Case Study | BlueScope Steel

June 2014

Tata and BlueScope: a union of equals

With uncertainty over the long-term future

of manufacturing, the joint venture
between Indias Tata Steel and Australias
BlueScope Steel is an example of how
Australian manufacturers can find new
markets and new revenues overseas.
While BlueScope Steel can trace its heritage to the birth
of steelmaking in Australia, the companys future lies in
selling Australian innovation, technology and expertise
to Asia and beyond.
BlueScopes successful global partnerships allow it to
prosper in diverse markets such as North America,
Saudi Arabia and India, where the company established
a joint venture in 2005 with the Tata conglomerate.
The partnership between Tata and BlueScope has
outperformed expectations, powered by Indias
economic growth.

Partnership creates opportunities

Today, Tata BlueScope Steel has three business
divisions in India offering premium brand steel products
for building and construction.
The company has four state-of-the-art manufacturing
plants, supported by a network of sales offices. A board
that comprises representatives from both companies
governs the Tata BlueScope business.
BlueScope, which had limited operating experience in
India, opted for a joint venture because of Tatas local
brand recognition and its corporate values.
Tata had strong growth ambitions, and a marketing and
branding ethos similar to BlueScope.
Tata BlueScope CFO, Shyamsunder, an Australian
national, says the move into South Asia has helped
BlueScope to increase revenue.

Tata Bluescope Steel manufacturing facility in India

However, he says operating in an economy of rapid

growth yet poor infrastructure posed a few challenges.
The Indian market is highly price sensitive,
Shyamsunder says.

You must take the time to understand

each market, become a local operator, and
develop enduring relationships. This takes
perseverance and patience.
Tata BlueScope CFO, Shyamsunder

You can achieve premiums for your product only after

proving its value, and that takes a long time in India.
Having a global brand does not guarantee acceptance
by the local market.
We learnt this the hard way. We based our business
case on achieving premiums because we held
significant share of the Australian market and we
thought we would achieve similar results in India.

But that was not to be the case. We had to do the hard

slog of building brand value. This is one of the reason
why it so important to have a strong, well-recognised
local partner.

strong and demonstrated alignment between, and

within, our board and our management. You must
ensure that any ambiguity in your strategy is resolved
throughout all layers of management.

Doing business in India

You must review your business performance more

frequently and keep your standards high. Where you
need to make changes to work culture and systems, do
so in a way that does not make your local management
and partner feel marginalised. Think local.

People often underestimate or misunderstand Indias

strong business culture, which Shyamsunder says is
different to other South-East Asian countries.
He says English literacy, numeracy, and engineering
skills are strong in India. This gives India an edge in
business and entrepreneurialism.

Management must support the local business and have

a strong allegiance to local communities. You must
assimilate. India has a highly unionised labour force,
and you must become part of the communities in which
you operate to be successful.

India has a strong, confident business culture, says

Shyamsunder. Even at the corporate leadership level,
people are entrepreneurial in ways that surprise those
from a western corporate culture. And Indian companies
are prudent about investments. Australian companies
have to be prepared to work through these issues to
find a way forward that works for both sides.

Having said all this, a well led and adaptive Australian

company can overcome these issues and create
important new markets and revenue streams in India.

The country also has a hierarchical and paternalistic

management style where the subordinates believe that
being the boss means you need to be consulted on
almost all decisions. Even highly qualified subject
matter experts will always feel obliged to refer to their
managers. This takes some getting used to for
Australian companies.

There are also opportunities for Tata BlueScope Steel in

the continued development of the South Asian
Association for Regional Co-operation, South Asias
premier body for economic unity.

Shyamsunder also says that protecting intellectual

property, careful use of language, and respect for
cultural and religious sensitivities are important
considerations in India.
For success, Shyamsunders advice is straightforward.
First and foremost, do not be tempted to enter India just
because it is a fast-growing economy. You are bound to
fail. Instead, you must ensure India is a strategic fit into
your longer-term business plans. Prepare for a very
long haul and be ready for unexpected turbulence.
You must take the time to understand each market,
become a local operator, and develop enduring
relationships. This takes perseverance and patience.
I would also encourage people to determine your
sustainable competitive advantage. In India, you need
to understand your competitive advantage, whether its
cheaper access to raw material, a lower cost base, or
strong relationships. These three are vital. India is a
relationship-based country.
We experienced some challenges. The market was
unpredictable and political in nature. What we did not do
well, but later corrected, was making sure there was

Tata BlueScope is enthusiastic about its future in South

Asia. It sees rapid growth in industrial and commercial
buildings and bright prospects in India in particular.

BlueScopes experience shows that India is a market

that demands commitment, robust plans, and a longterm perspective, but great rewards await those willing
to make the effort.

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Commonwealth of Australia 2014

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