Mckinsey to revamp Tata Chemicals
The Economic Times — December 24, 2001

Modelled on the quality improvement programme that helped Tata Steel in staging a turnaround, Tata Chemicals has kicked off a project at its Mithapur chemical complex in Gujarat last week. This will be introduced in the company's fertiliser plant in Babrala, Uttar Pradesh once it gets integrated into the operations at Mithapur.

Tata Chemicals has asked Mckinsey to put in place a strategic framework in 6-8 months that will cover the entire gamut of operations from manufacturing to customer service. McKinsey took almost 18 months to complete the project in Tata Steel, given the large size of its operations.

As in Tata Steel, the project revolves around small teams and how they can contribute towards improving performance on a regular basis. Small teams of up to 6 people were formed at the soda ash division in Mithapur. Their mandate: come up with ideas that could become strategic inputs to four areas, namely manufacturing, purchasing, supply chain and customer service.

This is aimed at reducing costs at various levels and improving quality. This will gradually cover 1500 employees at Mithapur. The company has a total strength of 2100 employees after the recent downsizing initiatives.

While the project is essentially a replica of Tata Steel's initiatives, the names are different. Tata Steel called it TOP (Total Operational Performance) while Tata Chemicals has named it Project Manthan for a specific reason. This is because the company's products are mainly sourced from sea.

The current initiatives are part of the Tata group's strategy to re-position Tata Chemicals. Tata Strategic management group, the group's internal consulting wing, had made a strategic assesment of its core businesses more than a year ago. After this, the company had taken up several initiatves including a cost reduction exercise and re-vamp of marketing activities.

As part of the strategy, the company created marketing teams for the salt business and scrapped distribution arrangement with a Mumbai-based company. Hindustan lever's Annapurna salt brand has been providing tough competition to its Tata Salt brand.

The cost reduction exercise was mainly targetted at its soda ash business. The business was adversely affected by soda ash dumping from China which pulled down the prices. The company has also reached an understanding with the Mumbai-based Jyothi Labs to sell its detergent business. Tata Chemicals has reported a turnover of Rs 1,500 crore during the year ended March 31, 2001.