Ethics of Turnaround Management

at TATA Tinplate

- A Case Study

XLRI

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21st August 2017 1
 1997
Quite a chaotic situation

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 1997
Net worth almost getting
wiped out

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 1997
Company on the verge of being
referred to BIFR

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 1997

Continual breaches in
commitment to FIs on
interest payments, leave
alone principal amounts

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 1997

Technology obsolescence
& cost ineffectiveness of
one large plant of 3000
employees

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 1997

Inability to pay wages to

workmen for months

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 1997-1999
What needed to be done at earnest to get Co. from ICU to Main
Ward?

Sweat productive assets to the hilt to maximise inflow of cash.

Tremendous effort was necessitated to focus on sales, prices,

W.C. block, operational efficiency, quality. Sought help of JAPS
through TPM route.

Govts permission for closure of the plant, which was not

forthcoming as it would imply downsizing of the Co. from 5000 to
2000 workmen.

Concurrence of FIs for Financial Restructuring with guaranteed

minimal Co. performance.
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 1997-99: Huge Ethical Concerns
From Workmen:
Who is responsible? Strikes, Dharnas by families at my
house.
Fair on part of Tatas not to pay wages for months?

From Government:
Tinplate cant make workforce of 3000 redundant

From Board:
Insistent on closure but with only legally compliant VRS
package. Amounts will be minimal and not Judicious.
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 1997-99
Despite turmoil our focus was to:
Seek Board concurrence for attractive separation
package, which will not substantially increase cash
outflows but alleviate the problems of workmen.
Medical attention
Housing
Education of children
Offer assistance to workmen for retraining or
redeployment chances in other local Companies
Assistance in investment of VRS package to get best of
secured returns
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 1997-1999
Interact directly with workmen to endeavour to
work out mutually acceptable way out and keep
the union in the loop.
Communicate objectively with society at large
the genesis and remedial action for turnaround
of the Co.
Arrange buffer funds to handle VRS cases with
agility and to ensure monthly payments on time
as a part of financial package.
Approach government for permission albeit with
cooperation from workmen!!!
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 1999 & after
By 1999 Co. had a turnaround & has been on the wave of massive
transformation since then.

1997 2017
Employees 5000 1500
Market Share 15% 45%
Exports - 25-30% of production
Prod. Positioning Supplier Solution Provider
Financial Status Cash losses EVA +, Debt Free, Dividend paying Co.

Company was awarded in 2007, JRD Tata Q.V. Excellence Award.

IIMA has prepared a case study on the Turnaround of the company.

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 Learnings

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 Pillars of Ethics & Governance
Corporate ethics cannot just be reduced to compliances. It
has to be steered by authentic leaders to catalyse change
towards

Trust How do we earn & deepen Trust

Courage Strength in the face of adversity

Justice concern for fairness

Wisdom Good sound judgement

Temperance Self-restraint

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 Pillars of Ethics & Governance (Contd.)
Values & Culture of the Organization
People (Authentic Leadership)
For the Tatas, there are Five Value Pillars of great importance
Pioneering
Integrity
Excellence
Unity
Responsibility

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 Pillars of Ethics & Governance (Contd.)
Organizations have to focus on People to develop

Integrity, Responsibility & Compassion are key success factors

Organizations must create a pipeline of virtuous & authentic

leaders

Such authentic leaders as opposed to leaders focussed on their

own-selves, have Very High, Sustainable returns.

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 Pillars of Ethics & Governance (Contd.)
Authentic leaders have unimpeachable character, are experts in
their leadership context and have superior competence

Authentic leaders must demonstrate

Competence
Communications, Integrated thinking, Problem solving capability,
Managing group dynamics, Expertise, Accountability
Context
Ecosystem, competitive forces, Build competitive advantages
through people first
Character
Values, Equity, Humility, Wisdom, Courage & Credibility

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 THANK YOU

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