MD's Speeches on Aspire,
at Jamshedpur, 2003

Friends,

A very good evening to all of you. Last year, on this very same day, on this very same venue, Sri R.B.B. Singh, President, Tata Workers' Union and I jointly launched our VISION 2007, which was co-created by all of you. Today is the first birth anniversary of the launch of Vision 2007. So, it is a good time to look back on our journey and see how we are progressing on realizing our Vision 2007. Our Vision 2007 has two components. The first component is for Tata Steel to become an EVA + company. The second component, which has been with us for over 95 years, is to improve the quality of life of our employees and the society that we serve. How was this year gone by? By all accounts, we have had a very good 2002-2003. We crossed 4 million tonnes of crude steel for the first time in the history of Tata Steel. Our product mix was better than last year. Our marketing efforts were better than earlier years. We sourced better. We had a large number of Improvement projects, Quality Circles, Quality Improvement Projects, Six Sigma, TOP, TPM and many other nitiatives, all of which are part of our Tata Business Excellence Model, which is a journey that we have undertaken to become excellent in our business. As a result of all these measures, and as a result of all the dedicated and hard work that all of you have done we are going to declare record profits. We have also outperformed the stock market. We have outperformed all the software companies. We have outperformed all the Telecom companies, all the Entertainment industry companies and we have outperformed all stocks. It's a great deal of pride to be able to say that out of the three companies, which were on top of the improvement in the Sensex over the last one year, two of them are Tata Companies. One being Tata Steel and the other being Telco. So, are we on our track to become EVA + ? The answer is undoubtedly, "yes". In fact, we are likely to become EVA + even in the first year of inception of our Vision. Even in the very first year of launch of our Vision 2007. But are our results sustainable year after year for a long time to come? The answer, perhaps, is doubtful. The answer, perhaps, is not so sure. Recently, I sent a report to our Chairman, Mr. Ratan Tata, on the performance of Tata Steel during the year 2002-2003. He wrote a very beautiful note to me and I am going to quote his small, brief and beautiful note. He says, "Mr. BM, congratulations. A very impressive performance. But what should concern us is the sustenance of this performance." Why is there a concern about our ability to sustain our performance? Why is a there a concern about our ability to create record profits year after year and to be EVA + year after year. I will explain why. In the year 2001-2002, we made a net profit of 205 Crores. If the prices in 2002-2003 had been exactly the same as they were in the year 2001-2002, our profits would have been only 400 Crores. But what we are going to achieve is perhaps 4 times the profit that we did in the year 2001-2002. How has this come about? If you do a careful analysis, you will find that 70% of the improvement in profits in the year 2002-2003 over the year 2001-2002 is coming due to higher steel prices and 30% of the improvements only, about 200 Crores of improvement, is coming from our own efforts, which by itself is very creditable, which by itself all of us should be greatly proud of. But it is a fact that if the prices had been the same as in the year 2001-2002, we would have made a profit of only 400 Crores. And if the prices had been on an average, which prevails over a business cycle, our profits would have been perhaps about 550 or 600 Crores. But what this company requires, what Tata Steel requires, to become EVA + at the current level of investment is a net profit of something like 1000 to 1100 Crores. So as you can very easily see if the prices had been normal and we did not have the benefit of a very record high in prices during the year 2002-2003, we would have ended up some 500 Crores short of what is required to become EVA +. This is the challenge. There is still a gap inspite of all our outstanding performances, inspite of all the wonderful improvement projects that you all have undertaken and the Continuous Improvement that all of you in Tata Steel together have affected in a fantastic manner. There is still a gap of about 500 Crores between what we want to become : EVA + at a time when the steel prices would be normal and what we are today. So, the challenge is to become EVA + under normal steel prices and not depend on steel prices to make us EVA +, but depend on our own efforts to become EVA +, irrespective of what the steel prices are in the market place. Now how we are going to achieve this? How are we going to become EVA+ under normal steel prices? How are we going to become EVA+ with our own efforts and without depending on steel prices? This is what ASPIRE is all about. ASPIRE is a program that will help all of us to increase the speed of improvement. ASPIRE is a program that will help all of us to increase the speed of change. ASPIRE is not a new program. It is a new way of doing what we are already doing. It is an organised way of integrating all the Improvement techniques. It is an organized way of involving more people. It is a structured way of selecting improvement projects, implementing them and measuring improvement. It is also an organized way to improve people's skills, people's calibre, people's quality and people's performance. ASPIRE will use all the improvement tools, that we have today. The Quality Circles, the Top, the Six Sigma the TPM and several others that we are already practising. Each Department of the company will have, what we call as the Change Acceleration Teams. Because what we are talking about ASPIRE, is about speed. ASPIRE is about velocity. ASPIRE is about speed of improvement and speed of change and that is why the teams are called Change Acceleration Teams ? CAT's. The Departmental Head will be the Champion. He will have trained facilitators. They will be called Black Belts, Green Belts and TPM coordinators. Black belts and TPM coordinators will be full time facilitators, trained in improvement methodologies. Most of the departments will have one Black Belt and one TPM coordinator. All employees irrespective of where they belong will be eligible for Green Belts. He or she needs to select a project, get trained and implement the project for getting certified. Eventually, all our employees, irrespective of where they are, with a certain basic education should aspire to become Green Belts. All successful Green Belts will be eligible for reward and recognition. Training for the champions will start right away next week. This will be followed by a structured program for selecting Black Belts, Green Belts and the TPM facilitators. You can become a Black Belt, Green Belt or a TPM facilitator depending upon the success of your project. Over the next three months, all of you and each and every one of you will have an opportunity to get to know the details of the ASPIRE program and appreciate the power of the ASPIRE program. Business Excellence Councils at various levels will henceforth act as the Steering Committees for progress of ASPIRE and will review the implementation of TPM and Black Belt and Green Belt projects. As I said earlier, ASPIRE is not a new program. It uses the same tools that we know and are using them already. It is a vehicle to accelerate, to run faster and to fly. It will continue to be part of the Tata Business Excellence Model, which is a model that we have chosen to journey along in our march towards business excellence. The challenge to become EVA+ under normal average steel prices is very, very steep. No other Steel company in the world has achieved this so far. But ASPIRE will help us succeed. You are imbibing the ASPIRE program, the ASPIRE culture and making it a success will make us succeed and make Tata Steel EVA+ and improve EVA year on year. Thank you and best wishes.