October 2007 | Sujata Agrawal

High five

Tayo Rolls has a plan in place to achieve high-octane growth, and its main components are cutting-edge technology, employee enthusiasm and boundless ambition

Pradeep Srivastava

Paanch saal me paanch guna — five fold in five years — that’s the vision driving the growth strategy of Tayo Rolls, India’s leading anufacturer and supplier of steel rolls. The ‘five’ fixation does not end there. “We have defined our growth in terms of panchshul (five directions), growth in the same business, backward integration, acquisitions, diversification and alliances,” says Pradeep Srivastava, the managing director of this Tata Steel associate company, who co-created the vision with his employees in 2005.

To realise its high ambitions, Tayo Rolls will have a whole lot more to do, expand capacity, increase exports, upgrade technology and empower employees. Can the company make good on its aspirations? Srivastava, for one, has no doubts it can. “There are big opportunities ahead and the last few years have shown that we can deliver,” he says.

The past, though, cannot be a barometer by which Tayo Rolls measures up in the future. It took about 30 years for the company to reach annual revenues of Rs100 crore. Now it is aiming to get to over Rs500 crore a year by 2010, a growth rate that is not easy for a steel rolls company to achieve.

The fine print of the plan guiding Tayo Rolls shows it has already embarked on its dream run. The cast rolls capacity has been increased to 13,500 MT with well defined plans for the next phase of 15,000 MT.

In 2005, as a step in backward integration, it set up a mini blast furnace (MBF) with a capacity of 40,000 TPA to manufacture foundry grade pig iron.

Tayo Rolls is the first company in the world to make rolls directly from iron ore, and it has other advantages to bank on. “We are the only steel rolls company with a captive blast furnace and have a unique plus point in that we take clean molten metal into the Arc furnace,” says Srivastava. Translated into simple speak, that means it can optimise the charge mix, reduce the energy it consumes, and thus manufacture a superior product with lower cost of operations.

The excess capacity and availability of molten metal from the MBF has also become a nucleus for further growth. Leveraging this to meet the growing demand for forged rolls and engineering forging, Tayo has recently finalised a major diversification plan. It will be setting up an integrated facility to manufacture forged rolls and engineering forgings with technical collaboration with a world-renowned European company.

Tayo Rolls will now produce forging quality ingots, engineering forging for oil, gas, steel, energy and infrastructure sector apart from its main product of forged rolls. This will be the largest brownfield expansion programme at Tayo since its inception. Production is expected to commence in 2008. This will make Tayo, the only company in the world to have a totally integrated facility for cast and forged rolls at a single location. “This will ensure a turnover of more than Rs500 crore by 2010,” says Srivastava. This project is a strategic fit for Tata Steel with Corus in its fold and will result in significant value creation within the group.

Tayo Rolls began life in 1968 as Tata Yodogawa, promoted by Tata Steel in collaboration with Yodogawa Steel Works and Nissho Iwai Corporation of Japan for the production of cast iron and cast steel rolls for metallurgical and nonmetallurgical industries. Rolls were imported at the time and the process for getting government approvals was rigorous and cumbersome.

The company started production in 1970, manufacturing state-of-the-art rolls for modern flat and long product rolling mills for the steel industry and for paper and rubber mills. “We were market leaders from day one,” says Srivastava. Even more impressively, Tayo Rolls has been making profits and paying dividends ever since those early days. “In the 37 years of being in business, we’ve never made a loss and we’ve never skipped a dividend.”

Tayo Rolls’ focus on supplying high-end rolls that meet Tata Steel’s exacting standards has helped the company secure customers inside as well as outside India. It exports more than a quarter of its products to some 30 countries worldwide, including Corus (and that was before the British behemoth was acquired by Tata Steel).

Product focus also had a part to play in the company changing its name. “People did not know what Tata-Yodogawa produced,” says Srivastava. “Also we had a much larger global customer base than Yodogawa, which is now focussed on big rolls and operates in a very niche Japanese market”. The Japanese co-promoters have 12 per cent equity in the company.

The changes that came about in the company touched more than its name. Though it was the largest player in its segment, Tayo Rolls was not growing fast enough. “We were a bit inward looking,” admits Srivastava. “But over the last few years, we have begun to better appreciate, and cash in on, our potential and the tremendous opportunities coming up in this business.”

Roll manufacturing depends, to a large extent, on the steel sector. Positive changes in the steel industry and burgeoning demand have had a direct effect on Tayo Rolls’ business. However, this sub-sector has a cost to bear; if the rolls are of better quality, consumption goes down. There are other negatives that have to be dealt with.

There has been a steep jump in input costs without a corresponding increase in realisations. Add to that the not-so-small matter, of intense and increasing competition from the likes of China, the crashing of trade barriers and the appreciation of the rupee against the dollar.

On the bright side, Tayo has the technology to back up its ambitions. Technology is vital in the production of rolls, which gives steel its shape (flats, sheets, bars and rounds). Rolls are made from steel or cast iron and have to compress steel. They have to be strong enough to press steel but, at the same time, malleable enough not to break or wear out quickly. Tayo has kept its technology up-to-date through collaboration agreements. It has recently entered into a new agreement with Yodogawa Steel Works, Japan. Its modernised plant is equipped with Japanese, European and indigenously developed technologies, which give it a distinct edge over the competition. This is helping Tayo as it expands its horizons.

For Tayo Rolls, the biggest driver for growth has been the environment and the buoyancy in the steel industry. “Our technology and rolls are world class. What we are now trying to do is design systems that enable us to lower our cost of operations,” says Srivastava. The Tata Business Excellence Model has been helpful in this effort. “There is a feeling of doing something out of the ordinary.”

An intensive internal communication initiative has enabled the company to tap what has become a source of significant strength — its people. Employees share a common vision and goal and there is a culture of worker participation at every level. “Tayo Rolls is one of the smaller companies in the group, but our people are highly motivated and there is a tremendous sense of belonging among them,” says Srivastava.

“Keeping pace with the growth of its parent company [Tata Steel], Tayo Rolls will soon be among the top five rolls companies in the world,” says Srivastava. With a strong belief in their ability and in themselves, the leadership and the people at Tayo Rolls are surely motivated in their determination to move forward.

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