Making of a Success Story

The Story of the Joint Venture of Tata Metaliks Ltd., Kubota Corp., and Metal Corp

The joint venture agreement between Tata Metaliks Ltd., Kubota Corp. and Metal One was signed on 20th July 2007.  

This story is about how the coming together happened, and how an agreement was successfully reached upon. And the story goes like this: Kubota Corp is a USD11 billion company and is a world leader in manufacturing of DI pipes in terms of quality and fourth in terms of volume. It was looking for expansion outside Japan. They also wanted to create a base in India, which would help them to understand the growing Indian market for DI Pipes as well as their other products such as agricultural machinery, construction machinery etc. After carefully considering various options: India, China and other South Asian countries, they finalized upon India, and Tata Metaliks fitted the bill to ‘T’.

At TML, an idea germinated wherein it was felt that there should be a value added down streaming. So far TML focused on one particular product only. Several ideas surfaced, were discussed and finally it was decided to zero in upon DI pipes.

Metal one brought the two together and TML and Kubota signed an MOU on 8th August 2006. The companies exchanged market and project related information to develop techno-commercial feasibility report. After the respective Board of Directors of the two companies approved the project and gave nod for going ahead, a press announcement to this effect was made on 29th March 2007.

And then began endless rounds of discussions, visits, brain storming etc that finally culminated into an agreement that was signed on 20th July. For the all the members of the TML team, the period from Feb / March to July 07 could be described as one of despair - a tough, challenging, demanding, amusing, pleasant, satisfying to delight period depending upon what the discussions made one feel on a particular day.

 

“It was journey that both sides undertook, and at the end of the journey both evolved and emerged as more committed to make this proposed Joint Venture a reality”, says Saikat Dutta, one of the core members of the JV team. When representatives from both sides embarked upon this journey, both parties were focused upon the interests of their own respective companies. However as they thrashed out the details, moving methodically and step by step – the understanding grew and both parties felt that they were working towards building a joint venture. They were working towards building a new company out of which both would benefit.

Naoya Tanaka of Kubota team leaders felt that though there were differences of opinions or ‘fights’, it was something that brought them closer. He says,”The agreements became emotional sometimes because of difference of opinion”. However he feels that the JV will be successful as they have, from both sides managed to build up a relationship that goes beyond immediate interests. According to him the ‘fights’ were against problems and not against each other.

Nobody in their team ever felt hopeless – as above everything else they had trust in Tata Group and the name. They did feel desperate at times, but never ever did they lose hope. Back home, the colleagues and other members also shared their enthusiasm.

There were times when both the parties felt frustrated. All’s well that ends well – quite true but behind every story of success also lie the moments of despair and agony.

The reasons for despair were several. For Kubota Corp., it was a small step in terms of capital involved but giant leap otherwise, as they were getting into a strategic partnership with any company in India for the first time. The cultural differences also sometimes seemed insurmountable. There were several doubts, misgivings, and uncertainties on part of TML also. Tata Metaliks was entering into a market where there were already two established players – Electrosteel Castings and Jindal Saw. The general apprehension was - what would be special about our product that would give it an edge over others, what would be the value addition to this product that would to be launched under the brand name of Tata Metaliks and whether it would affect the core business i.e. the pig iron, as part of the liquid iron production will have to be diverted to the new pipe plant.

 

These apprehensions and concerns were eventually ironed out culminating into an agreement signed on 20th July 07.

And as they say rest is history. But small things, small gestures go a long way. Saikat Dutta still remembers the day when a member of the Japanese team presented him with a mosquito repellent and fan (probably to keep away mosquitoes). He probably was himself troubled by the brazen mosquitoes of Kolkata. This small gesture of selflessness touched the heart of the TML team members.

The Japanese whom we Indians believe are reluctant about food proved to be quite otherwise. Some members were overwhelmed by the gastronomical delight dished out by Indian food, especially the Bengali cuisine and enjoyed “Chingri Macher Malai Curry”, “Bhetki Paturi” and “Chicken Korma”. While there were some others also who were gripped by delly belly in Kolkata during first few visits.

Our own Banashree from Kharagpur administrative office was bowled over when one member of a Japanese delegation approached her and complimented her on her beauty, and that too in Hindi as he was making genuine efforts to learn Hindi. What could be a better way to begin then by complimenting a beautiful lady!

Some members from Indian side are also making enquiries about schools that teach Japanese in Kolkata.

This only signifies the beginning of a saga of a bondage the will last long.

Details about the Joint Venture:  

Name of the proposed JV: Tata Metaliks Kubota Pipes Limited
Expected turnover: Rs. 350 cr at 100% capacity utilisation
TML: 51% stake
Kubota Corp, Tokyo and Metal One: 44% stake
Metal One, Tokyo: 5% stake
Operational from: Forth quarter of Financial year 2008 – 09
Production planned at: 1,10,000 tonnes per annum

Product: DI Pipes