Mithapur, the mother plant
Mithapur is the birthplace of Tata Chemicals. Its importance stems from its massive salt reserves. Due to this it has become the centre of salt and soda ash production in India. But the abundance of a natural resource cannot alone account for its 70-plus years' success. That is down to a combination of pioneering spirit, inventiveness and entrepreneurship. By mixing those ingredients skillfully and, in recent years, introducing processes such as the Tata Business Excellence Model and now Lean Six Sigma, successive generations of managers have sustained Tata Chemicals' leadership position in India. At the same time, those pioneers, including the current group managing director, R Mukundan, who served as site head from 2002 to 2003, created the platform and confidence from which to embark on a globalisation journey that has made the company the world's second-largest producer of soda ash.
On the north-western coast of India, Mithapur is a small, isolated town. In excess of 100,000 people in the town and surrounding villages are dependent on Tata Chemicals, directly or indirectly for their livelihoods.
Salt production has been core to the business since its inception. The commissioning of a new 200 crore (US$40million) salt plant in February has brought the annual capacity to 800,000 tonnes. This is a step towards the goal of increasing production to one million tonnes in the next 3–4 years. Mithapur has the capacity to manufacture more than 900,000 tonnes of soda ash each year. It also has a significant and unique cement plant designed to utilise waste solids from the site. The plant produces more than 500,000 tonnes of cement annually. Caustic soda, sulphuric acid and liquid chlorine are manufactured in small quantities. The product mix means the business has been profitable even in downturns. When demand for soda ash has slumped, production has shifted to recession-proof salt.
The operations are complex as vice president of Manufacturing and site head M Ravindranath explains: "Mithapur is a highly integrated chemicals complex. The site is built on the concept of total utilisation of energy from its captive power plant. We have soda ash and salt plants that are steam-intensive, and cement and caustic soda plants that are power-intensive – helping the site in its steam and power balance.
"From a cost point of view, Mithapur has a unique advantage of having its own captive salt works and a power plant. But this region being arid means water is a scarce commodity. To become self-sufficient on water, we set up a make-up water plant where condensate is a product and salt is a by-product. In the recent past, the growth of salt has been phenomenal and that helps us retain our market leadership. The growth of salt reflects environmental considerations. A tonne of salt produces one-third the CO2 of a tonne of soda ash. That's why we're investing in new salt capacity. The new plant allows us to make an additional 900 tonnes per day of salt. It also gives us 4,500m3 per day of high quality water."
The key to the success of Mithapur is the blending of chemistry and engineering, and utilisation of total energy. "For us, manufacturing excellence means continuous improvement through innovative ideas," says Ravindranath.
Mithapur's operational flexibility is also something that sets it apart. In terms of its ability to create value from the assets at its disposal, it is ahead of all competition, according to Ravindranath. "Mithapur has the ability to stretch and use materials that no other soda ash plant in the world uses," he says.
Methodologies such as Lean Six Sigma play a part in this uniqueness. Anand Sodha, head of Supply Chain and Lean Six Sigma champion explains, "From 1999 we faced increasing competition and we had to change our approach. Our initial action was to reduce costs. Since then we've worked on programmes which looked at operational excellence as well as costs. In 2009, ADAPT took us on the next phase where the focus was raising cash. Lean Six Sigma, combining the elimination of waste and elimination of variation, is a natural progression."
He adds, "We focus on people and processes with the goal of improving EBITDA, increasing market share and retaining our position of lowest delivered cost producer. At any one time, 18–20 Lean Six Sigma projects are running and the progress is checked in a monthly global review. In the past 1.5 years we've created annual savings of 2.1crore (US$3.8million)."
There are plenty of people who are second-, third- or even fourth-generation employees. According to HR head Rajbir Singh Saini that is one of the reasons the culture of Mithapur is so strong. "Personal relationships are very important at Mithapur. It's the close-knit nature of relationships and strong emotional connection to the place that makes people buy into the idea of cost control, for example," says Rajbir.
Rajbir acknowledges that attracting talent is a challenge. "Young engineers have options not available a generation ago and this is a remote location far from city life. But life in the township is vibrant. Professionally, we try to give people challenging assignments. Bringing talent together through cross-functional teams helps us achieve better results," he says.
Attrition rates are low and there has been very limited recruitment into Mithapur in the past 20 years. This means a generation of highly experienced plant operators and engineers are nearing retirement. Ensuring the right mix of suitably experienced staff in the future is a concern for the Mithapur leadership team. Mahesh Deshpande and Shalin Mehta, AGM and senior manager, functional capability building, are working with site management and HR on an initiative to develop a 'functional capability plan'.
The functional capability plan also addresses a wider demographic trend. Says Shalin, "People don't want to come and spend a lifetime here in this remote place. We are waking up to the idea that talented people will be attracted to the Tata name. They may spend at least five years with us. The capability plan will help us secure a future built on manufacturing excellence."
A fatality at Mithapur in January 2012, caused when a contractor fell through a roof, was a traumatic event for the company, and it has been the catalyst for renewed focus on safety. Long-running campaigns have been successful in reducing incidents relating to handling of hazardous substances. In recent months, the emphasis has been on reinforcing safe practices in seemingly routine activities.
Head of Safety, Health and Environment, Rahul Buch, explains, "There are many activities which require a 'permit to work'. On those we have consistently improved our safety performance as part of a safety excellence journey since 2004. We had a rudimentary safety function, but we needed to make safety a line management issue. The results are significant." The frequency of total reportable injuries, measured per million man hours, at Mithapur has been reduced from 9.5 in 2005–06 to 1.1 in 2011–12. "We're now identifying activities that don't require a permit, and developing communications that make people see safety as a personal responsibility here too."
Rahul's responsibilities also include environmental management. In the past 30 years, a massive amount of new regulations have come into effect. This has required work on building more efficient boilers, effluent management and reducing water usage.
"We did a lot of pioneering work in terms of effluent management and separating soda ash solids. Our soda ash filtration system was the first in the world."
World firsts and respect for history are part of the fabric of life at Mithapur, but there's no sense of living on past glories.
The management is focused on growth and actively pursuing manufacturing excellence. Being part of an international business also has its benefits. "The chance to learn from others, share our experience with teams in the UK, strengthen our global position, all make the future exciting," says Ravindranath.
Mithapur has a rich and well-organised archive of photographs and artefacts from the late 1920s. Senior Corporate Communications officer Tushar Zinzuvadia is passionate about the legacy of the business. Born in Mithapur, Tushar is a second-generation Tata Chemicals' employee. His father served as a pharmacist. Tushar joined the company in 1996 as a draftsman. He is pictured with a scale model of the original process house dating from 1940–41, and made by the founder of the Okha Salt Works, Kapilram Vakil. The archive contains books and reports tracking the early years. It has the first annual report, the first internal magazine and details of Tata Chemicals' first employee Sukar Bhuna.