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| Vol. 4, Issue 5 May 2012 |
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Reporting & Essays |
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Reportage |
Moral Minefield
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| Has Tata Steel, one of India’s oldest and most admired corporates, diverged from the ethical path laid down by its founding fathers? |
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Published : 1 November 2011 |
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PHOTOGRAPHS BY AKSHAY MAHAJAN |
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| The hundred year old Tata Steel plant’s chimneys pumping out black,
reddish and white colored smoke over the city of Jamshedpur.
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~One~
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N 2007, EXACTLY A CENTURY after the company was founded with almost defiant Indian pride during British rule, Tata Steel took over the Anglo-Dutch steel manufacturer Corus. In his book, The Romance of Tata Steel, published later that year, the most prolific chronicler of the House of Tata, RM Lala, described the felicitous timing of the takeover: |
The hand of history has woven the tapestry of the Tatas. Just over a hundred years ago, Jamsetji Tata requested the Secretary of State, Lord George Hamilton, for the co-operation of the British Raj in starting India’s first steel works. On the hundredth anniversary of the registration of Tata Iron & Steel Company, the company won the bid to purchase the Anglo-Dutch steel giant CORUS. And so the wheel has turned a full circle.
The multi-billion dollar deal was signed after months of fierce competition between Tata and a rival bidder, the Brazilian steelmaker Companhia Siderúrgica Nacional (CSN)—and the outcome did suggest a certain good fortune for the Tatas. At a final auction held in London on 30 January 2007, Tata raised its offer in the ninth and last round of bidding to 608 pence per share—narrowly edging out CSN’s final price of 603 pence. The takeover—an all-cash deal—cost Tata Steel $12.1 billion, almost double the $7.6 billion it had first offered for Corus in October 2006.
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A train carrying iron ore from the small mining town of
Noamundi to Jamshedpur, the site of Tata Steel’s first plant. |
The acquisition vaulted Tata Steel into the top ranks of world steel firms: already India’s largest steel manufacturer, it became the world’s fifth-largest, and the first Tata company to be named a Fortune 500 multinational corporation. Symbolically, the deal was heralded as a demonstration of India’s rising economic might, and an auspicious arrival for Indian business on the global stage.
In a strictly historical sense, the acquisition marked a major triumph for Tata Steel, which had persisted “against great odds”, in the words of RM Lala: it had dodged fierce strikes by disgruntled union workers in the 1920s; subsisted through decades of artificially low steel prices set by the Indian government after Independence; seen off threats of nationalisation during the reign of Indira Gandhi; upgraded an obsolete plant that was desperately in need of modernisation; and fought back from what its directors described as the brink of extinction in the early 1990s.
But to say that Tata Steel, now a global steel powerhouse, had left all its problems in the past would be an understatement. For the firm’s great triumph at the Corus auction in London came almost a year after one of its lowest moments: a violent incident that took place in Kalinganagar, Orissa, which may have marked the company’s greatest moral failure in its 100-year history. It found no mention in The Romance of Tata Steel.
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N THE MORNING OF 2 JANUARY 2006, Mukta Bankira awoke, as always, at the crack of dawn to begin sweeping her brown and blue-painted mud house. Framed by a low bamboo fence, the house is tucked away in Kalinganagar—a small town in the iron ore-rich Jajpur district of Orissa, about 100 km from the capital at Bhubaneswar, which has |
become one of the state’s new industrial hubs. Its undulating landscape is bifurcated between smoke-coughing factories and pastoral tribal villages flanked by low-lying, forested hills. A 40-year-old widow, Bankira, who belongs to the Ho tribe that is predominant in the region, lost her husband to a fatal fever many years ago. Like everyone else in her village, Chandia, she eked out a subsistence living and fed her four children by growing vegetables, grains and lentils on the agricultural lands nearby and rearing poultry and livestock for milk and meat. Her son Ranjit, a tall and lean 20-year-old, described Bankira as “the kind of mother who went hungry herself but made sure her children never did”.
Tensions had been high in Kalinganagar all winter long. More than a decade earlier, the Orissa state government had acquired more than 10,000 acres of land for an industrial complex, and in turn apportioned that land to companies like Tata Steel, which had purchased an allotment of 2,400 acres to set up an integrated steel plant capable of producing six million tonnes per year. In 2005, the unresolved dispute between displaced residents and the state over compensation and rehabilitation had become especially heated. The state had acquired the land from some of the villagers for  37,200 per acre, and resold it to Tata for approximately 337,000 per acre—still well below the market price, which by 2006 was estimated at more than 500,000 per acre. (Villagers who did not have the record of rights for the land in their possession had it taken without compensation.) According to news reports, the state earned a profit of roughly 7.5 billion, while Tata saved 870 million by purchasing the land at below market rates.
By this time, building the steel plant at Kalinganagar had become one of Tata Steel’s highest priorities, alongside its efforts to upgrade capacity at its original plant in Jamshedpur, Jharkhand. But roadblocks still lay ahead: villagers who felt they had been undercompensated (or denied compensation) for their land continued to contest the deal, and many of those displaced from their homes or livelihoods were yet to be resettled or compensated. A long-standing local resistance movement had turned up the heat against any further land acquisition or development, based on the government’s previous failures to deliver fair compensation. “Kalinganagar was a turning point in anti-displacement struggles,” said Sudhir Patnaik, a journalist based in Bhubaneswar who publishes an Oriya fortnightly magazine, Samadrusti. “They said a complete no to displacement with the slogan: money cannot compare to the lands we have.”
On the morning of 2 January, news had travelled like wildfire through Bankira’s village and the surrounding area that Tata Steel had begun to use bulldozers to level land and build a boundary wall so that work could commence on the steel plant. The land, while legally under the possession of Tata Steel, was still subject to compensation disputes from affected villagers. Bankira ran out of her house, heading toward the contested field, almost a kilometre away: when she arrived, a contingent of some 300 armed police, deployed to guard the bulldozers, were facing a swelling crowd of several hundred angry tribal men and women, some of them carrying bows and arrows.
There are conflicting accounts about what provoked the police to fire at the assembled crowd, but when it was all over, 12 tribal men and women and one policeman were dead, and another 37 tribals injured. Local human rights activists have alleged that not all of the dead perished in the skirmish, and that up to six, including Mukta Bankira, were taken into police custody and killed—an allegation that gathered momentum among the locals when some of the bodies returned to families for cremation were found to be missing their hands. Bankira’s son Ranjit said that his mother’s body in particular had been badly mutilated. “She had a bullet wound on her neck below the right ear,” said Ranjit, averting eye contact throughout his recounting of events. “Both her hands had been chopped off. Both her breasts had been sliced off and she had knife marks on her forehead. I feel bad that Tata Steel took my mother away.”
The anger in the local community deepened the following week, when large advertisements for Tata Steel appeared in the local newspapers. “The people felt humiliated by this,” Sudhir Patnaik said. The chief minister of Orissa declined to visit the village to pay his regards; the only politician who came to see the victims’ families was the Congress party president, Sonia Gandhi. “She spoke in English,” Ranjit told me. “I didn’t understand what she said.” When I asked him about Ratan Tata, the chairman of Tata Group and Tata Steel, he responded with a vacant look. “I don’t know who he is,” Ranjit said.
Ranjit Bankira is now 20 years old and married. He works as a peon in a local government school, earning 7,000 per month. He quit studying after seventh standard. “I had dreamed of doing big things once but now I have to take care of my younger siblings,” he said. Last year, he alleges, Tata Steel took five acres of the family’s land, for which he has received no compensation. “If you don’t get technically displaced by leaving your house and belongings, then there is no payment,” he said. After Bankira’s death, the family received 1 million in compensation from the state and central government, which remains secured in a bank account for his siblings’ higher studies and future use.
In an interview with the environmental activist and journalist Nityanand Jayaraman six months after the shootings, HM Nerurkar, Tata Steel’s current managing director, and the former in-charge for Kalinganagar, candidly acknowledged that local people “did not like that government was profiting” from the taking of land, and “have not got a good deal”—but also explained that by mid-2005, Tata Steel had decided “we can’t keep on waiting indefinitely” to begin construction. In late 2005, Nerurkar said, the Tata Steel Rural Development Society (TSRDS)—an NGO affiliated with the company—set up a medical camp to reach out to the locals, but it was burned down after two days. That the construction work on the boundary wall began just a few months later would seem to indicate that Tata Steel was well aware of the intensity of local sentiment against land acquisition and development, but proceeded in spite of this opposition. (Nerurkar’s office declined my request for an interview, citing his busy schedule, and did not respond to questions submitted by email.)
The deaths in Kalinganagar brought a share of unwelcome publicity to Tata Steel, but it was quickly dispelled by the euphoria over the Corus acquisition a year later. What was more serious, though, was the tarnish—however slight—that had begun to appear on the reputation of a company that had for decades been regarded as India’s gold standard for corporate ethics and responsibility.
~Two~
| J |
AMSETJI NUSSERWANJI TATA, the Parsi founding patriarch of the Tata empire—often called the “father of Indian industry”—regarded the establishment of an Indian steel mill as a patriotic endeavour, in line with the nationalist fervour that swept the land as the 19th century neared its end. Tata believed steel could be a symbol of India’s modernisation, |
and was convinced that an indigenous industry would usher in national prosperity and reverse the pattern of exploitation under British rule, when raw materials were taken from India to manufacture goods in England, whose sale—including back in India—generated considerable profits. According to several accounts of his life, Tata had drawn his inspiration from a lecture given by the Scottish historian Thomas Carlyle, which he had attended during a visit to Manchester in the 1860s. “The nation which gains control of iron,” Carlyle said, “soon acquires control of gold.”
Jamsetji did not live to see his audacious dream of setting up an Indian-owned steel plant in British India become a reality; that task was left to his son, Dorabji, and his cousin, RD Tata. Three years after Jamsetji’s death in 1904, the Tata Iron and Steel Company (TISCO) was registered; five years later, the first ingot of steel rolled out of its plant at Jamshedpur. On his death bed in Germany, Tata had told Dorabji and RD Tata, “If you cannot make it greater, at least preserve it. Do not let things slide. Go on doing my work and increasing it, but if you cannot, do not lose what we have already done.”
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Readers' Comments |
Total Comments
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masterdt
18 April 2012
11:20 AM
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Noamundi earns 'ideal mine' tag from central panel - The shah commission praised Tata Steel's operatng system at the Naomundi mine in west singhbhum.
Also the commision called it as idea mine in that region.
For more information please do visit any of the following link..
http://www.youtube.com/watch?v=0eU4T1MJhco
http://www.flickr.com/photos/webmaster2012/6942079326/
http://masterdt.wordpress.com/2012/04/17/tata-steel-in-the-media/
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Sachi Mohanty
16 November 2011
03:06 PM
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Having spent 30 years in a steel city (not Jamshedpur but Rourkela), I have some perspectives to offer.
A steel city can provide better municipal services than the average small town.
Yet the beneficiaries may be only the permanent employees of the steel plant. Many are left out.
I suppose Tata Steel's No. 1 priority had to be survival and then profits. One can't fault them for that.
One can't expect them to solve all of India's maddeningly complex problems — even in the small slivers of India that they operate in.
The troubles Tatas have faced as they made forays in new areas ... from Gopalpur to Kalinganagar could be on account of different reasons.
People can be misdirected by vested interests ... local politicians or other worthies.
The challenges related to land acquisition are one of the GREAT challenges that is facing India as a whole as we try to achieve some semblance of development.
I am not optimistic that India is going to turn into a developed nation anytime soon.
And that's not Tata Steel's fault either.
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Monty Gee
14 November 2011
04:19 PM
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Contrary to Vivek's one-sided indignation, it's clear your reporter has mined data from loyal TISCO employees who have recorded their real anguish. No one should be surprised, least of all someone who lives in Jamshedpur. Dr. Irani was a dead loss on everything except purely technological matters. Even he would find it hard to justify Tata Steel's miserable record on environmental pollution. After he took over, the cost-cutting included severe cutbacks on the social welfare projects for which the Tatas had been famous. Where once TISCO had been proud to advertise the fact that its industrial policy was framed by Sidney & Beatrice Webb, the reigning deities of the British Fabian Socialist movement, the fact was kep under wraps - until it was time to flaunt it for the benefit of CORUS unions,.Also, far from suffering during the years of the Command Economy, TISCO benefited by default from the inefficiency of the Public Sector steel plants, which won it regular price rises without doing a thing. A parallel instance with Kalinganagar was Singur in West Bengal, where the Tatas (Tata Motors) got land for a song. Comments like Vivek's show powerful an IMAGE can be in helping people ignore REALITY at their doorstep.
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Monty Gee
14 November 2011
04:00 PM
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Tata Steel is by no means the model outfit it once was - and even that was many decades back. Its record on environmental pollution at Jamshedpur does not bear scrutiny. Nor does incidence of corruption in commercial dealings. And Singur in west Bengal also was a case of the Tatas (in that instance Tata Motors) being allocated land for a fraction of its market price. As for Dr. Irani's contribution, almost as soon as he took, most social welfare projects around Jamshedpur took a huge hit. Also, the industrial relations policy pioneered under Dorab Tata (the article does not mention that the policy and its terms were drafted by Sidney & Beatrice Webb, the reigning deities of the British Fabian Socialist movement) stopped being mentioned until it had to be flaunted to the British unions after the take-over of CORUS. Some of the comments here show how powerful an IMAGE can be in persuading us to ignore REALITY!
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Aniruddha Das
9 November 2011
07:59 AM
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Hard to disagree with Anjana and Vivek above; in a chequered history, a few blemishes can be excused. On the whole, has the Tata group had a positive impact on Indian society and served as a role model for corporate India? The answer is a resounding yes... the Kalinganagar incident has important lessons not least that the state government was complicit.
Finally, an error above: in reference to POSCO, they manufacture 28 million not 28 billion tonnes of steel... it would be impossible to produce and consume so much
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REKHA
7 November 2011
02:50 PM
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@AK. Very well said!! since our economy exposed to the world, the govt. has been focussing on only the "GDP". Every rulling govt. has just compromised with the interest of the common people and also has been giving grants to rampant establishment of industries, which are not only over exploiting the available natural resources but also degrading the quality of life of the affected people from their projects. Even the TATAS earlier known for their values and ethics are not behind in the race of increasing their business size jeopardising the enviornmental balance. This can easily be seen through the red sky in the evening in Jamshedpur , the city fonuded by the great visionary Late mr. J. R.D. TATA. Now a days CSR has become only a tool to show that "how much they are concerned about the common people, can someone tell that what percent of their profits or turnover they give for CSR activities. for them CSR is also like a investment by which they earn support of local public and the govt. I think at least TATAS being the root of the industrial development of India must continue to adhere to the rules and provision made for the protection for our rich sources of ores.
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Sachit
6 November 2011
10:06 PM
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Excellent article! I particularly didn't miss the points-of-view of the people who weren't available for an interview--mainly because I can imagine what they would have said. The article convincingly brings forth the main point: Tata steel has changed--it merely professes to the values it once held true. Its priorities are no different from a global company which plays by different rules depending on where its operating. The company was ahead of its times in keeping the people around it happy--that it needs to try harder to keep them happy to ensure its own success couldn't have been put more succinctly than by JRD himself.
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AK
2 November 2011
05:31 PM
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@ Anjana Gopal and Vivek - you have aptly brought out the good done by Tata for the middle class and working class. This is rightly well known. But when it comes to the truly marginalized people in India, no one cares and this article highlights just that. CSR is just eye-wash for corporates for positive publicity. Real estate sharks in Mumbai and Delhi do CSR in land they want to later acquire.
@Vivek - you quote the Economist (and the blogger Schumpter no less - the very economist whose "disruptive innovation" ideas are ravaging western capitalistic economies now) - a very bourgeois publication more concerned about the middle classes than the marginalized. The Economist champions free trade, zero/low tariffs, zero regulations and so on. Hardly a magazine to compare the more left leaning Caravan magazine with.
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Asmi Biswas
1 November 2011
12:48 PM
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A beautiful article. Very well researched. Brings to the fore the plight of the marginalised people. It's easy for people who live in ivory towers to not realise that the stress of the report, even though primarily on the Tata group and it's journey over the years vis-a-vis the community,is on what underlies the very basis of existence for the company, L-A-N-D. You can't build industries or expand industries without land, and this is where the real concern is. Displaced people, tribal people, landowners, have to be given their due share of rights. Unless economic growth is marked by genuine concern and action for people and their rights, no development is complete and right. While there are instances where we have had multinational corporations coming and exploiting the country's resources, we also have instances where the state governments have in collusion with such companies, sidelined the people who are affected the most by such decisions. Take for instance, the case of the Vedanta mining in Orissa which will displace the Dongari Kondhs from their homes. There are numerous such instances where in the name of development for the country, we deprive people of their basic rights.
Kudos to the author for coming up with the idea to showcase a part of this reality. We need more voices like hers to talk about, discuss, and act upon such cases.
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Anjana Gopal
31 October 2011
01:01 AM
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I have spent all my formative years in Jamshedpur and have very strong connections with the city. I believe this article does not do complete justice to a the work being done by the Tata's in the context of Jamshedpur. The quality of life in Jamshedpur, the fact that employees who have opted for the ESS scheme ( my father being one of them) can enjoy good and FREE medical facilities and other such community benefits really put the company way ahead of a lot of private firms.
Most companies I have worked for do not extend anything outside the basic insurance coverage to its employeess which ony covers the employee and immediate spouse/kids/parents. Here is a company which provides decent medical facilities to even retired employees. Tisco run schools are another classic example of the good work extended by the company to the local community, the education quality and infrastructural facilities at these schools would easily compare to private schools in smaller cities ( the only caveat being the mode of education is in Hindi). So though the article is well researched, it does tend to provide a lopsided view of the Tatas. A more balanced viewpoint would have really helped.
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vivek
29 October 2011
04:29 PM
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Having lived most of my life in jamshedpur, i would agree that all the charges the reporter places at Tata steel's doorstep are founded in substantial fact. However, i strongly condemn the one sided reportage that has become a hallmark of caravan articles of late, and exemplifies itself here, wherein the reporter has only managed to get an outsider's perspective of Tata steel's point of view(hiding behind cleverly designed statements like " request for interview refused "which have come into vogue lately !). I challenge the same reporter to point out a similar initiative ( in scope,scale and intent) in CSR undertaken by a corporate enitity in the country or even abroad. Before besmirching Tata steel's reputation, the reporter should also try and contact the millions of people associated with tata steel ( employees, officers, family members ) whose lives have been touched in a positive manner by tata steel over the past hundred years and get their views on the subject. It's very easy to demonize an institution, and everyone loves a good story about how the mighty have fallen, but the reporter should realise that the very fact that tata steel still continues to provide for its workers in such a manner in this time and age makes it a world class institution. Lastly, i would like to point readers to this brief message in a publication far more respected and balanced in its views than caravan , which while lauding tata steel for its efforts also cautions against going overboard. (http://www.economist.com/blogs/schumpeter/2011/01/company_towns ).Maybe its time the reporter met some intelligent people than rumour mongers, wannabe politicians, and troublemakers while writing a story.
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