As he went about integrating NatSteel, which was Tata Steel’s first acquisition overseas, TV Narendran did all the right things. Wary that the management of the acquired company would be jittery, Narendran worked with them to turnaround the company. There was no major shake-up in the senior management and Narendran, who was Principal Executive Officer of the then Managing Director B Muthuraman before shifting base to South East Asia, gave room and respect to his senior colleagues. He started off as Executive Vice President of NatSteel Holdings and slowly moved up the ladder to become its President & CEO in 2008. By the time he moved back to Tata Steel’s operational head quarters in Jamsedhpur in 2010, NatSteel was a much more efficient and profitable unit.
Now as the newly appointed Managing Director of largest Indian steelmaker, Narendran (he will also head the South East Asian operations) will have to show a similar combination of doggedness but with soft hands. As I had written in this cover story of Forbes India in April, Tata Steel is going through the toughest challenge of its existence. Though the company might have shown a “turnaround” in the first quarter of this financial year, it is still not out of the woods. Its most ambitious project in Kalinga Nagar will do good to meet its deadline of October 2014 to start making steel. And as the first quarter results showed, the European operations continue to struggle. The net debt of the company is over Rs 60,000 crore.
The economic environment doesn’t provide any solace. The RBI Governor has hiked interest rates today (causing a fall in BSE Sensex by 2.7 per cent. But Tata Steel’s scrip fell steeper by 3.2 per cent) and growth in steel demand in the domestic market is at its slowest in five years.
In many ways Chairman Cyrus Mistry has made the right choice. Narendran has had stints in company’s long steel and flat steel units and the international experience at NatSteel is a huge plus. And as the Principal Executive Officer of Muthuraman, who is Vice Chairman now, Narendran would have closely observed how a MD works. Most of all, with his youth and squeaky clean image he might be able to bring in fresh air in Jamsedhpur, which recently saw some not-so-pleasant headlines.
To face the challenging tasks that confront him, the 48 year-old Narendran will need support from key executives, most of whom are his seniors.Not many of them would be amused by Mistry’s final choice for the MD chair. Though Narendran was among the favourites in this highly contested race, he was not the first among them. Kousik Chatterjee, the Group CFO who is now Group Executive Director (Finance and Corporate) and Partha Sengupta, who heads the raw materials division, were the early front runners. Anand Sen, who heads the project in Odisha, finished off the quartet in the running. Interestingly, in his new role Chatterjee will be reporting directly to the Chairman and will also have an additional responsibility of global mining projects, which till recently was overlooked by Sengupta. Talk is also ripe that Chatterjee might be up for ‘bigger’ roles.
Tata Steel will hope that the tide turns into its favour as the young mechanical engineer and MBA graduate from IIM Calcutta takes over in November. Narendran’s predecessor HM Nerurkar didn’t have a very pleasant stint, unfortunate also to have a dipping economy both in Europe and India. But more than luck, that will depend on Narendran’s charisma and grit.