The churning
"Tata Chemicals has a great past and we have to take it further ahead. The way to do it is in four simple steps: focus on safety, quality, cost and productivity," says R Mukundan, the COO of Mithapur, outlining his strategy for growth in a wide-ranging interview
An alumnus of the Tata Administrative Service, R Mukundan has worked with several Tata group companies, including Tata AutoComp Systems and Indian Hotels Company Limited. He joined Tata Chemicals (TCL) as vice president, strategy and business development, and head, corporate quality, in October 2001.
In this interview, the dynamic new COO of Mithapur talks about the changes under way and the challenges ahead.
It is now six months since you took over as COO of Mithapur. What do you see as your main challenge?
A change of mindset is certainly the chief challenge. We have changed from a production-centric organisation to a customer-centric one. In addition, we're also aspiring to become a leaner company with more openness and more transparency. The board of directors today wants an ethical, performance-oriented organisation that offers quick returns, quick deliveries and quick solutions. The customer is king.
The outside world wants Mithapur to retain its vibrancy and its local wealth generation. The employees, the last piece of this puzzle, want to be part of a growing organisation that appreciates them. This is the framework we have to work within. Tata Chemicals has a great past and we have to take it further ahead. The way to do it is in four simple steps — focus on safety, quality, cost, and productivity.
My priority is safety. If safety and quality are focused on, cost will go down and productivity will go up. Mithapur is on the right path. The groundwork has been done and kept ready by the previous leadership. There is a need to maintain constancy of that focus today. We need to avoid the pitfalls of settling for mediocrity. Dissatisfaction is vital for growth and improvement. Every corner of the plant needs to resonate with energy and vigour.
Mithapur is a very important part of the history of not just TCL but the Tata group too. How do you propose to keep alive the best traditions of the past, while trying to catapult the company into the 22nd century?
Mithapur has an inherent character with a basic value system. The need is to only nudge it in the right direction, to keep it rolling on. Therefore, there is not much work to do. And hence, it is not too energy sapping.
The Mithapur township has a strong tradition which it has lent to the plant too. For example, it has a strong Diwali custom. Neighbouring Dwarka is an important influence on the town. Mithapur is the only place in Gujarat that hosts the Ravan Dahan ceremony during Dassehra. In addition, Mithapur has a network of several institutions in the fields of education, culture, voluntary work, environment and much more. TCL is in the process of building an archive that will reiterate the town's historical importance. The archive is proposed to be the first stop on a visit to the plant.
We intend to retain all traditions. Only, anything that comes in the way of safety and quality will be removed.
TCL's Babrala plant is a showpiece of modern technology. What are your plans for upgrading it?
Plants and human beings are similar — both are as old or as new as we make them. Mithapur is a mix of the old and the new. While some parts of the plant date back to 1944, there are other parts that are even more advanced than the Babrala plant. The power plant and the cement plant for example, use the latest technology and are digitally controlled.
The Mithapur Renewal Plan has initiated constant upgrading, along with a simultaneous mothballing. We are capable of ramping up to about 20 to 25 per cent without any further investment. Safety as a priority of course cannot be emphasised enough.
How successful has the SAP implementation been in Mithapur? Have the benefits started accruing?
The implementation is complete and the optimisation is on. Glitches are being ironed out. Categories like purchase, HR, CRM, online access to dealers and suppliers are SAP-enabled already. The benefits have started accruing.
You have also initiated a quality drive in Mithapur. What have been the gains?Has it helped in triggering a change in mindsets — across the shopfloor and in corporate corridors?
Individual plant reviews have changed in intensity. Each product or product group (the marine group, cement, soda ash, and utilities) has a day in the month when all its aspects are evaluated TBEM, safety, quality, etc. The respective departments make presentations to the management team. Then they get time for a month to work on their issues. Product quality as well as asset quality is assessed.
This has worked better and is bringing about positive results.
Project Manthan is aimed at achieving a continuous improvement in working capital and inventory management and rationalising costs. The gains are already evident in the half-yearly results. What are the other tangible and intangible benefits?
Project Manthan is a process that seeks improvement in all areas. The improving trend is on target in most areas and performance and capability improvement is seen too. The process is on in waves; each wave stretches over two to three months and covers four to five units of the plant. The unit teams brainstorm, meet customers, suppliers, even competitors, and then crystallise their ideas on how to save costs, improve functioning.
Ideas are then prioritised to act upon and bring results within a specified time frame Several people are involved in this process which builds capability among employees. Project Manthan has completed one full cycle and one full year. The next stage is trickier when we push the envelope further. The process is being shared with other Tata companies like Rallis and Tisco.
What operational changes were affected in the manufacture of soda ash to cut costs and raise profits?
Input costs were saved, processes were changed along with manufacturing equipment. This saved approximately 20 per cent of costs through a period of a year and a half.
The global soda ash industry has been facing a crunch, partly because of plastics and paper replacing glass in packaging. How has TCL managed to avoid this downslide?
Glass, one of our chief buyers, is a developing industry in the areas of construction and automobiles, with a growth rate of four to six per cent. The other industry we supply to is the detergent industry. The dense soda ash we make is a higher growth industry than our light soda ash. Hence we haven't faced a downslide in sales at all.
TCL has been exploring markets in the UAE and Bangladesh. What prospects do you see there?
We own the largest share in the soda ash market in Bangladesh. The UAE is a big buyer of our high-value pure salt, used in several industrial applications.
Tata Salt has become the company's key driver of business growth; is this growth sustainable?
We're looking to supplement growth through our bi-carb business along with newer niche chemicals. We would like to increase the output of our bromine and other marine chemicals too. The company got out of detergents some time back and there was some discussion on getting out of cement too.
Is that still likely to happen?
Cement is not one of our core businesses. It is essentially a waste-handling process for us. It is currently a part of our portfolio and we are focusing on enhancing its business value.
How has Mithapur coped with the recent upheavals in Gujarat — the earthquake and then the riots? Have you evolved a business continuity plan?
The company has appointed a chief risk officer and risk management is certainly one of our priority areas.
Mithapur has suffered two fire outbreaks in the last two years. What is being done to avoid such incidents in the future?
We have invested in equipment, training and awareness, building capability and upgrading of infrastructure. Rs 5.5 crore has been spent on the fire hydrant system alone this year. Our near-miss reporting scheme has also contributed to fire safety.
What are the recent EHS initiatives you have launched?
Seventy per cent of unsafe incidents are a result of unsafe behaviour. Some are due to a combination of unsafe behaviour and unsafe conditions. Very few are only due to unsafe conditions. Training and awareness in the plant as well as in the township, use of safety equipment, ban on smoking, safety publications, safety signage (including 1,000 billboards), daily safety reports and inter-departmental safety audits have all been introduced to better our safety standards.
The safety audits foster a competitive spirit and the monthly safety reviews have a lasting impact on various sites. Titli, the exchange programme between the Babrala and Mithapur plants, has led to a more open culture of sharing and collaboration.
What attracted you to TCL?
Managing director Prasad Menon's plans interested me because they were different, so I joined the strategic planning team. Operations happened to me later.
What is your favourite form of relaxing from the tensions of daily work?
I work out for an hour every day and listen to music, especially light jazz and rock.
What do you see as your personal challenge in your new job as COO of Mithapur?
I need to be less impatient. But happily enough, a lot of it has happened already, from two directions. Firstly, I have a better understanding of my colleagues in Mithapur and their issues and secondly my colleagues now probably appreciate and agree on the need to change fast.