It’s been ten years since 58-year-old TV Narendran took over as the MD and CEO of steel behemoth, Tata Steel Ltd. While the past decade has been a roller-coaster ride, with its highs and lows, Narendran cannot forget the first few months of his ascent to the top post. It was literally a baptism by fire, he recalls. Two weeks into his job as the chief, there was a huge accident at a plant in Jamshedpur where a gas holder, a prominent structure in a steel plant, exploded. While there was only one fatality, this explosion was covered widely even in global media and Narendran had to fend calls from all over.

The double whammy came when the Mines and Minerals Act (MMDR Act) was implemented early in his stint and there was a Supreme Court order to close all the mines. “So, for the first time in Tata Steel’s history, we couldn’t operate our mines. We had to import iron ore, and we really struggled to run the furnaces,” recalls Narendran. For almost eight to nine months, Tata Steel was importing iron ore at a time when India hardly imported iron ore till then. “India was exporting iron ore, so the railway freight system was not geared to bring in the ore from ports to the plants,” he says.

It’s a busy Monday morning, but the only time Narendran has in his packed schedule is this mid-morning. We meet him for this conversation at a well-appointed room in hoary Bombay House, the HQ of the Tata group. Large bowls of various dry fruit are placed before us with steaming cups of coffee. Continuing in the same dour vein, recalling his early years as CEO, Narendran says soon after that, there was the problem of Chinese exports. “Steel prices really went down in 2014-15; China was exporting 120 million tonnes! Those were very tough few years for me. After that things stabilised and then it was more driven by the opportunities that we had for growth, both in India and overseas parallely,” he says.

During all these testing times, Tata Steel was also doing a lot of work internally on transforming the company by embarking on its digital journey and sustainability among many other things. To bring in a digital ethos, Narendran realised the company needed an outside-in perspective. Talking to Tata Chairman N Chandrasekaran, Jayanta Bannerjee of TCS was identified as the CIO for Tata Steel. He came in with a different perspective and knew where the gaps were.

“Also, the top leadership should understand the digital piece. So we arranged for our operating people to get exposure. They went around the world and saw not just the steel industry but other industries, wherever they were good examples of organisations which used digital to transform themselves. They came back with a lot of appreciation of what is possible and then we did a lot of stuff bottom up because it’s not just a top-down thing So, we ran a lot of programmes at the shop floor level, explaining them about the technologies and asking them for ideas,” he explains. There was also a reverse mentoring programme where the digitally savvy younger executives mentored the seniors.

Digital: efficient, convenient

Many wonderful ideas for efficiency emerged. Now, the worker on the shop floor, who had to walk 200 metres to the control room to check the temperature in the furnace, can just point his camera app at the furnace and get the temperature. In the pipe tubes division, the tubes are bundled first in a truck and then one had to count the number of tubes as it was sold by piece. The whole process of loading the truck didn’t take long. But getting the truck out of the gate still took many hours because of the counting. Now, there’s an app, and a worker just takes a photograph and immediately knows how many pipes are there.

“Earlier the fear among people was, going digital means I lose my job. But now they started seeing digital as a way to make the job easier, more efficient and convenient. So, the unions bought into it,” he recalls. As part of this entire process, today, even the control rooms for the mines are operated remotely in Jamshedpur.

Narendran speaks easily and candidly, with lots of laughter interjecting. I reach for a couple of cashews while asking him an introspective question. He’s been a lifer in Tata Steel (he joined in 1988 straight out of IIM Calcutta), so how did he get the idea to drive the change despite being part of a well-entrenched system; did someone from outside look in and advise on the transformation? “I have been fairly regular to the World Economic Forum (WEF) at Davos, for instance, though it’s criticised a lot. But I find those two-three days as an opportunity for me to just listen. It’s very stimulating to hear what the world is talking about. The idea of giving importance to sustainable practices, going digital ideas came to me from there, at a time when we were not even talking about it,” he elaborates.

As Narendran says, one is always consumed by the daily stuff and the firefighting one does, but, “What are the seeds you want to plant today? In companies like ours you have to keep planting the seeds, because these are multi-generational companies, so you have to look at the problems of the future, say 15 years later, and think what are the seeds you need to plant today to deal with them? For me, it was clear that digital and sustainability would be a big issue.”

He recalls what strategy guru Vijay Govindarajan said at one of the sessions with the company that an organisation which only talks of its past has no future. “And, in Tata Steel we talk a lot about our past but I tell people we can keep talking about the past but our responsibility is to leave a good future behind,” he adds.

The path that Tata Steel took on its transformation journey was vindicated by the WEF recognising three of its manufacturing sites – Jamshedpur, Kalinganagar and IJmuiden (the Netherlands) — as ‘Lighthouses’ which light the way for the next new normal in manufacturing through its use of technology to transform factories, value chains and business models. “We are the only steel company in the world with three sites recognised as lighthouses by WEF,” says Narendran with pride.

Upping steel consumption

Ask Narendran how the steel consumption story in India is going to shape up, he’s quite sanguine. “The least I expect is consumption to grow at the same rate as the GDP growth rate, or ideally, at a higher rate than the GDP growth, like in all developing countries.

In China, when GDP was growing at 10 per cent, steel consumption was at 15 per cent. In Vietnam, consumption was growing at 15-20 per cent when GDP was at 8-10 per cent. In India, when GDP growth rate was at 7 per cent, steel consumption was at 5 per cent. But now steel use has caught up with GDP, if not ahead of GDP. And if India’s steel use grows at 7 per cent a year, you’re talking of 8-9 million tonnes of consumption growing every year, which is significant,” he explains.

He bristles a little when you asked about China pushing steel into global markets, singed as he was with cheap Chinese exports in the early part of his CEO stint. They are, of course, exporting, but not as much as they used to, he says. At the peak, they were exporting 10 million tonnes a month, but now the highest they’ve reached in the last few months is 8 million. Now it is dropping again. “If they export 5-6 million, I think the world can deal with it. If they start exporting 8-10 million tonnes, then we have a problem. Because the Chinese steel industry, while it has grown big, has never been very profitable.”

EBITDA margins of Chinese companies are typically less than 5 per cent, so it is not sustainable, he points out. “That’s why when people say China’s competitive, I differ, because just because somebody sells steel cheap doesn’t mean they’re competitive. Today, if Tata Steel or any steel company in India has to make 5 per cent EBITDA margin, you will not be able to survive. Because you can’t invest, grow or have the cash flows. You need at least 15-20 per cent EBITDA margins,” he emphasises.

I urge Narendran to flash back on his life and career. He was born in Jamshedpur and to the question, “Aha, so you are a TISCO kid? (as Tata Steel was known then),” he says his father was with the foundry of Tata Motors. But, when he was two years old, his father relocated to Coimbatore, where Narendran grew up and schooled and then on to REC Tiruchi (now NIT) and then seamlessly to IIM Calcutta.

Lifer in Tata Steel

Tata Steel was his first job from campus, when many classmates were joining consumer goods industries. So, why Tata Steel? “That’s a question I’ve asked myself. In those days, there were not so many choices. Consulting was not there. In fact, at that time, no international consulting companies had started and nor were there any IT companies. For some reason, I was always interested in something which had to do with engineering,” he recalls.

Those were also the days of the legendary MD of Tata Steel, Russi Mody. In the Tata group then, it was the TAS which recruited from B-schools, and Tata Steel from engineering schools. But Aditya Kashyap, who was Mody’s deputy, was looking to recruit from B-schools to start its international business and also change the way steel was marketed. Three years into the company and Narendran was posted to Dubai to kick-off its sales and distribution in West Asia. But, after five years there, though the exposure was good, he got bored, so he and wife, Ruchi, who was with the TAS, opted to come back to Jamshedpur.

Later, he joined then MD B Muthuraman’s office in a chief of staff role, which gave him exposure to the whole organisation. Muthuraman was driving growth internationally and one of the first acquisitions was Nat Steel in Singapore, where Narendran joined in 2005 and had a stint for five years. In 2010, Narendran returned to base in Jamshedpur, and was VP for flat and long products.

So, did he at any point of time know that he could become the CEO and MD? “You always get some signal or the other, right? Whether it’s for the management programmes that I got selected for or getting picked as one of the top talent in the company among 110 people when I was just 36. So that was a signal that; you’re seen as one of the guys with potential. Then when the MD picked me as his chief of staff, that was also a signal,” he recalls.

To unwind from the pressures of running a large conglomerate like Tata Steel, which has operations in Europe and the UK as well, Narendran drums it up, literally. He has a full drum set at the MD’s bungalow in Jamshedpur where he drums to his heart’s content. “When I turned 40, I asked myself, do I have any regrets? And the regret was, I knew I wanted to play the drums but never learned. So, in Singapore, I enrolled in classes and learnt for three years. And now I play at my leisure.” While appam and stew are his all-time favourite food, Japanese sushi is his go-to cuisine when eating out, a taste he picked up from his years in Singapore.

Ask him about dealing with the pressures of the job, he’s cool as a cucumber. “Every job has pressure, doesn’t matter whether you’re the CEO or when I was trying to sell steel in Dubai; it’s a question of how do you deal with it. For me it’s my music, my drumming, my family or my run in the morning (10 kms most days on Marine Drive when he’s in Mumbai); all these are my ways of finding my slot to relax. So, everyone needs to find that slot for themselves,” he says. Evidently, he’s a man of much mettle.