The Hindu : Business : Tata Steel to push for social responsibility of businesses

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Saturday, Jul 03, 2004

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Tata Steel to push for social responsibility of businesses

By Our Special Correspondent

CHENNAI, JULY 2. The Tata Iron and Steel Company (Tisco) will announce in the course of this year a policy framework whereby it "will do business" only with entities which show a commitment to corporate social responsibility. "We want to encourage our suppliers and customers to adopt social responsibility because business has an obligation to give something back to society", said B. Muthuraman, Managing Director of Tisco, which is known for its committed budgets down the decades for community welfare beyond the confines of its own employees.

Addressing the open session of the 168th annual general meeting of the Madras Chamber of Commerce and Industry (MCCI) here today, Mr. Muthuraman disagreed with the proposition that the "business of business is business and adding to shareholder value" and that social welfare was beyond its purview. For businesses to be "sustainable in the long term", they had to commit themselves to social good, he said.

Mr. Muthuraman said there was little possibility of steel prices coming down in the next two to three years. The present high prices of steel were the result not of high cost or high margins of steel producers but of the failure of raw material manufacturers to foresee a demand revival for the final product and make adequate investment in expansion of their capacity. Once producers of inputs like iron ore and coke expanded their capacity, the price of steel, for example HR (hot rolled) coils, could stabilise around $350 a tonne.

The Tisco MD said his company was already the lowest cost producer of steel in the world, thanks to huge investments it made in modernisation in the post-1991 years and total involvement of the workforce up to the lowest level in evolving and implementing the company's vision. Further cost cuts would be possible only if externalities like infrastructure and rail freight improved.

The steel industry the world over had performed poorly till the last three years or so, because of slump in demand with developed countries with limited populations having crossed the stage of creation of infrastructure. The revival in the fortunes of steel at present was due to the demand shifting to countries like India and China, which had both large programmes for building infrastructure like roads and ports and huge populations that could sustain a rising domestic demand, he observed. Mr. Muthuraman said his company had started drilling work for its titanium dioxide project in Tamil Nadu and had commissioned studies on availability of water, power and other requirements.

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