Foundation
— has begun to describe as ‘impact sourcing’.
And that is where TBSS is headed: impact
rural areas to improve social equity and, in the
process, improve its operational efficiency. ¨
special report
Case study: tata cHemIcaLs
Back to better schooling
Where most bridge-course education programmes aim to bring
dropout students to high-school levels, the Tata Chemicals
initiative seeks to prepare dropouts among girl students for college
T
he Tata Affirmative Action Programme
jury named the Tata Chemicals
education initiative in partnership with
SNDT University, Mumbai, as a best
practice for its successful efforts in enabling
school dropouts to access higher education.
This education initiative began with
Mangubhai Chavda, a resident of Surajkaradi
village of Okhamandal, near the Mithapur plant
of Tata Chemicals in Gujarat, where he was
employed. The 2001 Gujarat earthquake had
destroyed several structures in the area, among
them the Mahadevpara School at Mr Chavda’s
village. The widespread fear and despair that
prevailed after the disaster resulted in many
schoolchildren staying away from class.
Families were hesitant to allow their children to
go to school.
It was in this situation that Mr Chavda,
motivated by a sense of duty, began to repair
the school building as a personal initiative. He
painted the walls in bright colours, cleaned the
yard, planted flowering plants and even offered
to help some children with fees and school
materials. The children returned to school,
months and years passed and Mr Chavda
remained engaged with the institution, helping in
various ways — from moral support to financial
and material aid. Then, in 2004, he persuaded
five girls from nearby Surajkaradi village to join
a distance-learning programme run by Mumbai’s
SNDT Women’s University.
Tata Chemicals became involved in this
initiative 2009 when company executives
learned about Mr Chavda’s remarkable efforts
to encourage the schooling of local girls, even
helping them enrol for college and a university
education. The school lies in an area where 65
percent of the population is from scheduled
caste communities and, hence, the project was
brought under the Tata Chemicals Society for
Rural Development (TCSRD) ‘Hope’ initiative,
part of the company’s Tata Affirmative Action
Programme engagement.
Tata Chemicals decided to introduce a
bridge programme to help students prepare
for the entrance exam of Mumbai’s SNDT
University. Designed in partnership with SNDT
Vocational training for affirmative action
Year
Number of girls enrolled (and successfully
graduated) from bridge course
Number of girls
trained in vocational courses
2008
85 (100%)
65
2009
125 (100%)
85
2010
155 (100%)
125
2011
185 (100%)
85
2012
225 (100%)
75
2013
160 (100%)
66
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The Tata Chemicals team with the TAAP award for best practices in the education category:
(from left) Mangubhai Chavda, Milind Kamble (chairman, Dalit Indian Chamber of Commerce),
Alka Talwar and Arup Basu
University, the programme is aimed at girls who
are 18 years old or more, but have dropped out
of school. It seeks to bring them up to the level
where they can sit for university entrance exams
— unusually ambitious, considering that most
bridge courses in India aim at bringing dropout
students to high school education levels.
After the candidate clears the entrance
test, she is enrolled for the SNDT Women’s
University distance learning programme.
The courses offered by the university are for
bachelor’s degrees in science, the humanities,
commerce and law. The university also offers
diploma courses in tailoring, parlour education,
art and commerce.
The bridge courses offer education
in mathematics, history and women’s
rights, allowing students to qualify for the
university entrance examination. All courses
are conducted in Gujarati and students are
allowed two attempts at the entrance exam.
Every student enrolled for the bridge course
since Tata Chemicals began this initiative has
successfully cleared the entrance exam. Since
68 Tata Review
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July 2013
2008, 1,045 girls have graduated from this
programme, of who as many as 790 are from
the scheduled castes.
Building on the success of the bridge
programme, which has given the girls a
prized degree, Tata Chemicals has also started
vocational training courses in tailoring,
computer work, etc for girls (certified and
supported by the Gujarat government). Since
2008, close to 500 girls have trained at the
vocational centre. Tata Chemicals also helps the
graduating girls get jobs or bank loans to set
up businesses and some 155 of the graduating
students have set up their own enterprises,
more than 200 have got employment, 125 in
government jobs.
For Tata Chemicals, the way ahead is to
expand the programme and involve former
students to mobilise support. For Mr Chavda,
who was honoured with the Shram Veer Award
for his work by the Government of Gujarat
and remains engaged with the programme, its
growth and success is a matter of much personal
satisfaction. ¨
special report
benefiCiary Case study: KanIpnatH JawaLe
the advantage of ability
A daily wage worker in 2001, Tata Affirmative Action Programme
beneficiary Kanipnath Jawale now runs a `2-million business,
which has translated into his extended family prospering, his
capabilities improving and his dreams getting ever bigger
K
anipnath Jawale was still in his teens
when he left Aagde, a small, desolate
village in Ambad taluka (block) of
Jalna district in central Maharashtra, a
drought-prone region that sees persistently high
levels of migration. The year was 2001 and
Mr Jawale came to Pune, where he became one
of thousands of daily wage labourers eking out a
living in the fast-growing city.
“There was no work for me in my village
or nearby towns,” he explains, “and so I left to
look for a job.” Mr Jawale had a few advantages
over most other migrant workers: he had studied
up to Class XII, he had a home with his sister
and brother-in-law and, above all, he had the
advantage of being very ambitious, balanced by a
sense of reality.
Even while he continued working as a daily
wage worker for four years, Mr Jawale bought a
tempo (a small commercial vehicle) and began
running it, in his off-duty hours, for the glovemaking factory where he was employed. “But
it didn’t really give me much of an income,” he
says, “I had to push for work and even then there
were days when it was idle.”
Then two enormously significant events
took place: one, the landlord of the house his
sister and brother-in-law rented proposed a
marriage between his daughter and the young
worker; and, two, Mr Jawale met Milind
Kamble, chairman of Dalit Indian Chamber of
Commerce and Industry.
“Both people have turned out to be
wonderful for me,” says Mr Jawale. “I couldn’t
ask for a more supportive wife than Sushma and
Mr Kamble pointed me in the direction to real
entrepreneurship, suggesting that I set up my
own manufacturing unit for gloves and other
leather products.”
Sushma Jawale willingly put up her
jewellery as mortgage for a loan and
Mr Jawale started his manufacturing business.
Kanipnath Jawale at the TAAP convention in Mumbai
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“The Tata Motors people have helped
me with very close mentoring and handholding… They showed me how to become
more competitive vis-a-vis other vendors, in
terms of quality, cost and delivery.”
Subsequently, Mr Kamble referred him to people
at Tata Motors, where they were implementing
the affirmative action programme. “That started
me on the most significant change in my career,”
says Mr Jawale.
At Tata Motors Mr Jawale met people who
would turn out to be significant influencers in
his life, especially Satish Karanje, manager for
materials at the company’s material planning
and purchase division in Pune. “Mr Karanje
and his team members advised me on how to
improve my products and where I could source
better materials at less cost; they even helped
me contact suppliers,” says Mr Jawale. The Tata
Motors team also guided him on the necessary
steps to be taken to meet the company’s
vendor registration norms and other legal and
accounting-related compliances he needed to
adhere to in his business.
“The Tata Motors people have helped me
with very close mentoring and hand-holding,”
says Mr Jawale, adding in deep appreciation,
“They showed me how to become more
competitive vis-a-vis other vendors in terms of
quality, cost and delivery.”
On their part, the Tata Motors team
is hugely complimentary of Mr Jawale. “He
followed our suggestions quickly and efficiently,”
says Mr Karanje. “It was a pleasure mentoring
someone so driven.”
Mr Jawale displayed plenty of ingenuity
as well, especially in devising technical
improvements. For example, Tata Motors
standards demanded that the safety gloves to be
made of leather. “But these were uncomfortably
hot to wear,” says Mr Jawale. On enquiry, he
found that the standards stipulated that only the
grip needed to be leather. That’s when
Mr Jawale designed gloves with a mix of leather
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and cotton padding — the grip of the palm
remained constructed of leather but the top of
the hand was made of cotton padding — making
it much more comfortable for the company’s
workers to use.
From making gloves Mr Jawale graduated
to manufacturing safety shoes, leg guards and
aprons. Now he also occasionally undertakes
special contracts, like the manufacture of badges
for shop-floor employees. Each of the badges
has two parts, a stitched cloth section and a key
chain and ring. Following field research,
Mr Jawale was able to deliver a product that
met the Tata Motors specifications and quality
standards and was as much as 75 percent
cheaper than the product delivered by his
nearest competitor.
Today Mr Jawale’s business is sizeable,
reporting a turnover of `2 million per year and
employing seven people besides himself. The daily
wage earner turned entrepreneur shares his good
fortune with his extended family, four of whom
are employed at his factory. His family home in
Aagde has been refurbished and his children and
his sister’s children now go to better schools.
Mr Jawale has bought a small plot of land
in Pune where he intends to build a house. He
has also purchased a two-wheeler and dreams of
buying a car — “a Tata Safari, that’s my dream
car,” he says. And he has invested in improving his
skills, an achievement of which he is most proud.
“I enrolled in a three-month course
to gain some basic computer skills and am
now attending classes to learn English,”
Mr Jawale says with evident pleasure.
Mrs Jawale, meanwhile, is also acquiring skills
that she may use to add to their livelihood (she
has undertaken to attend a beautician’s course).
“She is very intelligent and a strong person,”
Mr Jawale says proudly. “She has been the
backbone of all my endeavours.”
Kanipnath Jawale hopes to progress
to manufacturing automobile components
some day. More immediately, he plans to help
others, providing employment, sharing his
knowledge about entrepreneurship and offering
encouragement to people who, like himself, dare
to dream. ¨
special report
‘We must correct a
historic injustice’
B Muthuraman has been
Council on Affirmative Action.
one of the most vociferous
The Tata Steel vice chairman
supporters of the affirmative
and head of the Tata group’s
action cause in Indian
Affirmative Action Forum
industry, both in his former
believes that creating an
role as president of the
equitable social order is critical
Confederation of Indian
for the economic and social
Industries (CII) and his current
development of India and that
position as chairman of the
the country cannot realise its
industry body’s National
potential unless it takes the
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disadvantaged sections of its
population along.
In this interview with
Sangeeta Menon, the guiding
force of the Tata Affirmative
Action Programme (TAAP)
talks about the affirmative
action agenda and why it is
time for the private sector to
take on greater responsibility
in creating more opportunities
for the country’s scheduled
caste and scheduled tribe
communities.
What role can the private sector play
in creating a more equitable social
order in India?
India’s problem of social injustice has not got
solved over many years and one cannot expect
the government alone to resolve the issue. The
government can enact laws, it can mandate,
but it cannot really participate in the process of
giving equal opportunities to everybody. About
75 percent of India’s GDP growth comes from
the private sector and, therefore, the private
sector has an important role to play in setting
social wrongs right. Besides, if we say that social
inequality is the prime factor impeding India’s
growth, then the private sector ought to take
interest in solving this problem.
Affirmative action is about giving ‘due
share’ to people who did not have it for many
centuries. So we are correcting a wrong inflicted
on some people for thousands of years. It is
not only the right thing to do, but it also makes
business sense, because — I have personally
seen this in many cases — people from the
scheduled castes and scheduled tribes, once
they are given the opportunity to flourish, are
far more loyal to the organisation. They don’t flit
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from one company to another because they are
at the beginning of their development process.
However, business sense is not the only reason
why we must adopt affirmative action; we must
do it to correct a historic injustice.
Do you think there is widespread
acknowledgement of this issue
within Indian industry now?
Yes, it has been drilled into people so many times
that there is greater acknowledgement now.
At the CII annual general meeting some years
ago, [India’s prime minister] Dr Manmohan
Singh said he would like to see industry take on
affirmative action as an agenda for itself. Since
then CII has adopted the affirmative action
agenda. We discuss affirmative action at every
national council meeting, we have set agendas,
we have defined the four Es — employment,
employability, entrepreneurship and education
— and we take on targets every year: how
many people to be employed, how many to
undergo skills development, how to get Dalit
entrepreneurs to supply materials, and so on.
CII has 7,500 companies as members. If
you take the top 100 companies, many of them
are doing one thing or other in the area of
affirmative action. But many of the medium and
small companies either don’t know how to do it
or they are not convinced or they don’t have the
wherewithal to accomplish much. We are asking
them to combine and create a pool on a regional
or state level and contribute to a common cause.
There is definitely great realisation among
the CII companies and a greater realisation
among Tata companies. I am happy to say that
more than 50 companies in the Tata group have
committed themselves to affirmative action,
and they now work towards specific targets and
measures. So the simple answer to your question
is, yes, there is better realisation and more
commitment, but far more needs to be done.
How would you describe the
affirmative action journey of Tata
companies?
Since working for societal causes is in the
DNA of the Tata group, it was not difficult to
special report
The team that assessed Tata Motors being awarded by Mr Muthuraman; (from left)
Dr Joy Deshmukh Ranadive, TCS; Tahsheen Katrak, Trent; Pinakshi Khandelwal, TQMS;
and Dr Percy Batliwala, Tata Teleservices
convince our companies that here is an issue that
they need to tackle quite apart from corporate
social responsibility (CSR). Sometime last
year we had put down a 12-point checklist on
affirmative action for our chief executives. This
requires each company to have an affirmative
action council headed by the chief executive.
Every company must have an affirmative action
champion and a budget that is separate from
the CSR expenditure. And every company must
have annual targets on employability, education,
the number of scholarships to be offered, the
number of entrepreneurs to be created, the
number of people to be employed.
Many Tata companies have adopted
affirmative action in a big way. The group
comprises about 100 companies, of which 50-60
are already on board with the affirmative action
cause and this represents the overwhelming bulk
of the Tata companies operating in India.
The Tata group has also instituted a system
of assessment along the lines of the Tata Business
Excellence Model (TBEM). Companies apply
for their affirmative action efforts to be assessed
and a team of assessors assess the companies on
the basis of certain defined criteria; we even have
an external jury. So there is a structured process
in place for taking affirmative action to a higher
level within the group. Tata companies are
approaching the issue in an organised manner;
the journey thus far has been good.
Are you happy with the progress
made by Tata companies?
I am happy with the progress, but I want to see it
move faster. The affirmative action programme
is not like any other, not even TBEM, where
if you do your processes well, build a good
leadership and human resources process, or if
you have a good manufacturing process and
a sound customer process, it will quickly be
reflected in your bottom line. No such thing will
take place immediately in any affirmative action
programme. It has to do with long-term creation
of equality and long-term business stability. All
that is not a quarter-on-quarter or year-on-year
affair, so the inclination to take on an affirmative
action programme will be low compared with
the business excellence model. Which is why
perseverance and tenacity are important.
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The Tata group has been active in CSR for
150 years without it being mandatory and
without anyone putting pressure on us ...
I would like to see the affirmative action
journey going the same way.
How important is it to educate
and sensitise organisations and
employees about affirmative action?
That is an area where more focus is required.
For example, it is difficult to get data from any
company on the number of scheduled caste and
scheduled tribe people it employs. People start
thinking, ‘Why is this data being sought.’ They
wonder if they are going to be marginalised or
penalised. On the other hand, there is another
set of people who think that in current times
they don’t have to disclose their caste. But this
can be overcome if there is good communication
between management and employees, a clear
statement that the purpose of asking for such data
is to ensure that no injustice is done to them.
One thing that must not happen in all this
— and it’s a very thin line — is that none of these
initiatives should create an entitlement culture.
That is wrong. The culture that must be created
is one that gives people opportunities to get jobs,
become better and so on.
Do you think the four Es sufficiently
address the problem at hand?
By and large the four Es cover the basic need. As
long as we have these in place, we are fine. We
may add something when we see an opportunity.
For example, Tata Steel has added one more
E to its affirmative action agenda — ethnicity
— because it understands that people from
the scheduled castes and tribes want to retain
their culture and identity. Tata Steel has been
running a tribal cultural centre in Jamshedpur,
where tribal languages are taught and where
tribal culture and identity is preserved. Other
companies may not have the wherewithal to do
such a thing now, but over a period of time we
need to attempt it in other companies, too.
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Do you think affirmative action
should be made mandatory in the
private sector?
In my personal view none of this should be
made mandatory. If one is not convinced about
something, one will find ways to circumvent
the mandate. Take CSR, for example. The Tata
group has been active in CSR for 150 years
without it being mandatory and without anyone
putting pressure on us. And we have done it
extremely well. Nobody mandated it. The group
felt intrinsically that it was the right thing to do.
I would like to see the affirmative action journey
going the same way. It is fundamental to the
growth of India; we will not be able to progress if
this does not get resolved.
How do you see the affirmative
action effort progressing?
I will not jump to the next level in this
journey quickly. I would strengthen the
current initiatives and make it bigger before
we move to the next level. Almost 25 percent
of India’s population are from the scheduled
caste and scheduled tribe communities, but
is that reflected in the top 100 positions in
organisations? Unless we see more numbers at
the top we cannot move to the next level. This is
a different kind of journey, one where progress
is going to be inherently slow and we are at
the stage where we are sowing the seeds and
strengthening the roots.
What is the status of the Section 25
company that you propose to set up?
The company will be formed in another
couple of months. The Section 25 company
is going to be a non-profit venture. We are in
the process of receiving regulatory approvals
and the company is going to be formed with
an initial capital of `25 million. The company
can then provide capital to Dalit entrepreneurs
and help create more entrepreneurs from
among the scheduled caste and scheduled tribe
communities. In this context, we will partner
the Dalit Indian Chamber of Commerce
and Industry to identify and vet potential
entrepreneurs and proposals. ¨
PHOTOFEATURE
Walwhan and the
world within
The ecosystem that Tata Power has nurtured around its hydroelectric operations
near Lonavala (on the outskirts of Mumbai) shines brightest near and about the
90-year-old Walwhan dam. This is an ecosystem that has space for business and
the community, for people and profits, for the environment and for life of all kind.
Text by Jai Wadia; photographs by Rajesh Shah and Vivek Vishwasrao
July 2013
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PHOTOFEATURE
Tata Power pioneered the generation of
electricity in India by commissioning
India’s first hydroelectric power plant,
in Khopoli, in the hills of the Western
Ghats, in 1915. The company followed
this up with hydroelectric plants at
Bhivpuri and Bhira. These operations
have played a vital role in providing
clean power to nearby Mumbai.
The garden area in and around the Walwhan
dam has an abundance of flora and fauna. The
lush greenery is embellished with a variety of
flowers, the singing of the Malabar whistling
thrush and other songbirds, and many species
of brilliantly adorned butterflies.
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PHOTOFEATURE
Schoolchildren on a visit to a greenhouse that
Tata Power has set up in Walwhan. The
company’s plants do more than generate
power; from these operations flow Tata Power’s
environmental and social development
initiatives, touching the lives of communities
living around the 36,000 acre catchment area.
Tata Power has for long years been
investing in growing and maintaining
the green cover in Walwhan. About
900,000 saplings are planted every
year and the survival rate is 30-40
percent. This afforestation effort, which
helps local villagers earn extra income,
is designed to be sustainable.
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PHOTOFEATURE
Walwhan is home to a unique initiative
— the conservation of the Mahseer,
a fish of the caro family. There is a
Mahseer hatchery that breeds some
300,000 fish larvas every year. Started
in 1970, this programme has been so
successful that it now distributes close
to 100,000 larvas to other parts of
India, ensuring that the Mahseer thrives.
Different species of garden lizards cavort in
the canopy that covers Walwhan. Additionally,
the garden here is home to about 60 different
types of medicinal plants, specially cultivated
in a greenhouse and in open areas. Visitors can
walk among the plants and learn about their
health and wellness properties.
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PHOTOFEATURE
Health care, education and infrastructure are
the focus areas of Tata Power’s community
development programme, which covers 107
villages in the catchment areas of Maval,
Mulshi and Shirawata. Over the last five years,
regular health camps have been organised and
free medicines provided to needy villagers.
Tata Power has tied up with non-profits
such as Baif and Rural Communes to
improve local agricultural techniques
and increase farmer yields and
income. Also, village ponds have been
replenished with rohu and katla fish,
which are either eaten by the locals or
sold for extra income.
July 2013
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Community
‘This has been the
unfolding of a vision’
He has had a remarkable
journey with the Tata group,
more than 50 years long,
in different companies and
business capacities marked by
achievements and accolades.
For RK Krishna Kumar who
retired as a director of Tata
Sons on July 18, 2013, perhaps
the most fulfilling of his many
accomplishments was an
endeavour that had little to do
with business.
Mr Krishna Kumar has been
the principal force behind the
setting up of the Tata Medical
Centre (TMC), Kolkata, a
hospital that appears bound
to become just as much an
institution for the treatment
and cure of cancer as its
inspiration and namesake in
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Community
Mumbai. Mr Krishna Kumar,
who joined the Tata group
back in 1963, talks here to
Christabelle Noronha about
TMC — “a labour of love,” as
he puts it — how it came about
and how much more it will
become in the years ahead.
What does TMC, Kolkata, mean to
the Tata group?
TMC is not an isolated project but part of a
continuing Tata tradition of 150 years, the
bedrock of which is giving back to society what
you get from society. This was a fundamental
principle with Jamsetji Tata, the founder of the
group, and it is the foundation on which the
group has been built. This principle will continue
to illuminate the future course of the group.
Why a hospital to treat and care for
cancer patients?
Back at the time when we were considering
setting up the centre — as a gift to the nation
during the centenary year [2004] of the death
of Jamsetji Tata — we found that a number of
hospitals and facilities had sprung up in India
to treat a variety of medical conditions and
ailments. We also discovered that there was a
special need to set up a world-class hospital
in eastern India to treat cancer, which is now
almost epidemic in nature. This and the fact that
good medical facilities for cancer treatment are
beyond the reach of the poor.
In 1945 the Tata Memorial Hospital was set
up by the Tata trusts in Bombay. The hospital
has, down the years, matured into a worldclass institution that offers some of the best
treatments for various forms of cancer and it has
served a staggering number of patients. But it is
overcrowded, bursting at the seams with patients
pouring in from different parts of India and from
outside the country.
We saw a big gap in terms of treatment
facilities for cancer in the eastern part of the
country, in West Bengal, Odisha, Assam and the
other north-eastern states, and, from outside
India, in Bhutan and Bangladesh. Countless
patients from these places had to travel all the
way to Mumbai for treatment and many of them
and their relatives faced a formidable challenge
to find a place to stay, some forced to live on the
pavements outside the hospital. This was when
our chairman emeritus, Ratan Tata, suggested
that we consider setting up a cancer hospital in
Kolkata. There was also a long-standing demand
from the shareholders of Tata Global Beverages
in Kolkata to set up a hospital in the eastern part
of the country. So the timing, the need and scale
were appropriate for a Tata intervention.
We did some research and estimated the
financial implications and technical challenges,
as also finding the right people to manage
the hospital. We interacted closely with the
Tata Memorial Hospital, with the late Dr
Katy [Ketayun] Dinshaw, who passed away in
January this year. We approached many of the
big medical equipment manufacturers, among
them General Electric and Siemens, to identify
the latest technology in cancer diagnostics,
in imaging and laboratory equipment. We
will remain forever grateful to all those who
participated in making the hospital take shape
exactly as we had planned it.
We began with an early estimate that it
would cost us about `2 billion to establish the
centre. As we progressed we decided to go in
for the best and most advanced in the field of
oncology. I must say, though, that the starting
point was the willingness and the eagerness with
which the Tata trusts and many Tata companies
contributed significant sums of money for the
project. By the time we had completed work
on the centre the cost was close to `3.5 billion.
The ease with which the required resources
were collected from our companies and the Tata
trusts reflects the philanthropic impulse that is
ingrained in the Tata group.
We also got a lot of support from the
Government of India. For example, we received,
within a short period, an exemption from import
duties. The cause was noble and the government
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Community
knew that, coming from the house of Tata,
a substantial part of the treatment would be
subsidised or free for poor patients. I met the
finance minister, the revenue secretary, and
the chairman of the Central Board of Direct
Taxes on various issues and I found all of them
generous and supportive. Many of us are all
too quick with criticism of the government.
For my part, I would like to pay tribute for the
support we received from the government on
this project.
Post the opening, Geeta Gopalakrishnan
has led a magnificent effort to raise funds for
the expansion of the hospital from within
India and outside the country. What I thought
would be a trickle has now become a tide. It
is especially heartwarming to have unknown
individuals making donations even though they
have not been approached directly. TMC now
has a corpus of `1.76 billion. It has received
an approval from Indian Oil Corporation for
a donation of `660 million to fund further
expansion. There have been other significant
donations and this flow continues.
We were fortunate to be introduced,
through Dr Dinshaw, to Dr Mammen Chandy,
a person with true Christian virtues and a
distinguished oncologist. Dr Chandy had just
retired from the Christian Medical College,
Vellore. I met him and was impressed by the
range of his knowledge, his experience with
oncology and also his compassion. Together,
we gathered a good team of professionals
from different disciplines. Many of them left
lucrative positions outside India to come back
and serve the centre.
Tell us about the challenges the
team encountered.
We got a lot of support from the Government
of India. Many of us are all too quick with
criticism of the government. For my part, I
would like to pay tribute for the support we
received from the government on the project.
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This was a labour of love. There were plenty of
challenges over the initial two years to
get things going, from securing land and
so on to dealing with cost overruns. But we
stayed the course, we wouldn’t give up and the
centre took shape. This has been the unfolding
of a vision.
Having seen patients and their relatives
on the pavements outside the Tata hospital
in Mumbai, I was keen that we should also
have a facility to house, free of cost, needy
patients and those caring for them near the
new hospital. So we created another trust,
the Premashreya Trust, which is building
a structure that can accommodate 250-300
people at a time. We acquired a small piece of
land near the hospital and a building is now
coming up there. We expect it to be completed
by mid-2014 and it will be run by a non-profit
organisation. From giving a place to stay
free of cost to caring for patients, all of this
becomes an invisible but necessary adjunct
to the hospital. Cancer treatment itself can be
debilitating in terms of costs incurred. If we
do not provide this facility the outlook for the
families of poor patients would be bleak.
We have a special children’s ward, which
was built and designed to have the right
ambience. This was to try and lighten the
terrible tragedy of little kids being treated for
leukaemia and other cancers. We have done
everything we possibly can to treat them with
love and care and Anu Chandy, Dr Chandy’s
wife, is leading this effort.
When we planned the original hospital
and built it, we had made provisions for
expansion, but we had not expected that the
need would come so quickly. We did provide
the basic infrastructure in phase one but this
is becoming inadequate. So expansion in the
second phase will need to be done and the
centre is addressing this task.
Are there any other facilities
besides all this?
We have provided a small complex in the
second phase for the education of the nursing
staff and specialists. We have also linked
Community
up with similar institutions elsewhere.
For instance, we have a tie-up with Duke
University in the United States and there are
plans for collaborations of this kind with other
such institutions, especially with regard to
nursing skills. Education is the core in making
this hospital modern and cutting edge in
its understanding and treatment of cancer.
Additionally, we have invested in a piece
of land with the intention of establishing a
research centre.
Would this be one of the most
satisfying initiatives you have been
involved with in your time with the
Tata group?
Yes, without a shadow of doubt this has been
one of the most satisfying initiatives I have
been involved with. Also satisfying was my
stint in the high ranges of Munnar in Kerala.
When I was with Tata Tea, we had thousands
of plantation workers living in difficult
conditions. They had been looked upon as
captive labour and their living conditions were
not what I would call acceptable. We drove
for more profits so that we could invest a part
of those profits in building schools, hospitals,
better houses and the like for our people.
In this context I must mention something
that has not been recognised well enough
in India. For a long time now we have been
supporting an endeavour called Shrishti
that we seeded in Munnar. Here, some 150
children, mentally and physically disabled, are
taught vocational skills. These children have
reached high levels of excellence in a variety of
vocations and the products they have crafted
have attracted international attention.
We also need to look more deeply at how
to improve the lives of young girls elsewhere
in other parts of our operations. The girl child,
I think, should be the central focus of our
attention in the coming years, because they
suffer the most in India and they constitute the
bedrock of this country’s future.
In recent times I have asked myself:
“Am I a professional manager and has my
career been influenced by the professional
RK Krishna Kumar (extreme right) looks on as Ratan Tata
inaugurates the Tata Medical Centre in Kolkata on May 16, 2011
decisions I may have taken.” I am coming
around increasingly to the view that I am not
a professional manager. The most satisfying
part of the 50 years I have been associated with
business is that I have been able to work for
the Tatas and for India. And with the Tatas it
is not just about making money. People have
made harsh judgements about my relentless
pursuit of profit in the various companies I
have been associated with. I may have been a
hard taskmaster but at the heart of it all was
the realisation that a Tata company must earn
an incremental profit so that we can reach out
to those in desperate need. I look upon myself
more as a non-business kind of person.
Institution building is one of the
core attributes of the group? What
next after TMC?
I think we need to look at education as a main
initiative; we need to spend time, effort and
money to bring about the change that we
would like to see in this sphere. Education can
take many forms. It is not essential anymore to
build brick-and-mortar structures to impart
learning; we can create virtual institutions
and academies and those seeds have already
been planted by the Tata group with its forays
in virtual education. An area to look at is the
teaching of vocational skills, especially for
young girls and women. ¨
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Community
A heart for healing
The Tata Medical Center in Kolkata has been a
lifeline for cancer patients from the eastern part of
India and the countries neighbouring the region,
and it has set new benchmarks in the treatment
and care of those battling the disease
T
he radiant eyes of Anita
Sheshari [name changed]
light up with all the
enthusiasm of childhood
as she describes a typical day in
her life this summer: plenty of
playtime with friends, art and craft
work — she proudly displays a
bunch of colourful paper puppets
she has just finished making — and
watching her favourite cartoon
shows on television. On certain
mornings Anita and her parents
also make a visit to the Tata Medical
Center (TMC) in Kolkata for her
chemotherapy appointment or for
a follow-up with the paediatric
oncologist at the hospital.
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The 11-year-old, sixth standard
student from Dhanbad, Jharkhand,
has been undergoing treatment
for leukaemia at TMC since
February this year. After doctors
at the local hospital in Dhanbad
failed to diagnose her condition,
Anita’s parents took her for further
investigation to the Tata Main
Hospital in Jamshedpur, from where
she was referred to TMC. Since then
she has been under the care of the
team at TMC, spending the initial
weeks of treatment in the hospital’s
children’s ward and now staying at
the nearby St Jude India Child Care
Center so she can complete her
treatment as an outpatient.
Anita is one of the scores of
cancer patients from the eastern
region of India who travel to Kolkata
from their villages and towns to get
quality cancer care, often free or
subsidised, at TMC.
The reason for setting up the
hospital at Rajarhat, on the outskirts
of Kolkata, can be traced back to
the experience of the Tata Memorial
Hospital in Mumbai, where about
30 percent of the patients used to
be from the country’s eastern parts.
With no access to quality cancer
care in their own states, patients
and their families would travel huge
distances to get treatment, and were
forced to deal with much disruption
and inconvenience in their lives.
Eastern comfort
The `3.5-billion TMC was conceived
as a philanthropic initiative to serve
cancer patients from the east and
northeast of India as well as those
from neighbouring countries such
Community
The Tata Medical Center in Kolkata
as Bangladesh and Bhutan. In fact,
a large number of cancer patients
from Bhutan — their tobacco habit
makes the Bhutanese a high-risk
category for mouth cancer — travel
to TMC to receive treatment as the
Government of Bhutan takes care of
their medical expenses.
“We saw a big gap in terms
of treatment facilities for cancer
in the eastern part of the country
— in West Bengal, Assam, Odisha,
Bihar, and beyond — in Bhutan,
Bangladesh and so on,” says
Tata Sons director RK Krishna
Kumar, the driving force behind
the setting up of TMC and a trustee
of the Tata Eastern Medical Trust,
which governs the hospital’s dayto-day operations.. “Patients had
to travel all the way to Mumbai
for treatment and many of them
and their relatives lived on the
pavements outside the hospital. This
was when our former chairman,
Ratan Tata, asked if we could
consider setting up a cancer hospital
in Kolkata itself.”
Not only has TMC brought
comprehensive cancer care closer
to patients from the region, it has
been a lifeline for sufferers lacking
the monetary resources to battle the
disease. That’s because 50 percent of
the hospital’s services are earmarked
for free or subsidised treatment.
Thus, if a paying patient incurs
an expense of over `200,000 for
the treatment of, say, leukaemia, a
patient who has received subsidised
treatment will pay as little as `20,000,
and sometimes even that is waived.
Dr Mammen Chandy, the
director of TMC, illustrates the
manner and benefit of this kind
of generosity. “Some months ago
we had to perform a bone marrow
transplant on a child,” he says. “It’s
an expensive procedure, costing
around `1.5 million, and the
hospital management allowed us to
go ahead with the transplant free of
cost. It is extremely satisfying and
motivating for our team of doctors
to know that we are under no
pressure to explain such decisions.
At TMC we are truly focused on
providing the best possible care for
our patients.”
Anita’s father, a carpenter,
could never have afforded his
daughter’s treatment if it weren’t
for the heavily subsidised medical
services at TMC. Or take the
case of Bimal Mundu [name
changed], a three-and-a-halfyear old suffering from acute
lymphoblastic leukaemia and
undergoing treatment at TMC
since last December. “Back home in
Dhanbad we do not have hospitals
with the kind of facilities required
for cancer treatment. Travelling to
Kolkata for treatment would have
been beyond our reach if we did
not have support of this kind,” says
his father.
corpus for support
The hospital dips into a ‘patient care’
corpus it has created to treat such
sufferers — the funds are received
through donations from individuals
and companies — and even refers
them to the other sources of
financial help.
Trishna Dey, programme
manager at TMC, explains that an
efficient patient navigation system
allows the hospital to “assist the
journey of a patient in the hospital”.
Patient navigators, primarily medical
social workers, not only provide
July 2013
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85
Community
At TMC, the medical services are grounded in hi-tech infrastructure but
moulded by warmth as the ward for young cancer patients (above) shows
all the information required to
help patients and their families
take informed decisions, but also
collect details related to the patients’
socioeconomic status to help the
hospital ascertain the extent of
financial support to be provided.
TMC’s range of services
includes cancer diagnosis, therapy,
rehabilitation and palliative care,
and preventive services are expected
to be added soon. The hospital has
167 beds, with an average of 500
patients admitted in its various
wards every month. The outpatient
department sees 450-500 patients
using its services every day.
Multi-disciplinary disease
management teams, comprising
86 Tata Review
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experts from streams such as
surgery, radiation oncology, medical
oncology, pathology, radiology,
psychiatry and medical social work,
participate in decision-making for
treatment protocols, using evidencebased medical strategies and
appropriate clinical guidelines.
The center has invested
in state-of-the-art equipment,
technology and hospital
management systems and these
place it among some of the bestequipped cancer treatment facilities
in the country. TMC boasts an
integrated surgical suite with eight
general operation theatres, an
operation theatre for brachytherapy
(a procedure wherein radioactive
sources are positioned within or
close to the cancerous tissue) and
a state-of-the-art central sterile
supply department.
To facilitate high-volume
and complex cancer surgery in
an ambient atmosphere, each
theatre is fitted with equipment of
international standards, including
the Magnus Operation Theatre
Tables (TMC is the only hospital
in India to use these). The tables,
with their unique transport system,
eliminate the need to transfer
patients between stretchers and
trolleys, both pre- and postoperation.
TMC’s not-for-profit
philosophy, combined with the Tata
association, has helped it attract
some of the best oncologists from
various areas of specialisation: many
of the doctors left reputed hospitals
in India and abroad to join the team
at the center. “We have created a
sense of community here with a
committed team of doctors, nurses
and support staff who are focused on
providing the best possible care to
our patients,” says Dr Chandy.
Designed to heal
TMC’s buildings and wards are
designed to be in sync with the
center’s holistic approach to cancer
treatment. Spread over 13 acres
of land, with a built-up area of
325,000 sq ft, the hospital has large
open spaces, manicured lawns
and colourful flowerbeds. And its
wards, with high ceilings and large
windows that let in plenty of natural
light, create a sense of space and
cheer, while providing an ambience
conducive to healing.
TMC will, by April 2014, add
another gentle, caring touch to its
offerings for patients. Just 500 metres
Community
from the hospital, Premashraya,
a hostel facility that will provide
either free or subsidised services to
patients and their families, is being
built on 1 acre of land donated by
the Tata group. Inspired by the idea
of Hope Lodge in the United States,
run by the American Cancer Society,
Premashraya will provide clean and
comfortable shelter to 300 patients
and their attendants, reducing some
of the economic burden on patients
and creating a homely atmosphere
for them and their families.
There is continuous
engagement with education and
training at TMC and commitment
to ensuring that doctors and support
staff are in touch with the latest
developments in oncology research
and treatment. “We conduct several
workshops with experts from
leading international hospitals to
keep our staff in touch with the latest
practices,” says Dr VR Ramanan,
deputy director, TMC. “For
example, we recently had a senior
gastrointestinal surgeon perform a
surgery which we streamed live to
the conference room for our team of
doctors to watch.”
The hospital offers a fellowship
programme for clinicians in
areas such as surgical oncology,
haematology, medical oncology,
radiation oncology, paediatric
oncology, anaesthesiology,
diagnostic imaging and pathology.
“Once the hospital completes three
years of operations, we plan to
upgrade to university-recognised
courses,” says Dr Aseem Mahajan,
senior administrative officer, TMC.
Given that nursing in cancer
care is an entirely differently
proposition compared with general
nursing, TMC is also working
on offering an MSc in oncology
We have created a sense of community here
with a committed team of doctors, nurses
and support staff focused on providing the
best possible care to our patients.
Dr Mammen Chandy, director, Tata Medical Center, Kolkata
nursing, the first such course to
be available in India. “We have
received a clearance for this from
the West Bengal State University
and the state government,” says
Dr Ramanan. “Once we receive
a final clearance from the Indian
Nursing Council, we will be ready
to start the course.” TMC will
partner London’s King’s College
to gain expertise in designing and
implementing this course. There are
other partnerships on the anvil —
with the likes of Duke University,
Manchester University, and the
Medical Research Council, UK — in
the hospital’s pursuit of excellence in
services, training and research.
research push
Research itself is set to become big
at TMC, with plans at an advanced
stage to establish a dedicated
research center — the `500-million
Tata Translational Cancer Research
Center — near the hospital. Land for
the project has already been bought
and the TMC team is working
to raise funds for the center. Dr
Chandy believes that the research
center will be a huge differentiator
for TMC. “We are in talks to set up
a joint venture with Oxford Gene
Technologies,” he says. When that
happens we will be the only center
for genome testing in India.”
Meanwhile, with the hospital
already working to capacity in
less than two years and given the
growing demand for its services,
TMC is now planning an expansion
that will see it grow to a 400-bed
hospital, offering many more cancer
patients access to quality treatment.
This next phase will enable TMC
to enhance some of its facilities
while enabling it to use some of the
existing infrastructure to maximum
capacity.
The expansion is expected to
be completed within three years, but
the TMC team already realises that
it is never going to be enough, that
demand for treatment is only going
to rise. Which is why the center
envisages creating a hub-and-spoke
model wherein it will continue to
manage complex protocols and
provide specialised services even
as it trains doctors and staff at
other hospitals in the region to
handle follow-up cases and manage
outpatient, day care, diagnostic and
basic inpatient services.
This will allow the hospital
to take cancer care to a lot more
people, create an ecosystem for
quality cancer care and also reduce
the pressure on itself. The creation
of these centers of cancer care will
also enable TMC to join hands with
other hospitals to advance preventive
oncology and educational outreach
programmes in all these states.
When that happens, patients like
Anita will no longer have to travel
too far for cancer treatment. Cancer
care will come closer home. ¨
— Sangeeta Menon
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MARKETING
Cooling minds,
winning hearts
Backed by research and an acute awareness of
what customers are enticed by, Voltas has reclaimed
pole position in the room air-conditioner market
I
ndia is spoiled for choice, domestic
and foreign, when it comes to
consumer durables and it’s not easy
for an Indian brand to overtake
the plethora of international players
jousting for leadership. Yet Voltas
has not only managed to achieve
pole position in the domestic airconditioner market, it has also been
stretching its lead slowly.
The 19.8 percent market share
the company recorded in May
2013 — based on sales volumes
in multi-brand outlets — is an
improvement on the 18.4 percent
of a year back. That means Voltas
is the undisputed No 1 in the room
air-conditioning space in India. What
makes the success especially sweet
is that it comes at the end of a long
struggle, and it highlights the belief
the organisation had in its ability to
deliver wonderful products.
A veteran in the cooling
business, Voltas can trace its
88 Tata Review
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history back to the 1960s, when it
became the first company to sell
room air conditioners in India. It
soon established its dominance in
the Indian market, but this would
disappear with the advent of South
Korean, Japanese, Chinese and other
brands in the 1990s. The business
went into the red in 1994 and, as the
years passed, matters got worse.
out of the quagmire
Something had to give, and it did.
About six to seven years ago, the
team at Voltas took a hard look
at the business to find a way out
of the quagmire. It was tough.
“Truth to tell, there is no significant
differentiator in air conditioners,
neither in terms of technology nor
economies of scale in running the
supply chain,” explains Sanjay Johri,
the company’s managing director.
“Technology is fairly commoditised
in air conditioners and this is a
challenge faced by all companies,
including Voltas.”
Stiff competition and no
differentiation — these challenges
led the Voltas team to look at the
possibility of differentiating its air
conditioners by creating a unique
identity for the Voltas brand.
“Multinationals in the FMCG [fastmoving consumer goods companies]
are good at this,” says Mr Johri.
“Their whole approach to business
starts with consumer insight and
that’s what drives their products,
distribution and sales. We tried to
replicate the FMCG approach.”
Voltas put a lot of time and
effort into getting insights on the
customer’s mind and needs, and
into seeing how to make best use
of such insights. “We tried to create
a differentiator in the mind of the
consumer,” says Mr Johri. “We were
actually fighting for mind space.”
That battle, back in 2006,
unfolded at a time when
international air-conditioning brands
were using their ‘foreign’ lineage as
an advertising hook to win over the
Indian populace. It was also a time
when the national economy was
MARKETING
booming, with over 9 percent growth
rates. Voltas’s research showed there
was a sense of pride in being Indian.
Taking that as the key factor, the
company ran with the messaging:
‘India ka dil, India ka AC’.
The campaign featured a little
girl running up to the field to cool
down her farmer father with ‘cold air’
from a Voltas air conditioner.
It was emotional and people
remembered it. The campaign proved
to be a breakthrough, enabling the
company to gain a certain amount
of traction vis-à-vis other brands.
Voltas began inching its back up the
leadership ladder and it soon reached
the No 4 position.
Starry Space
Over the next few years Voltas
continued to face, and overcome,
market challenges by keeping its
focus on customer needs. In 2007,
when the cost of manufacturing air
conditioners went up because of a
hike in commodity prices, Indian
manufacturers had to take a call on
whether to absorb these costs or
increase the selling price. Voltas’s
research team dug deep to mine an
Sensible cooling — the customer saves money, the nation saves power
important insight — most customers
were concerned with not just the
unit price but also the running cost
(electricity is expensive in India).
This thought led to a turning
point for the company. Voltas
revisited its technologies and found
that it could make its air conditioners
more energy-efficient at a marginally
higher cost. Accordingly, its
marketing campaign focused on
energy efficiency and showed how a
one-time spike of `1,500 in the price
would help the customer save up to
`3,000 by the end of the year. The
campaign also had a patriotic hook:
while the customer saved money, the
nation saved on power consumption.
“Our advertising budget was
quite high — `200 million — and
it was a tough call to make as the
business was not making money,”
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MARKETING
What has really worked for Voltas is the
focus on consumer insight and creating the
campaign around that; when it all comes
together, you have your eureka moment.
Sanjay Johri, managing director, Voltas
recalls Mr Johri. “But there was a
certain logic we felt would work.”
And it did: the company’s sales
jumped up by 41 percent in 2007-08.
By 2010, energy-efficient air
conditioners were all the rage, with
the Indian government’s Ministry
of Power making it mandatory
for electrical products to display
their energy efficiency through
a ‘star rating’ label. At this point
Voltas moved a step forward with
its marketing platform of ‘sensible
cooling’, which translated into using
air conditioners more responsibly so
as to save on energy bills.
The campaign had a series
of tips on how customers could
programme their air conditioners to
consume less power (by utilising, for
example, the timer and sleep-mode
features). Customers bought into this
message and Voltas soon jumped to
No 3 rank in the market.
In the summer of 2012,
Voltas started looking for a new
breakthrough idea that would help
them achieve the coveted leadership
position. The winning concept came
from the need to give the customer
something beyond just cooling.
“Most people think of an air
conditioner as something that cools
the air and, consequently, usage is
concentrated in the peak summer
months,” points out Mr Johri.
“However, air conditioners have
features that can fulfil many other
needs, such as a dehumidifying,
which extracts moisture from the
90 Tata Review
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air. This function can be used to
dry clothes during the monsoon in
Mumbai. Delhi in the winter gets
bone-chilling cold; by adding a small
heating function, the unit can work as
a heater, too. And adding a dust filter
makes sense in places like Rajasthan.
Thus was born the Voltas
bestseller — the ‘all weather AC’ that
helps customers stay comfortable all
through the year, no matter what the
weather outside.
The challenge was to
communicate this in an interesting
manner, and that’s where Soho Square
(erstwhile Meridian), an advertising
agency from the Ogilvy & Mather
group, stepped in. Meridian came
up with an innovative advertising
strategy, creating a character called
Mr Murthy, who would get frequently
transferred to new postings because
he did outrageous things. What
kept Mr Murthy happy through all
the disruption was his Voltas air
conditioner, which would continue
to heat or cool the house, as required,
no matter the posting. The character
clicked, especially in North India.
“People remembered Voltas and
Murthy rather than the other brands,”
says Mr Johri. In terms of mind share,
it has been fantastic. What has really
worked is the focus on consumer
insight. You have your eureka
moment when it all comes together.”
Mr Murthy was the herald of a
wonderful milestone. Last summer,
Voltas overtook, first, Samsung and
then LG to become the leading brand
in market share. “It was a proud
moment for us — an Indian company
beating multinationals, much bigger
than us, with bigger pockets and a
wider range of products,” says Mr
Johri. “Our team has done a great job.
We had consistently shown losses
for 12 years, from 1994 to 2006.
And there were questions about us
being in the business. But the story
started changing in 2006 and now our
room air conditioners are a lucrative
business (`19 billion in revenue and
`1.7 billion in profit).”
tranSformation zone
The transformation has encompassed
more than the ad space. In a leap of
modernity, the company closed down
old and outdated factories and set up
a new plant with automated assembly
lines in Pantnagar, Uttarakhand.
Supply chain and logistics have
changed, and components are
purchased from cheaper sources,
including China.
Capacity, too, was enhanced,
from 350,000 units in 2006 to the
current figure of nearly million room
air conditioners and commercial
refrigeration products (freezers,
bottle coolers, etc). Trade channels
have grown correspondingly:
exclusive sales and service dealers,
multi-brand outlets — Voltas now
has about 7,000 retail points — bulk
distributors and so on.
Voltas’s resurgence story
is a classic one. It is about how
a company banked on its core
competence to create a strong
customer connect. The market will
be keeping a close eye on Voltas to
see what tack the brand will take next
year. And Voltas will keep listening to
the voice of the consumer. ¨
— Sujata Agrawal
special report
Every one a winner
Centred on showcasing and recognising outstanding innovations
by Tata companies worldwide, Tata InnoVista is a celebration
of creativity. This highlight of the Tata calendar has, over the
years, grown in significance and heft, now attracting more than
2,000 entries from across the group. Here we frame some of the
striking achievements from the 2013 edition of the event, coming
under three categories: Promising Innovations, Dare to Try and
The Leading Edge — Proven Technologies.
By Gayatri Kamath, Nithin Rao and Suchita Vemuri
July 2013
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special report
Promising innovAtion: Core proCess
A fine gain
By finding a novel way to cluster ferro-alloy fines, Tata Steel has
cut down on production costs, minimised in-process losses of
raw material, and reduced the environmental load of its product
T
ata Steel’s Ferro Alloy and Mineral
Division (FAMD) produces about
200,000 tonnes of manganese ferroalloys, an important raw material
in the manufacturing of high-quality steel.
Ferro-alloys are made by smelting manganese
ores, casting them as cakes, and then crushing
them into lumps of 10-60mm in size. Smallersized particles, called fines, cannot be used in
bulk steelmaking processes due to difficulties
in handling and recovery. And agglomeration
processes used for ore fines (briquetting,
sintering, pelletisation, etc) do not work with
ferro-alloy fines.
The lack of a viable technology was hurting
Tata Steel in several ways: The use of fines led to
INNOVATION: Novel agglomeration process for ferro-alloy fines
TeAm: Veerendra Singh, Prabhash Gokarn, Bibhu Nanda,
Amitabh Bhattacharjee and Ashutosh Kumar
92 Tata Review
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lower market realisation (by about 20 percent);
there was the increased cost of manpower (ferroalloy sizing is done manually because mechanical
crushing increases the amount of fines
generated); and there was an increasing demand
for sized manganese alloys that had to be met.
The InnovaTIon
The challenges lay in the surface characteristics
of the fines and the choice of a binder material
that would not contaminate steel. After months
of hard work, the research team developed a
process using a phenolic resin that enabled
coating of metal surfaces and gave very high
bonding strength in both cold and hot condition.
A new briquetting process was developed to
convert the fines into cylindrical briquettes of
high strength and low porosity.
The world’s first commercial agglomeration
process for ferro-alloy fines proved successful,
both in the laboratory and during the plantscale trials. Tata Steel has already developed
a vendor to supply ferro-alloy briquettes. and
the company has also applied for international
patents for the process.
The BenefITs
The process has the potential to reduce costs and
increase productivity to the tune of `30 million
a year, serious money in these tough times.
The briquetting plant has generated jobs for
about 10 skilled and semi-skilled workers and,
with expansion, this number will go up to 30.
There are green benefits as well: environmental
pollution caused by using fines is minimised,
while raw material usage is optimised. ¨
special report
Promising innovAtion: Core proCess
Harmony in flux
In a world’s first, Tata Steel has discovered the use of ‘dual flux’
at its pellet plant, boosting productivity in dramatic fashion,
improving fuel conservation and bringing emissions to lower levels
B
last furnaces do not deal well with
iron-ore fines. To produce top-quality
steel, it is necessary to convert these
tiny particles of iron ore into pellets.
Pellet quality plays a vital role in reducing
the consumption of coke fuel and increasing
productivity in the blast furnace.
The InnovaTIon
Tata Steel recently commissioned an iron ore
pelletisation plant at Jamshedpur with a capacity
of 6-million tonnes per annum. To improve
pellet quality, steel plants typically use carbonate
fluxes such as limestone or dolomite. But these
conventional fluxes do not work well with Indian
iron-ore fines, which have a high amount of
alumina that has a harmful impact on the ironmaking process.
The Tata Steel team created a new
flux combination called ‘dual flux’. It
comprised two distinctly different minerals:
a silicate mineral (pyroxenite or olivine)
and a carbonate mineral (limestone). The
team found that during pellet firing the
combination of the two minerals — the ‘dual
flux’ — helps achieve consistently excellent
pellets that can sustain the extremely high
temperatures of a blast furnace.
The Tata Steel team in Jamshedpur has
established silicate mineral flux (pyroxenite)
as a fluxing agent for pelletisation — and this
is a global first. To protect the intellectual
property right, a patent has been filed for this
innovation. Also, a paper on the innovation has
been published in the International Journal of
Mineral Processing.
The BenefITs
The tailor-made dual flux, developed through
thermodynamic modelling, works well for a
wide variety of iron-ore fines. The innovation
resulted in a 12-percent increase in the
productivity of the pellet plant (from 17.6
tonnes/m2/day to 19.7 tonnes/m2/day), which
translates into an expected saving of `5.3
billion over the next two years.
Other benefits include a 30-percent increase
in pellet strength and a 4-percent decrease in the
generation of fines. Just as significant, the fuel
consumption in the blast furnace has decreased
(by 29 kg/tonne of hot metal), thus securing
savings in natural resources and a reduction of
carbon emissions. ¨
INNOVATION: Innovative dual flux for iron-ore pellets
TeAm: Dr Srinivas Dwarapudi, TK Sandeep Kumar, Pradeep
Choudhary, Arun Kumar and AS Reddy
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special report
Promising innovAtion: Core proCess
Coal competency
System modifications undertaken by Tata Power to permit use of
cheaper coal has resulted in a significant reduction in fuel costs,
and this has enabled the Mundra power project to remain viable
T
he 4,000MW Mundra Ultra Mega
Power Plant (UMPP) is designed to
consume about 12 million tonnes of
coal in a year; in fact, coal accounts for
70 percent of the power-generation cost. Trouble
struck when the Government of Indonesia
changed coal-pricing norms in September, 2012.
Since Mundra relied on coal imported from
Indonesia, the cost of its coal doubled. With the
survival of the project at stake, the Mundra team
had to look at ways to reduce costs by using
lower-grade, cheaper coal.
The problem here was that large utility
boilers such as the ones at Mundra are designed
for a single specific coal grade; they are sensitive
to any change in the fuel and this affects efficiency.
INNOVATION: Cost reduction by use of alternate coal in mundra
TeAm: Ravikant m Sankhe, Vidyanand Sogal (Tata Consulting
engineers), Amitava Datta, Nitin Sharma and Avin Chanana
94 Tata Review
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The InnovaTIon
Tata Power set up a cross-functional team
comprising representatives from the boiler
supplier company, Doosan, Tata Consulting
Engineers, its employees and other consultants
to identify viable alternatives that would help
it maximise the use of cheaper coal. The team
had to implement operational and technological
interventions to increase alternate coal usage
while sustaining optimal performance.
The team reviewed several aspects,
such as coal properties, ash properties, coal
‘flowability’, the coal-handling system, furnace
design, pressure-parts design, draft-system
design, mills and firing-system design, and
coal-drying options.
There were several big interventions,
including modifying the coal-handling system
to blend coal suitably and in the control
system; this for safe and optimal blend firing,
combustion optimisation in furnace, and coalmill retrofitting to prevent damage due to the
spontaneous combustion of coal.
The BenefITs
The innovative interventions allowed
the power plant to fire cheaper coal in
controllable blends, thereby optimising the
cost-efficiency of power generation without
jeopardising safety and equipment life.
The innovation has already resulted in
savings of about `500 million (till March
31, 2013). The power plant expects to save a
further `2.87 billion in fuel costs per year (at
current prices). More importantly, this gives the
Mundra UMPP a chance to remain viable. ¨
special report
Promising innovAtion: New produCt
nothing flaky here
Years of research paid off for Rallis India when it succeeded
in making a premium version of its popular herbicide,
Pendimethalin, giving global customers a convenient option
P
endimethalin — or Pendi, as it is
popularly called — is a herbicide used
worldwide. Manufactured in the molten
stage and packed in 200-litre metallic
drums, it solidifies at room temperature.
Customers have to remelt the product to
extract it. Besides being a laborious and timeconsuming process, this involves additional cost,
energy usage, losses in handling and the risk of
deterioration even to the extent of explosion. For
some years now, Rallis India has researched ways
to deliver Pendi in more convenient form, in a
way that it can command a premium price.
The InnovaTIon
The research team experimented with various
technologies, such as change in reaction kinetics,
melt crystalliser and agitated thin film drier. In
2011 a Rallis team created Pendi crystals using the
‘short path distillation’ technology. The team won a
‘dare to try’ award at Innovista but the process ran
a high risk of explosion and so hence abandoned.
The present team, from the manufacturing
base at Dahej (Gujarat), took on the challenge in
late 2011. It found that flakes could be a better
and safer option to crystals. The challenge was
that Pendi contained many impurities that can
retard flakes formation.
The team identified 28 probable impurities
and, through bench-scale experiments, the
ones that had to be eliminated. Through solvent
extraction, the team scanned 20 solvents before
identifying the right one. Working closely with
an equipment manufacturer, a ‘pilot flaker’ was
designed. After successful trials, it was moved to
commercial scale in April 2012.
Finally Rallis designed a new method
for bulk packaging — a custom-made and
innovative tri-laminated jumbo bag, easy
to handle and costing `4 less per a kg in
comparison with the drums. The risk of flakes
coagulating in hot climates was resolved by using
reefer (refrigerated) containers for shipment.
The notable aspect of this innovation is that
the entire research and development work was
done by a regular shop-floor workforce.
The BenefITs
The years of research have paid off in a success
story and Rallis can now offer global customers a
stable, convenient-to-use product at a premium
price. Rallis also saved `1.6 million in packagingmaterial costs in 2012-13 and brought down
emissions at the customer’s end. ¨
INNOVATION: Development and scaling up of Pendimethalin flakes
TeAm: RV Rajbhar, ND Prabhu, Udhav Patil, Durgesh Pandey,
Shailesh mistry and Joselind John
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Promising innovAtion: New produCt
Beverages fortified
A unique cap-dosing technology developed by Tata Global
Beverages allows consumers to easily add nutritious supplements
to bottled beverages without losing the potency of the formulation
T
here is an increasing market demand for
vitamin- and nutrient-fortified drinks.
But such beverages tend to lose their
potency quickly and the shelf life is short.
ACTIvATE is an innovative beverage developed
in a joint venture between Tata Global Beverages
and the united States-based Tornante Company.
The idea for the product germinated when
Tornante founder Anders Eisner was trying
to pour a vitamin supplement into his bottled
water — and making a mess of the task. His
determination to design a more convenient
— and less complicated — way of adding
supplements led to the ACTIvATE cap-dosing
innovation. “I wanted to create a superior
functional beverage that would deliver against
its promise, provide great taste, and offer a
INNOVATION: ACTIVATe – a potent consumer innovation
TeAm: Jesse merrill, Andrea Stodart, Reza mirza, Craig Berger
and Anders eisner
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convenient way to live life at 100 percent without
compromising efficacy,” said Mr Eisner.
The InnovaTIon
The ACTIvATE team worked on two different
research tangents: one, to identify functional
ingredients that could be added to beverages by
consumers, and two, to develop a technology that
would easily release these ingredients at the time
of consumption. The researchers discovered that
vitamins A, B5, B12, and C lose their potency
when stored in water and deteriorate over time;
these vitamins need to be kept dry and then
added to the beverage just before drinking.
The team also initiated research into
developing a cap-dosing system. Here the cap
contains a moisture-resistant compartment
where ingredients can be stored dry. Consumers
have to simply twist the cap and release the
vitamins before drinking, thus getting a fresh
and efficacious dose of nutrition. This cap-dosing
technology has now been patented. Apart from
vitamins, the team also proposed other kinds of
supplements that can be stored in the cap, each
aimed at addressing a specific consumer need. All
supplements are sweetened with a herb and have
zero sugar and zero calories.
The BenefITs
ACTIvATE is the first ‘enhanced water’,
where supplements remain fresh and have not
deteriorated in potency. The use of the cap
technology protects vitamins from deteriorating
prior to consumption. Sales of ACTIvATE grew
32 percent within a year of launch, although this
was limited to test marketing. ¨
special report
Promising innovAtion: New serVICe
Linking is lucrative
Tata Consultancy Services’ ‘connected marketing solutions’ are
aimed at increasingly ‘connected’ consumers, which translates
into addressing the needs of global enterprise marketing teams
W
ith the digital explosion, marketing
teams are increasingly looking to
engage with customers on myriad
new and evolving digital channels.
With the emergence of the ‘connected’
consumer, Tata Consultancy Services (TCS)
saw the need for ‘connected marketing
solutions’. The objective was to address the
needs of global enterprise marketing teams, by
going beyond the buying of search keywords
and display ads.
The InnovaTIon
TCS’s connected marketing solutions are
designed to help enterprises connect with target
customers, other enterprises and stakeholders,
and with different silos of data, channels and
messaging. This is achieved by:
Connecting touch points through TCS’
‘connected digital experience’ solutions,
which enables consistency across channels of
interactions and close cross-channel loops.
Connecting people and businesses through
a specialised ‘social suite’, which includes
a range of solutions for social media
engagement, collaboration and promotions.
Connecting data through the TCS voiceof-customer analytics solution, which
helps collate and analyse vast quantities of
structured and unstructured customer data,
so as to derive meaningful insights.
Connecting businesses through TCS’s digital
transformation solutions, which digitise
marketing business processes and also
help streamline alignment with the larger
enterprise through technology, delivery and
service innovations, as well as industryspecific co-solutions. The solution targets a
radically different market for TCS services
— the marketing function as opposed to the
traditional technology stakeholders.
The BenefITs
By creating a new audience for TCS’s offerings,
this new service line has enabled the company
to acquire new customers and to expand its
footprint in the space where it already has
well-established relationships. With a global
portfolio of some 110 customers and having
executed more than 230 engagements, TCS has
been able to demonstrate thought leadership
and move its services further up the value chain
in the customer organisation. ¨
INNOVATION: Connected marketing solutions
TeAm: Anita Nanadikar, Sanjay Jambhale, Subramanian
Gopalakrishnan, Anil Sharma and Nitin Hanjankar
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Promising innovAtion: New serVICe
money wise
The ingenious strategy followed by Tata Consultancy Services’
infrastructure services team has helped double revenues, and
enabled customers to benefit from lower IT operating costs
W
here IT infrastructure is
concerned, customers are always
on the lookout for ways to cut the
total cost of operating (TCO) —
that is, cost of technology and labour. To keep
customers happy, the IT infrastructure services
(IT IS) team at TCS decided to develop an IT IS
2.0 version based on disruptive technology.
The InnovaTIon
IT IS 2.0 is an innovative and transparent
engagement model that unbundles hardware and
services. The TCS team developed an ‘asset-light
white -box transparent engagement model’ and
a suite of technology innovations, both of them
are industry firsts. The TCS team developed tools
for automated collection and integration of data
about the enterprise technology footprint; a novel
INNOVATION: IT infrastructure services 2.0
TeAm: Rahul Kelkar, Prof Harrick Vin, Bhanu Raj, PR Krishnan
and murali menon
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data-driven, analytics-led, application-aware
infrastructure transformation planning platform;
standardised transformation execution processes;
and a transparent operations governance portal.
The asset-light-white-box transparent
engagement model embodies the ‘we manage, you
control’ philosophy, where the customer owns and
controls the implementation of technology assets.
TCS commits to transforming the technology
footprint to drive significant non-labour savings,
thus reducing the customer’s TCO. At the same
time the model preserves the flexibility and
control of the enterprise with its technology
environment. This technology-driven automation
helps fuel business growth for the customer
without any financial risk.
The commercialisation of IS 2.0 required
changes at all levels of the organisation, from
market positioning, sales and solutions to
engagement models and service delivery.
The BenefITs
The IT IS 2.0 model is backed by a unique go-tomarket strategy that supports a mutual win-win
for customers and TCS, allowing the company
to drive business growth by taking on the
competition. It also features a suite of technology
innovations that enables TCS to deliver on
contractual commitments with certainty.
The innovation will lead to better margins,
as well as open up new markets without risk. The
impact is clear — the TCS IT IS unit doubled
revenues to $1 billion over a two-year period and
recorded gross profit margins of over 40 percent.
It aims to double revenues to $2 billion over the
next two years. ¨
special report
Promising innovAtion: support proCess
Presentation art
The innovative use of 3D video mapping and audience interactivity
by Jaguar Land Rover has created a standout marketing asset
that is drawing rave reviews in creative forums worldwide
m
arketing cars is a tough business.
Even more difficult is making the
power train the hero of the story.
In August 2012, Jaguar Land Rover
(JLR) introduced the 13MY, a new power train
tailor-made for the Chinese market. To unveil
this product and raise awareness, the marketing
team at the company brainstormed a new and
amazingly creative presentation format.
The InnovaTIon
In an innovative first, the team combined
3D video mapping technology and digital
interactivity to project videos onto a translucent
life-size sculpture of an actual XJ. The
installation was complemented by an actual-size
engine at the core of the car, illuminated by a
complex lighting system.
Aiming to educate consumers about the
products in an interactive and creative manner,
the installation was fully controlled by the
audience, which could choose ‘the story’ to
project onto the car — such as a drive through
a city or open country, by day or at night. The
virtual audiovisual experience showcased the
power of the engine in different road conditions.
While reinforcing the brand’s relevance
in the Chinese market, this virtual experience
was a combination of art and technology.
The innovation required creating a holistic
experience for the audience, one that would be
robust enough for transportation.
The installation was taken on a tour of
11 cities across China to introduce potential
buyers to the advanced technologies of the
Jaguar MY13 engine.
The BenefITs
The presentation generated wide interest —
not only at the physical exhibitions, but also
on social media platforms, thus ensuring
greater reach and relevance. Within days it
had attracted about 20,000 video views online.
There was also wide interest from traditional
media and from the creative community, which
expressed curiosity and showered accolades on
blogs and in reviews.
And, of course, the ultimate benefit is
the creative breakthrough — a presentation
technique has been established that can be used
as a great marketing tool. Other JLR markets
around the world have already shown an
interest in the presentation. ¨
INNOVATION: Translucent Jaguar XJ video mapping
TeAm: Olaf Felten
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tHE LEAding EdgE: proVeN teChNologIes
steely kind of star
The new bake-hardened, high-strength, low-alloy steel
developed by Tata Steel has the potential to replace the metal
that is currently being used by automobile manufacturers
T
he pursuit of high-strength steels has
been the focus of steel research for quite
some time. In a radical innovation,
the Tata Steel team at Jamshedpur has
developed a new process for making highstrength, low-alloy (HSLA) steel. The new bakehardened, high-strength, low-alloy (BHSLA)
steel has the potential to replace the existing
HSLA material being used in automobiles by
manufacturers across the world.
The InnovaTIon
BHSLA steel offers substantial strength
increment (minimum 500 megapascals, or MPa)
compared with conventional HSLA steel (which
has a maximum of 350 MPa). The team at Tata
Steel designed the chemical composition of the
INNOVATION: BHSLA steel
TeAm: Dr Subrata mukherjee and Dr Sourabh Chatterjee
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alloy through a series of calculations based on
computer programs and metallurgical software.
Laboratory-scale heat was generated using a
vacuum-induction melting facility and the ingot
was cast, forged and rolled into strip products.
The rolling experiment was carried out such
that it replicated the real-life hot-rolling process
to manufacture strip products. The coiling
simulation was done using a salt-bath furnace
that was maintained at a constant temperature.
Subsequently the workpiece was cooled in air to
ambient temperature.
The new material was then tested mainly
for its mechanical properties and microstructural features. It was observed that the steel
was almost completely ferritic, yet possessed
tensile strength exceeding 500MPa (with a total
elongation of more than 30 percent). The bakehardening index was tested to be 30MPa, which
makes the material unique among steels being
used in automobiles.
Inspired by this success, the team is
currently working towards implementing this
innovation in its regular hot-strip mill.
The BenefITs
The new innovation holds tremendous business
potential for Tata Steel. Steels with tensile
strength beyond 500MPa will radically change
the auto sector as they will enable reduction of
vehicle weight without compromising crashsafety, and help cut down fuel consumption
significantly and thus reduce greenhouse gas
emissions. The use of these advanced steels will
help the automotive industry produce lighter,
faster, safer and cleaner vehicles. ¨
special report
tHE LEAding EdgE: proVeN teChNologIes
A tweet in time
The ‘event detection engine’ is an innovative tool developed by
Tata Consultancy Services that helps its clients detect ‘events’
such as disasters from social media in real time
D
isasters, whether man-made or natural,
can lead to losses — a tsunami,
earthquake, fire or factory strike can
lead to huge losses and disrupt the
supply chain. Events such as a fire or a factory
strike are more frequent than natural events such
as tsunamis and earthquakes but difficult to spot
if they have happened at a remote location.
Tata Consultancy Services (TCS) has
developed an ‘event detect engine’ (EDE), which
informs clients of events — accidents or disasters
— that have occurred around the globe at
industrial plants or around it. The objective was to
find an innovative way to help clients manage the
supply-chain disruptions caused by such events.
The solution was to detect them through from
social media, in real time or as early as possible.
The InnovaTIon
Every hour, 22 million tweets originate from 200
countries; the EDE tool was designed to pick
up tweets relating to accidents and disasters.
Tweeters often provide early warnings of
disasters. For instance, an explosion occurred
at a fertiliser factory in Texas, USA, on April
17, 2013, but 90 minutes before the devastating
event, a tweeter had sent a warning about smoke
coming out of the plant — and the TCS tool was
able to capture this information.
Detecting an ‘event’ through social media
is not an easy task. The TCS team identified four
major challenges.
Finding the ‘needle’ in the haystack — which
meant examining every tweet to identify real
events.
Efficient processing of all tweets.
Extracting relevant information from the
tweets, most of which use informal language.
The team had to develop new techniques of
‘natural language processing’ for this.
Lastly, issuing a real-time alert to clients,
warning them of the event and providing
immediate business intelligence.
The BenefITs
In a survey of 550 companies in 62 countries,
an estimated 85 percent reported at least one
supply-chain disruption over the previous
12 months. Companies can save significant
amounts if they get critical information well in
advance; the impact is diverse. TCS has filed
three patents for this system and has also made
presentations in three international papers. ¨
INNOVATION: event detection engine
TeAm: Puneet Agarwal, Divya Garg, Chandershekher Joshi,
Deepak menon and Kamal Joshi
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dArE to try
Potent medicine
The ‘drug discovery knowledge platform’ crafted by Tata
Consultancy Services has the potential to make the process of
drug discovery easier and fetch the company plenty of revenue
F
ew domains require complex knowledge
management to the degree involved
in drug discovery — maintaining and
managing data related to the chemicalpharmaceutical-biological laboratory research,
clinical trials data, genomics data, etc.
The InnovaTIon
The Tata Consultancy Services (TCS) team
conceptualised a technology platform that
would effectively manage and process data and
knowledge. Even more ambitiously, the team
envisaged incorporation of analyses of raw
data to identify drug, gene, protein and disease
associations and biological pathways, which would
allow scientists to draw inferences. Furthermore,
the team aimed at better information integration.
INNOVATION: TCS drug discovery platform
TeAm: Dr Rajgopal Srinivasan, Amit Saxena, Aditya Rao,
Dr Thomas Joseph and Dr B Gopalkrishnan
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The three core elements of the drug discovery
knowledge platform are:
Bio-suite: A portable and modular software
for computational biology and bioinformatics,
including a graphic user interface with
sequence and structure display and editing
facilities. The bio-suite was developed in
collaboration with 18 leading Indian institutes.
Bio-appliance platform: A self-contained
and self-maintaining system that integrates
structural, sequence and biological function
data, and helps reduce the amount of time
spent on data management. This platform
comprises five components, including an
enhanced search and retrieval system, a TCS
proprietary database of more than 20 million
published medical abstracts, algorithms for
data analysis and other features.
Genome commons navigator: Developed by
TCS in collaboration with the University of
California at Berkeley, this integrates opensource tools with custom-built software for
better genome interpretation.
A key feature of the platform is its ability
to integrate publicly available, structured and
unstructured data on genes, proteins, biological
function, drugs and diseases.
The BenefITs
The platform could offer TCS entry into the
bioinformatics services and help establish it as a
leader in the drug-discovery domain. It has the
potential to generate nonlinear licence revenues
as well as consultancy service revenues from
pharmaceutical companies to the tune of several
million dollars every year. ¨
case study
When the connect is
not just commercial
A sound customer relationship is one that goes beyond
transactions, as illustrated by Rallis India’s successful quest to
bond with Indian farmers. By Radha Ganesh, Dr Richa Vyas and
S Sharda Ratna from the Tata Management Training Centre
The background
The Rallis Kisan Kutumba (RKK) was
established to help Indian farmers grow better
quality crops and improve their incomes. A
larger objective was to alleviate imbalances in
the country’s food supply by forging strong
relationships with farmers and offering them
‘end-to-end’ farming solutions.
R Gopalakrishnan, chairman, Rallis India,
noted that “in 2006, while observing a focus
group discussion (FGD) with farmers at Bellary,
(Karnataka), Rallis managers found that they
possessed immense knowledge but had no access
to formal platforms to share their wisdom and
practices.” He thought that the potential benefits
of such discussions were immense — not only
giving Rallis a chance to connect closely with
farmers, but also allowing it to play a more
significant part in the farmers’ lives beyond just
selling crop protection solutions to them. RKK
provided an ongoing formal platform wherein
farmer knowledge could be digitised, analysed
and put to use productively.
Till the 1980s, Rallis operated in several
unrelated business sectors, ranging from fans
and tractors to pharmaceuticals, fertilisers and
jute. Then it began reworking its portfolio,
withdrawing from many non-core businesses
and going on to become the fourth largest seed
company in India and the sole distributor of urea
for Tata Chemicals, which took over Rallis as a
subsidiary in 2009-10.
Today the Rallis business portfolio comprises
four main segments (see chart), while its product
segment includes insecticides, herbicides and
fungicides. It has five manufacturing plants
in Gujarat and Maharashtra, and an extensive
network of 2,300 distributors and 40,000 dealers
across India.
LasT-miLe connecT
Rallis’s core strength is its ‘last-mile connect’
with farmers, a capability it has successfully built
over the years. In doing so the company has
followed four tenets, or ‘cultural pillars’:
adaptation and adoption;
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case study
synergistic response;
expeditious execution;
continuous cost reduction.
To interact with farmers, designated
technical teams from the company used the
structured approach of FGDs. In these sessions
farmers were asked open-ended questions about
their crop-related problems.
V Shankar, Rallis India’s managing director
and chief executive, gives an example illustrating
the effectiveness of FGDs: “In 2006 a pest called
brown plant hopper [BPH] ruined the entire rice
crop. The molecule used by farmers to control
the pest was losing its effectiveness against BPH
and the farmers voiced concerns about the same.
We then tested a new molecule called buprofezin
that was expensive and took time to arrest the
process. The trickiest part was to convince the
farmers to use the molecule as per instructions.
We supported them during the initial days by
being on call throughout. After the first season
the farmers saw that the molecule controlled
the pest for longer durations. Our support
to them during this critical period won us
their invaluable trust. The product became a
blockbuster, earning the company almost `1
billion worth in sales.”
The Rallis team members acted as ‘listening
and learning posts’ at the FGDs, bringing
together farmers as ‘family’, addressing questions
about which crops to grow, the correct usage of
crop protection inputs at the different stages of
the crop cycle and topics related to agronomy.
The rallis business portfolio
Business divisions
Agri-business
(domestic)
Institutional
business
International
business
Contract
manufacturing
Formulation and
technical bulk sales
Crop
protection
Seeds
Source: www.rallis.com
104 Tata Review
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Special
fertilisers
Household
products
Seed treatment
and chemicals
Based on the lessons learnt from RKK,
Rallis launched initiatives such as ‘seed
to harvest’, under which seminars, field
demonstrations, group meetings and other
events were held. Newsletters sharing best
practices — the unnat kisan (progressive farmer)
practices — were circulated. Experts from the
Indian Council of Agricultural Research, state
agricultural universities and departments of
agriculture were roped in to share their expertise
with farmers.
The dynamics of rkk
From a farmer universe of 138 million,
60 million were identified to be farming
households. Of the 60 million, 10 million were
large farmers, holding more than four hectares
each and accounting for 50 percent of the
cropped area. For RKK, 10 percent of these
— one million farmers who held roughly 15
percent of the cropped area — were targeted.
An estimated 5 million farmers using Rallis
products were reached by mass media, farmer
meets and point-of-presence programmes.
Some 2 million farmers were targeted by
word-of-mouth (WoM) initiatives. The follower
farmer and WoM segments contributed 20
percent and 40 percent, respectively, to Rallis’s
overall revenues.
Under a unique marketing programme
called 4S, farmers were grouped into four
categories, depending on the level of their
relationship with Rallis:
1. Sampark (contact): farmers new to
farming and to Rallis.
2. Sambandh (relationship): high frequency
of interactions between farmer and
Rallis representative for advice and
recommendations.
3. Samrudhi (prosperity): farmers using
Rallis products, giving testimonials and
promoting Rallis in WoM campaigns.
4. Santushti (satisfaction): farmers who are
peer leaders and assist in marketing new
Rallis products.
With respect to crop and agri-input
utilisations and to facilitate transfer of
knowledge among farmers, KR Venkatadri, chief
case study
operating officer, agri-business, Rallis India,
outlined three big initiatives to give the farmer
an end-to-end bouquet of solutions for the entire
crop cycle.
More Pulses (MoPu): Launched in 2010,
the project aims to improve productivity of
pulses cultivation in India. Various agencies
like the International Crop Research Institute
for the Semi-Arid Tropics, Tata Chemicals, Tata
Consultancy Services and Tamil Nadu Agriculture
University were roped in as partners to introduce
best practices. Rallis offered to supply inputs
such as seeds, pesticides, water-soluble fertilisers,
and these helped the farmers access finance to
buy inputs, and supported them by buying their
produce. This excellent initiative leveraged Tata
group synergies. Also, when Rallis and Tata
Chemicals introduced the iShakti brand of pulses,
it helped farmers get a fair price for their quality
output in the marketplace.
Advisory services: To fortify the customer
connect, advisory services were offered to
farmers in regional languages by experienced and
technically trained people.
IT services: IT was used to reach out
to more farmers. Rallis employed the video
streaming facility at the Tata Management
Training Centre at Pune, where R&D experts
broadcast information on weather, timing and
quantity of spray pesticides, pest attacks, and
market information on prevalent crop prices.
Other RKK initiatives that have been of
worth include prerna (inspirational) visits and
farmer exchange programmes where farmers
were taken to different regions to understand
best practices.
vaLue in The chain
The usefulness and success of RKK depended
on the value chain. The two critical factors that
decide success were identified as:
the ability to learn, listen and identify the
problem;
the manner of reaching the solution to
the beneficiary.
To achieve the above, Rallis manufactured
agri-based inputs or forged strategic
alliances and / or entered into co-marketing
arrangements. An additional challenge was
that many farmers would rent out their land
and move to urban areas, remotely controlling
operations from there. This made it difficult
for the company to identify target groups
of farmers for its products. To reduce its
dependence on the crop protection business,
the company diversified into allied businesses
such as plant growth nutrients, agri-services,
seeds and contract manufacturing.
concLusion
Companies need to look at their strengths
and build on them, rather than follow the
competition. Benchmarking is very helpful
but in many cases it can make an organisation
only the second best. Vanguard organisations
need to think differently to become leaders.
Focusing on product alone can be myopic;
however, crafting deep customer linkages can
give an organisation a sustainable competitive
advantage. This is exactly what the RKK
initiative demonstrates.
RKK is, thus, an excellent example of a
‘customer centricity’ model that is applicable
across business sectors. It shows the positive
results that can accompany an organisation’s
concerted efforts to understand its customers
and their situation, and also to be a true
partner in a manner that transcends simple
transactions.
The RKK success can be attributed to:
the commitment from the top
management team;
the passion of the team working at the
grassroots level with the end customers;
the proactive stakeholder engagement in
offering credible solutions. ¨
The case study does not illustrate either correct
or incorrect handling of an administrative
situation. The authors gratefully acknowledge the
support and guidance of Dr Shubhro Sen,
director, TMTC, and from Rallis India, for their
valuable inputs: R Gopalakrishnan, chairman; V
Shankar, managing director and chief executive
officer; KR Venkatadri, chief operating officer,
agri-business; and PV Reddy, head of marketing.
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strategy
Secure those skills
to reap big rewards
Business organisations will have to adopt a strategic approach
to the development of skills in their people if they want to get on
top of current and future needs, says Raman Kalyanakrishnan
T
echnology and globalisation have
reshaped international labour markets.
While the creation of 900 million
non-farm jobs in developing countries
has been a striking benefit, the most striking
imbalances have been created in the availability
of the right skills to match demand. It is
estimated that by 2020 there will be a shortage
of 38 to 40 million high-skilled workers and 45
million medium-skilled workers, and a surplus
of 90 million low-skilled workers, of who more
than 50 percent would be in India and other
developing countries.
India created 67 million non-farm
jobs between 2001 and 2010, reducing the
Source: Manpower Group’s Survey- 2011
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80%
Japan
67%
India
Australia
52% 54%
US
Singapore
44% 44%
New
Zealand
40%
Germany
29% 29%
Canada
UK
Global
15%
24%
Italy
34%
China
Chart 1: Percentage of employers experiencing
shortage of skills
agriculture workforce from 62 percent of the
total to 53 percent, but 41 percent of the job
creation has been in low-skills construction.
Industry reports estimate that India will create
160 million new jobs in manufacturing and
services in the next decade, including 28 million
in skill-intensive sectors such as retail, finance,
real estate and healthcare, and a further 15
million in manufacturing. The share of lowskills jobs is likely to fall from 74 percent (2010
figures) to 62 percent in 2020. This, combined
with the surplus of low-skilled workers, creates a
problem of skills mismatch.
The shortage will significantly affect the
corporate sector, in terms of both growth and
productivity. Today companies are spending
1-4 percent of employee costs (see chart 2)
on training entry-level staff; this cost is likely
to increase. The corporate sector needs to
strategically play a crucial role in the up-skilling,
or right-skilling of labour. The strategy would
need to recognise the nature of their current and
future skill requirement based on entry-level
skills required, the extent of labour, and the
amount of capital required to maximise value.
A classification based on the factor
strategy
intensities suggested by economist Damien
Neven identifies five industry types for labour
and capital intensiveness. Groups of industries
are classified into five categories for their specific
skills requirements, as shown in table 1. The
companies in each segment would need to adopt
unique strategies to meet training requirements.
A suitable combination will ensure that their
current and future needs are met effectively.
HigH Human CaPital
The class N1 industry requires high human
capital, which is characterised by high wages, a
labour-intensive nature and a low share of bluecollar labour. This cluster would typically include
corporate organisations working in sectors such
as pharmaceuticals, electronics and aerospace,
all of which demand high levels of interventional
training for labour. This would call for higher
engagement with universities and other institutes
and cover new employees as well as upgrade the
skills for existing employees.
Example: The partnership between the
European Federation of Pharmaceutical Industries
and Associations and 18 institutions resulted in
the partners together developing a pan-European
education and training programme on drug safety,
emphasising integrative and translational aspects
lacking in the current education programmes in
Europe. The course envisions delivering a new
breed of employees, people who can embrace new
technologies to enhance innovative approaches
to research and development. The courses are
designed to meet the needs of the pharmaceutical
industry, regulatory authorities and academia.
Class N2 industry requires high human but
low physical capital, characterised by high wages
and labour-intensive but low capital investment.
This category would include
instrumentation engineering, computer software,
hardware, and service industries such as banking,
financial services and insurance, which need
partial customisation in the course content
and strong on-the-job training and internship
programmes for specific requirements. This
would call for institutional partnerships to
prepare task-specific or operations modules, with
Chart 2: Employee cost and training spend by sector
services
Manufacturing
28%
IT/ITES 1%
Insurance
16%
2%
Hospitality
Engineering
15%
2%
Banking and
finance
2%
Telecom
3%
12%
10%
4%
3%
Construction
Commodities
4%
Employee cost as % of revenue
2%
1%
6%
Metals
& mining
6%
3%
5%
Retail
7%
5%
Power
1%
4%
FMCG
5%
Automobiles
1%
7%
Pharma &
healthcare
Chemicals &
fertilisers
4%
2%
3%
1%
Training spend as % of employee cost
frequent updates. As the value added by labour
is high, the strategies for continuous upgrade of
skills become critical to remain competitive.
Example: The Tata Consultancy Services
Academic Interface Programme has been
involved in various campus-corporate partnership
initiatives, including workshops for students,
faculty development initiatives, student awards
to encourage healthy competition at colleges, a
sponsored course on software engineering for
select final-year students, internship training
opportunities, and a global internship programme.
bluE-Collar rEquirEmEnt
Class N3 industry requires low human and
low physical capital, characterised by labourintensive operations, low wages, low investment,
and a high proportion of blue-collar workers.
This category includes footwear, clothing,
furniture, apparel, leather and leather goods,
and gems and jewellery industries. Though low
skill levels are required, workers are needed in
big quantities and, hence, these organisations
require a large number of skill-specific, shortterm training programmes. These corporate
organisations or the respective industry
associations will have to partner institutes with a
strong regional presence and low-cost models, or
independently develop low-cost training models
(perhaps using government schemes like the
National Skills Development Corporation).
July 2013
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Tata Review
107
strategy
Table I: Industry type and training approaches
Industry
class
Engagement
with institutes
for interventional
training
On-the-job
training
programme /
internship
Use of CSR support /
grants
In-house focus
N1
Very high
Low
Applied research
Managerial skills
N2
Medium
High
Institute capacity-building
Technical skills upgrade
N3
Low
High
Fee subsidy
Soft skills
N4
Medium
High
Fee subsidy and institute
capacity-building
Technical / soft skills
upgrade
N5
High
Low
Applied research
Managerial skills
Example: Various industry associations are
collaborating with IL&FS Education, a partner
of the National Skills Development Council, to
develop highly effective, short-term, job-specific
skill development programmes for the leather,
apparel and construction industries. IL&FS
Education has been successful in placing around
200,000 rural youth in these industries through
strategic partnerships with the industry, training
bodies and non-governmental organisations. The
youth are also given ‘last mile’ training in soft
skills to ensure a higher level of employability.
Class N4 industry requires low human and
high physical capital, characterised by capitalintensiveness, low wages and a high share of
blue-collar workers.
This category would typically include the
automotive, textile and services (including
hospitality) industries, which require high levels
of interventional training to keep their employees
in step with capital investments in machinery and
technology. This enhances the need for longterm collaboration with institutes to develop and
update content. There is also the need to identify
specific skill-sets that are deficient and to develop
on-the-job training programmes with technical
institutes, a need that could be met through the
organisation’s corporate social responsibility
(CSR) activities.
108 Tata Review
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July 2013
Example: The German automobile
manufacturer, Volkswagen, signed a memorandum
of understanding with an engineering college in
India to establish a training-cum-service centre.
One training programme targeted dealers, while
a technical apprenticeship programme offered
practical training for technical college and other
diploma students.
Collaboration witH institutEs
Class N5 industry requires high human and
high physical capital, characterised by capitalintensive operations with a low ratio of bluecollar labour.
The category includes telecom, healthcare,
food processing, paper, pulp and similar
industries, and differs from Class N1 industries
in that there is less emphasis on technology. This
would call for collaboration with institutes in
creating content and packaging on a long-term
basis. As the value added by labour is high,
organisations in these industries would also need
to collaborate with institutes to develop lastmile training programmes or in-house training
programmes for the upgrading of skills.
Example: MTNL, the leading
telecommunications company in India, partnered
the Welingkar Institute of Management to offer
two courses related to the telecom sector: a
postgraduate programme in telecom management
strategy
and a certificate course in telecom marketing
and management. These are aimed at training
candidates for employment in India’s telecom
industry.
Alongside strategies to maintain a
continuous supply of labour, it is also important
for companies to retain existing talent. Practices
to measure and reward skills among existing
employees would involve not only adopting
existing standards of monitoring and evaluation,
but could also involve designing a suitable skillrecognition system.
Corporate organisations will need to adopt
and customise relevant skill-measurement
standards — like the National Vocational
Education Qualification Framework — and link
job specifications and entry-level emoluments
accordingly. They would need to identify the
skill levels required for every job, recognise
the prior learning and experience levels of a
candidate and fit him or her into a relevant job
and level. This approach is relatively new to
Indian companies.
Australia is one of the prime examples
of a country in which the corporate sector
has benefited by using technical and further
education standards to measure the skills of
employees. The Australia Industry Group has
reported that 95 percent of the high-performing
industries in the country measure and track
the skills — and the utilisation of those skills
— among their employees; 43 percent use skills
registers, 35 percent utilise other formal methods
and 17 percent have informal methods in place to
do the measuring.
CHallEngEs
The corporate sector will face challenges relating
to external factors and with respect to some
internal policies. In India these would include the
multiple challenges of having large numbers of
contract workers, the paucity of teachers and the
poor quality of content.
On contract workers, neither the corporate
organisation contracting nor the contractors
employing these workers has the incentive to
invest in their skills development. It is a cost-
reduction tactic but it could lead to a shortage of
skills in the long run.
ConClusion
The corporate sector will need to take proactive
steps to ensure a pool of skilled labour for its
current and future needs, especially to remain
competitive. Apart from understanding the type
and nature of skills required, and depending on
the intensity of the requirement, the right strategy
would involve these factors:
a. Prioritising critical skills in the value
chain, where a need for interventional
training exists, and identifying and
engaging with the right partners for the
creation of content for training.
b. Recognising training requirements, both
technical and nontechnical and engaging
with institutes that have a strong regional
presence.
c. Identifying and allocating resources
for long-term engagement in course
development or short-term engagement
for modules.
d. Creating or adapting skills assessment
standards that value the skill levels of
qualified workers and guide them in
planning career paths.
e. Arriving at a right proportion of
contract employees by having permanent
employees for activities that are high in
skill intensity.
f. Using the corporate social responsibility
budget to support the development of
skilled labour in the long run.
Organisations with a strategic approach
to skills development will be able to
systematically analyse their requirements for
skilled labour and secure their current and
future needs. This will also help them increase
their engagement with existing employees and,
consequently, give them a greater chance of
achieving productivity gains and a sustained
competitive advantage. ¨
Raman Kalyanakrishnan is the practice head
for education and healthcare at Tata Strategic
Management Group.
July 2013
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Tata Review
109
book review
So you’re right? Slow
down, think again
M
After a few months the feedback came
any decades ago Daniel Kahneman
in and, says Mr Kahneman, “The story was
spent a scorching summer helping
always the same: Our forecasts were better than
evaluate candidates for officerblind guesses, but not by much.” The news was
training in the Israeli army. One
discouraging, but this was the army, and there
of the tests involved was the ‘leaderless group
was a routine to be followed. So the evaluators
challenge’, in which a group of eight men were
got back to assessing new candidates. Soon, new
sent to an obstacle field and given a problem to
feedback came in and this time, too, it was no
solve. As Mr Kahneman and Amos Tversky, his
different. That’s when it struck Mr Kahneman
friend and long-time collaborator, monitored the
that their dismal predictions had no effect
exercise, they noted who was in charge, who tried
whatsoever on the fresh set of judgements they
to lead and was rebuffed, how cooperative each
had made. “The global evidence of our previous
soldier was in contributing to the group effort,
failure should have shaken our confidence in our
who was arrogant, submissive, hot-tempered,
judgements of the candidates, but
persistent or a quitter. After
it did not. It should have caused us
watching the candidates,
to moderate our predictions, but
Mr Kahneman and Mr Tversky
it did not. We knew as a general
had to summarise their
fact that our predictions were little
impressions of the soldiers’
better than random guesses, yet we
leadership abilities and determine
continued to feel and act as if each
with a score who would be
of our predictions were valid,” he
eligible for officer-training. Says
says.
Mr Kahneman: “Because our
Mr Kahneman, who received
impressions of how well each
the Nobel Prize for economics
soldier had performed were
in 2002 — the first time a
coherent and clear, our predictions
Title: Thinking, Fast and
psychologist had won the honour
were definite. We were quite
Slow
— and Mr Tversky should have
willing to declare: ‘This one will
Author: Daniel Kahneman
Publisher: Allen Lane
known better, but did not, and
never make it’; ‘That fellow is
Pages: 499
in that they were being typically
mediocre, but he should be okay’;
human. Mr Kahneman coined
or ‘He will be the star’.
110 Tata Review
n
July 2013
book review
a term for this kind of thinking: ‘the illusion of
validity’, which is “a false belief in the reliability of
our own judgement.” With that he also discovered
the first of his ‘cognitive illusions’, essentially false
beliefs that we intuitively accept as the truth.
According to Mr Kahneman, many of
the central themes of Thinking, Fast and Slow,
can be found in the story. “Our expectation
of the soldiers’ future performance was
a clear instance of substitution, and the
representativeness heuristic (rule of thumb).
Having observed one hour of the soldier’s
behaviour in an artificial situation, we felt we
knew how well we would face the challenges of
officer training and of leadership in combat….
We had no reservations about predicting failure
or outstanding success from weak evidence,
which is a clear case of WYSIATI or ‘What You
See Is All There Is’.” The most remarkable lesson
that Mr Kahneman drew from this story is that
even after a series of wrong predictions, he
and Mr Tversky did not pause to rethink their
evaluation methods.
The aim of ‘Thinking, Fast and Slow’, says
Mr Kahneman, is to help us make better
judgements and choices by showing us how
thinking works, what pushes people to jump to
conclusions and when we must pull back and
let the critical part of our mind take over the
job of thinking. Just as a medical man uses a
specific kind of language to diagnose a disease,
he adds, we must also enrich our vocabulary with
a specific kind of language that will help us gain
a deeper understanding of the judgements and
choices other people make, discuss these errors
and stop ourselves from repeating them.
Why, you may ask, should we try to
understand the choices and judgements others
make instead of focusing on our own?
Mr Kahneman has the answer: “…because
it is much easier, and far more enjoyable to
identify and label the mistakes of others than
to recognise our own.” Effectively, he wants us
to use our gossip time to make more informed
gossip, whether we are discussing a colleague’s
investment plans, her decisions at work, or the
company’s new policies.
To illustrate his point about acquiring a
language to understand our biases and other
mental errors, Mr Kahneman gives the example
of the “handsome and assured speaker who
bounds onto the stage”, and shows how we
understand that the audience will judge his
comments more favourably than he deserves
because he is good looking and confident.
Having a language to describe this bias — in this
case the ‘halo effect’ — makes the bias easier to
anticipate, recognise and understand.
To explain how our mind works,
Mr Kahneman introduces the reader to the other
big theme of the book: the two fictitious systems
of thinking, the automatic and intuitive System 1
and the effortful System 2.
System 1 is fast; operates automatically and
quickly, with little or no effort. Here are a few
examples:
understanding simple sentences;
reading large words on billboards;
understanding that 2 + 2 = 4.
In all the above examples, our reactions
are involuntary. Can you, asks Mr Kahneman,
prevent yourself from knowing that 2 + 2 = 4 or
not understand the meaning of a simple sentence
in your own language?
By contrast, the operations of System
2 require attention and are disrupted when
attention is drawn away. Some examples:
maintaining a faster walking speed than is
normal for you;
counting the occurrences of the letter ‘a’ in a
page of text;
telling someone your phone number.
In the above situations, says Mr Kahneman,
we must pay attention, and “you will perform less
well, or not at all, if you are not ready or if your
attention is directed inappropriately.”
System 2 is a slow process of forming
judgements based on critical thinking. “It often
endorses or rationalises ideas and feelings
generated by System 1,” says Mr Kahneman, and,
therefore, gives us a chance to correct mistakes
and change our opinions. Why, then, do we listen
to the error-prone System 1? The author’s answer:
System 2 is lazy and to activate it requires mental
effort which costs us time and energy. Studies
have shown the consumption of glucose in our
July 2013
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Tata Review
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book review
Linda: Less is more
An extract from Thinking, Fast and Slow
The best known and the most controversial of our
experiments involved a fictitious lady called Linda.
Amos* and I made up the Linda problem to provide
conclusive evidence of the role of heuristics in judgment
and of their incompatibility with logic. This is how we
described Linda: Linda is thirty-one years old, single,
outspoken and very bright. She majored in philosophy.
As a student she was deeply concerned with issues of
discrimination and social justice, and also participated
in antinuclear demonstrations.
We introduced large groups of people to Linda and
asked them which is more probable:
Linda is a bank teller
Linda is a bank teller and is active in the feminist
movement...
About 85% to 90% of undergraduate students at
several major universities chose the second option,
contrary to logic. Remarkably, the sinners seemed to
have no shame. When I asked my large undergraduate
class in some indignation, “Do you realise that you have
violated an elementary logical rule?” someone in the
back row shouted, “So what?” and a graduate student
who made the same error explained herself by saying,
“I thought you just asked for my opinion.”
The word fallacy is used, in general, when people
fail to apply a logical rule that is obviously relevant.
Amos and I introduced the idea of a conjunction fallacy,
which people commit when they judge a conjuction of
two events (here, bank teller and feminist) to be more
probable than one of the events (bank teller) in a direct
comparison.
As in the Muller-Lyer illusion, the fallacy remains
attractive even when you recognize it for what it is. The
naturalist Stephen Jay Gould described his own struggle
with the Linda problem. He knew the correct answer, of
course, and yet he wrote “a little homunculus in my head
continues to jump up and down, shouting at me — ‘but
she can’t just be a bank teller; read the description.’”
* Amos Tversky, Daniel Kahneman’s dear friend and collaborator,
passed away in 1996. Mr Kahneman told The New York Times in
an interview soon after receiving the Nobel Prize for economics
in 2002: “I feel it is a joint prize. We were twinned for more than a
decade.”
body increases when System 2 is active. Thinking
is, therefore, hard work. The other reason we
cannot abandon System 1 is that it would be so
tiring and pointless to continuously subject our
thoughts and impressions to critical assessment.
For instance, agreeing to review this book
was the work of System 1 and System 2. I spared
five minutes to access whether I would be able
to meet the review deadline and made up my
mind that I would; but I understood later that
this was probably an illusion of validity and
overconfidence. Reviewing this book was quite an
effort and my System 2 was hard at work. This I
was able to understand not just from the fact that
it took me a long time to plan how to write the
review, but also from how hungrier than usual I
felt whenever I spent time with this lofty tome.
I do not regret the effort. Every minute
spent reading Thinking, Fast and Slow was worth
it because every time there is an opportunity to
jump to a conclusion in a serious matter, I am
now inclined to call on System 2 to reflect and
access, something I rarely did previously.
Now for some nitpicking. Some of the
conclusions Mr Kahneman draws probably show
up his own illusions. An experiment that comes
to mind is the one on how money-primed people
are unwilling to help others to pick up pencils.
Also, Mr Kahneman’s experiments are conducted
in controlled conditions and invariably examine
our everyday thinking. This book does not
explore deeper emotions such as jealously, anger,
love or fear. Would these have made the book
different? Did the author plan to include these
subjects or was the omission deliberate? Only
Mr Kahneman can tell.
Despite the seriousness of the subject and
its length, I would urge you to buy Thinking,
Fast and Slow, and take your time to read it. The
language is easy to understand, the examples
are abundant and illuminating, and though the
author presents us with this very significant work
in understanding the mind (his life’s work), he
is never condescending, and tells us candidly
that even after 50 years of trying to comprehend
cognitive illusions, he still falls prey to them. ¨
— Debjani Ray
112 Tata Review
n
July 2013
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