Book Review: The Romance of Tata Steel by RM Lala

In a mesmerizing account of 100 years of one of Indias most respected company Tata Steel, business historian RM Lala gets to the root of this question in his latest look The Romance of Tata Steel published by Penguin Books. RM Lala writes that its the vision and spirit of founder late Jamsetji Nusserwanji Tata (1839-1904), who thought of steel-business not as a way to make money but as a means to nation-building, that has stood the test of times.
This fascinating book, which builds on decades of experiences and research by respected author and Tata loyalist RM Lala, offers plenty of lessons in business creation, employee welfare, and surviving and adapting with the times.

In the book, RM Lala traces the history of Tata Steelfrom men searching for iron ore and coking coal in jungle areas, moving around in bullock carts before the site was found, to the companys modern status as a world-class company.

Identifying founders deep appreciation for human welfare, much before it became fashionable in Western management thinking, RM Lala writes, The significance of Tata Steel, lies in the principles it laid down for its operations at the outset, like an eight-hour working day in the steel mill, while in the West it was still a twelve-hour working day. In the decades to follow, it set standards of social welfare which were officially enforced by law for other industries-five, ten, twenty and thirty years later.

Lala adds, Over these 100 years it struggled at times, strumbled in its labour relations in the early years, but it learnt from it all and emerged as a company that has not had a strike in sixty-five years. Its labour relations are unique and participative. The company gave unprecedented facilities to its workers, rooted in the practice of Tatas first enterprise, the Empress Mills.

In the foreword to the book, Ratan Tata says, Russi has captured the touch and feel of events in Tata Steel from its early days . . . he also succeeds in bringing to life the human side of the company in a very readable and cogent manner.

Established in 1907, Tata Steel is Asias first and Indias largest private sector steel company. Its founder Jamsetji Nusserwanji Tata ranks among the visionaries of Industrial enterprises. Born on 3rd March, 1839 into a family descended from Parsi priests in Navsari, a centre for age-old Parsi culture, he was educated at Elphinstone College, Bombay. He set up at first, textile business in India, introducing new machinery that improved the production of cotton yarn. He however realised that Indias real freedom depended upon her self-sufficiency in scientific knowledge, power and steel, and thus devoted the major part of his life, and his fortune to three great enterprises The Indian Institute of Science at Bangalore, the hydro-electric schemes, and the Iron & Steel Works at Jamshedpur. Wealth to him was not the end but a means to an end, the increased prosperity of India.

Recounting how this Tata enterprise was ahead of this peer in human welfare, Lala notes in the book, During TISCOs struggle for survival in the mid-1990s, the prime minister had called a meeting of the heads of big companies suggesting they give one per cent of Profit After Tax to social work. Calculations revealed that even in its years of low profit Tata Steel had spent a higher percentage on social welfare than expected. The figures ranged from 4 to 13 per cent- 13 per cent in its most difficult year of poor profits and 4 per cent in its most prosperous year.

TISCO created many firsts in Indias labour history, which were often decades ahead of their time. The book gives some such instances:
A list of worker benefits introduced by Tata Steel:
Worker Benefits TISCO Enforced Legal measure

Introduction By law
Eight-hour working day 1912 1948 Factories Act
Free medical aid 1915 1948 Employees State Insurance

Act
Establishment of welfare 1917 1948 Factories Act
department
Profit sharing bonus 1934 1965 Bonus Act
Source: The romance of steel. (Partial list only)

Talking about Tata Steels recent acquisition of Anglo-Dutch steel giant Corus, author says, The hand of history has woven the tapestry of Tatas and in no company is it more visible than in Tata Steel. Just over a hundred years ago, Jamsetji Tata was requesting the secretary of state for India, Lord George Hamilton, for the cooperation of the British government in starting Indias first steel works. On the hundredth anniversary of the registration of the Tata Iron & Steel Company in 1907, this company won the bid to purchase the Anglo-Dutch steel giant CORUS. And so the wheel has turned a full circle.

The book closes with an inside account of moves to acquire Corus. Says the book: Ratan Tata was planning how to lift Tata Steel from a small plant on the world steel front (ranked 58 in terms of steel production) into a big player. It so happened that when the chairman as well as the CEO of the Anglo-Dutch steel plant Corus came to meet Mr Tata in Mumbai, he found that the chemistry of the two companies clicked. According to the rules of the (Corus) auction (where Tatas participated), there were a maximum of nine winner emerged in the first eight rounds, the final bid was to be a sealed bid.

All this was on the same day. On the night of 30 January 2007, the chairman of Tata Sons and Tata Steel, Ratan Tata; N.A. Soonawala, vice-chairman of Tata Sons; Krishna Kumar, executive director, Tata Sons; B. Muthuraman, managing director, TATA steel and its vice president (finance), Koushik Chatterjee, were closeted in a room at the Taj Mahal Hotel. At the London auction room, on Tatas behalf sat Arunkumar R. Gandhi their expert on mergers and acquisitions. Putting in the sealed bids in London through their representatives both sides had a 50:50 chance of winning. The last round of open bid the eight-having been 590 pence, the Tatas were to decide what the next bid should be. They were prepared to go higher, but they put the figure of 608 pence per share. Muthuraman (Tata Steels current MD) says at that point it was not a strategy, nor was there any particular skill involved. Why did we put the final number of 608 pence? Who gave us this number? I dont know. Their opponent, CSNs bid, when opened, was 603 pence. If we had bid higher, we would have had to pay more. Who protected us from paying more? Not we. A man of faith, he ascribes it to a higher power.