Published on July 09, 2021
In the Leadership Series EDGE webinar titled 'The Turnaround Journey of Tata Steel BSL' on July 7, 2021, Rajeev Singhal, Managing Director, Tata Steel BSL, elaborated on the story behind Tata Steel's acquisition of Bhushan Steel (BSL), which was completed in May 2021. The journey of winning the bid to finally assimilating BSL into Tata Steel's fold is a fascinating story of business excellence, as narrated by Mr Singhal.
When referred for liquidation under the newly formulated Insolvency and Bankruptcy Code (IBC) of the Government of India, BSL was a significant player in steel and one of Tata Steel's biggest customers. It possesses a crude steel capacity of 5.6 mtpa#, pan-India downstream facilities and more than two mtpa# finishing capacity. The company had manufacturing facilities located at Meramandali in Odisha, Sahibabad in Uttar Pradesh and Khopoli in Maharashtra.
For Tata Steel, the acquisition seemed a good buy on various counts:
- The strategic location of BSL’s plants and its high-quality assets
- A robust portfolio of steel products that could complement Tata Steel's bouquet
- State-of-the-art in-house steel processing centres in BSL 's plants
- BSL's strong presence in auto, appliances and coated steel segments with select customers
The acquisition would have enabled Tata Steel to scale up, primarily through the addition of BSL's mettle to its downstream offerings' portfolio.
Accordingly, in 2017, Tata Steel began preparations for the bidding process and, in March 2018, was awarded the bid.
The next steps
After being awarded the bid, Tata Steel rolled out a detailed plan to assimilate the acquired company into its fold. Accordingly, the management drew a detailed organisation structure covering all functions. An intelligence team gathered information from all locations, which allowed the mobilisation of a cross-functional team at each of the locations. A clear communication plan was prepared for all internal and external stakeholders. The stage was set for the first independent meeting of the Board of Directors of the merged entity, named Tata Steel Bhushan Steel (TSBSL). Accordingly, after the first Board meeting, all teams of Tata Steel entered Bhushan Steel's plants in May 2018.
Cultural amalgamation
BSL was traditionally an owner-driven company. As is the case with such entities, most of the practices and conventions were based on the personal beliefs and expertise of the owners rather than on hard data and facts. It had fostered a culture of ad-hocism in the organisation. On the other hand, Tata Steel was used to making decisions and implementing them, basis data-based information.
To bridge the efficiency gaps, Tata Steel implemented a Keep-Start-Stop methodology to align the operations with its way of working.
| Keep | Start | Stop |
| Organisational agility | Focus on Health, Safety and Environment | Process by-passes |
| Downstream portfolio strength | Focus on cost efficiencies | Value/cash leakages |
| Product characteristics | Optimal asset utilisation | |
| Group synergies | ||
| Reliance on planning processes | ||
| Building capabilities and enhancing resources | ||
| Ensure compliances | ||
| Analysis-based decision making |
The ad-hoc culture at BSL needed to be dismantled to align with the Tata way of working. Accordingly, TSL embarked on a plan to shape the new entity's aspirations and visions through an accelerated improvement plan — 'Be1: Alag Pehchan, Unchi Udan'. The programme acted as a single platform to achieve benchmark levels in operational excellence, customer centricity and financial prudence. Guided by the 'One Team One Dream' philosophy, the programme keeps people central to the transformation. The management also implemented various direct interventions aimed at improving operational performance.
Tata Steel has ensured that the new entity will be active on the sustainability and CSR front. After Covid-19 struck the country last year, it implemented a multi-layer comprehensive response — Kavach, meaning shield in Hindi. It has increased the green cover in the plants' catchment area. Also, various interventions to develop local infrastructure, improve learning facilities, and provide women with entrepreneurial facilities have been implemented in communities neighbouring the plants.
On a journey towards success
Post-acquisition, TSBSL is now accelerating towards becoming a successful steel enterprise. It now enjoys a significant share of business among auto original equipment manufacturers, with major appliance brands and in the hardened and tempered steel segment. It has now launched two new brands for emerging corporate accounts. The order book exudes confidence about the company's prospects, which is further evidenced by the robust business figures.
The session ended with Mr Singhal responding to some stimulating questions from the attendees.