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Moral Minefield|
Has Tata Steel, one of India’s oldest and most admired corporates, diverged from the ethical path laid down by its founding fathers?| |
By DIVYA GUPTAPublished :1 November 2011|
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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.|
~One~ I| 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.  |

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.  O| 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...
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