Changing Workplace Dynamics

Changing Workplace Dynamics

• Technology

• Business Context
 Changing Workplace Dynamics
• Technology
• Steel Making – Green Steel
• Value Addition – Steel Applications, Special Steels, Space, Defense
• Energy consumption – SEC, Energy Efficiency, Maintenance Practices, Renewable Energy
• Sustainability – Environment (Air, Water) friendly processes,
• Digital Transformation – Data Analytics, Real Time Processing, Decision-making aids,
Communication
• Impact of advanced technologies – 3D printing for complex steel components
• Business Context
• Government Policy context – National & International, Infra Investment, PLI, Import/Export
duties, subsidies, Push to Green Steel
• Economic Development – GDP, Infra Investment
• Environmental concerns – Regulations, Climate Change, Emissions, Circular Economy, Waste,
Resource efficiency, Low carbon technologies
• Global Market Dynamics – Regulations, Demand, Price
• Workforce & Skills – Skills, Gaps, Training, DEI, Preferences of today’s youth
 The Indian steel industry, a cornerstone of the nation's industrial growth, is undergoing significant trans-
formation. Some of the broad & key changes impacting large steel manufacturing plants are as follows;
1. Government Policies and Initiatives:
• Production Linked Incentive (PLI) Scheme: This scheme aims to boost domestic manufacturing, including steel production. It provides incentives to
companies that invest in domestic manufacturing and R&D.
• Infrastructure Development: The government's focus on infrastructure projects, such as roads, railways, and urban development, drives demand for steel.
• Import Duties and Tariffs: Government policies on import duties and tariffs can influence the competitiveness of domestic steel producers.
• Green Steel Initiatives: The government is promoting the adoption of green steel technologies to reduce carbon emissions and improve environmental
sustainability.
2. Technological Advancements:
• Digital Transformation: The integration of digital technologies, such as IoT, AI, and automation, is increasing efficiency and productivity.
• Advanced Manufacturing Processes: The adoption of advanced manufacturing techniques, like 3D printing, enables the production of complex steel
components.
• Green Steel Technologies: The development and adoption of green steel technologies, such as hydrogen-based direct reduction, are crucial for reducing
carbon emissions.
3. Global Market Dynamics:
• Global Demand: Global demand for steel, particularly from emerging economies, influences the Indian steel industry's export potential.
• Trade Regulations: International trade policies and regulations can impact the export and import of steel products.
• Price Volatility: Fluctuations in global commodity prices, such as iron ore and coking coal, can affect the profitability of steel producers.
4. Sustainability and Environmental Concerns:
• Stricter Environmental Regulations: The Indian government is implementing stricter environmental regulations to curb pollution and promote sustainable
practices.
• Climate Change and Carbon Emissions: The steel industry is under pressure to reduce its carbon footprint and adopt low-carbon technologies.
• Circular Economy: The industry is exploring circular economy principles to minimize waste and maximize resource efficiency.
5. Workforce and Skill Development:
• Skill Gap: The industry faces a skill gap, particularly in areas like automation, digital technologies, and sustainable practices.
• Workforce Training and Development: Investing in workforce training and development is essential to upskill employees and adapt to technological
advancements.
India GDP Growth Rates
India GDP (PPP)
....and then sample this
• Comparison of steel versus cement usage
in India Steel consumption in construction
remains relatively low in India compared to
many developed countries.
• Adoption of steel-framed construction in
India is limited
• Currently, the ratio of India’s consumption
of steel to that of cement is around 0.3,
which is much lower than the ratio in many
developed nations. In advanced countries,
the ratio can reach up to 1.5 and higher.

[Link]
uring/[Link]
 SAIL

Tata Steel

Rastriya Ispat Nigam Limited

Source:

[Link]
manufacturing/[Link]
India's Government is actively pushing towards the adoption of Green Steel,
aligning with its commitment to achieving net-zero emissions by 2070.
Key Numbers- Targets - Commitments:
• Emission Target: India aims to reduce the emission intensity of the steel sector to 2.2 tCO2 per tonne by 2030.
• Net-Zero Target: The country aims to achieve net-zero emissions by 2070.
1. Green Steel Taxonomy:
• Definition: "Green Steel" is steel produced with CO2 emissions of less than 2.2 tonnes per tonne of finished steel.
• Classification: Steel is further categorized into classes based on emission intensity:
• Five-star Green-rated Steel: Emissions below 1.6 tonnes per tonne of alloy.
• Three-star Green-rated Steel: Emissions between 2 to 2.2 tonnes per tonne of alloy.
• Review: The emission thresholds for these classifications will be reviewed every three years.
2. Policy Framework:
• Decarbonization: The government is actively working on a comprehensive green steel policy to decarbonize the steel industry.
• Procurement: The government aims to prioritize the procurement of green steel for public infrastructure projects.
• Research and Development: Significant investments are being made to explore and implement innovative technologies
3. Industry Collaboration:
• Public-Private Partnerships: fostering collaboration between the public and private sectors to accelerate the transition to green steel.
• Industry Engagement: Regular consultations with industry stakeholders are being held to gather insights and shape policy decisions.
4. International Cooperation:
• Global Partnerships: to learn from global best practices and collaborate on green steel initiatives.
• Technology Transfer: Government is exploring opportunities for technology transfer and knowledge sharing with other countries.
 PLI for Specialty Steel in India
Updated on: 14 FEB 2024 by PIB Delhi
• The Production Linked Incentive (PLI) Scheme for Specialty Steel, a vital initiative in India's industrial growth
trajectory, was notified in July 2021 for fostering investments and enhancing capacities in the specialty steel
segment.
• Under the PLI Scheme, 57 MoUs have been executed for generating an investment of ₹29,500 crores, additional
capacity of 25 MT for producing specialty steel grades and an additional employment to about 17,000 people by
FY 2027-28.
• Status of PLI Scheme for Specialty Steel
• As of Dec ’23, the selected companies have already invested about ₹12,900 crores against an investment commitment of ₹21,000
crores up to the current financial year.
• It is expected that another ₹3,000 crores will be invested by these companies during FY’24, i.e., about ₹16,000 crores of a total of
₹29,500 crores will be invested by FY 2023-24.
• The Ministry of Steel envisages an investment of ₹10,000 crore in FY 2024-25. It is also pertinent to mention that 5 units have
begun production, and 9 more units are expected to begin production in this quarter.
• Typically, investments in the steel sector have a long gestation period and depend on, inter alia, procurement of various
equipment, many of which are sourced from abroad.
• Delays due to unavoidable circumstances in the projects include supply chain delays due to geopolitical issues, unforeseen
events, natural disasters and changed market circumstances for certain PLI products also have an impact on the pace, phasing,
and the quantum of investment.
• Existing Specialty Products for PLI- Coated/Plated Steel Products, High Strength/Wear Resistant Steel, Specialty Rails,
Alloy Steel Products and Steel Wires
• Industry has sought to add Electrical Steel wires, bright bars, and stainless-steel components for defence
Global Market Dynamics
Global Demand and Supply Dynamics
• Infrastructure Development: Global infrastructure projects, particularly in emerging economies like China and India, drive significant demand for
steel.
• Automotive Industry: The growth of the global automotive industry, especially electric vehicles, creates demand for specialized steel products.
• Construction Sector: The construction sector, both residential and commercial, is a major consumer of steel.
• Supply Chain Disruptions: Global supply chain disruptions, such as those caused by geopolitical tensions or natural disasters, can impact the
availability and cost of raw materials and finished steel products.
Geopolitical Factors and Trade Policies
• Trade Wars and Tariffs: Trade disputes and tariffs imposed by countries can disrupt global trade flows and affect the competitiveness of steel
producers.
• Geopolitical Tensions: Geopolitical tensions can lead to uncertainties in the global market, impacting demand and supply.
• Export and Import Restrictions: Countries may impose export and import restrictions on steel products to protect domestic industries.
Technological Advancements and Sustainability
• Green Steel Technologies: The increasing focus on sustainability and reducing carbon emissions is driving the development and adoption of
green steel technologies.
• Digital Transformation: Digital technologies are transforming the steel industry, improving efficiency, reducing costs, and enabling data-driven
decision-making.
• Product Innovation: The development of high-performance steels with advanced properties is driving innovation and creating new market
opportunities.
Price Volatility and Commodity Market Trends
• Iron Ore and Coal Prices: Fluctuations in the prices of key raw materials, such as iron ore and coal, can significantly impact the profitability of
steel producers.
• Currency Exchange Rates: Changes in exchange rates can affect the competitiveness of steel producers in global markets.
• Market Speculation and Investor Sentiment: Market speculation and investor sentiment can influence steel prices and market volatility.
 Per capital steel consumption 2019
India then- 74.2, current – 93.4 kg, Global average- 219 kg

[Link]
in-figures-2023/
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world-steel-in-figures-2023/
More numbers
• [Link]
production-by-process-2023
The move towards Sustainable Steel
• Decarbonisation: The Steel Sector's Green Challenge: The steel sector is a significant
contributor to greenhouse gas emissions, accounting for 7-9% of global emissions. In
response, major steel producers worldwide have committed to becoming carbon-neutral or
achieving net-zero emissions by mid-century.
• To address this challenge, the industry is exploring various technological solutions:
• Alternative Fuel Sources: Steel producers are investigating ways to replace traditional coal and
gas-fired power sources with greener alternatives. This includes the integration of solar and wind
farms into steel production processes.
• Hydrogen in Steel Production: Researchers are experimenting with replacing coke with hydrogen
in the blast-furnace process. While hydrogen usage produces only water as a byproduct, scaling
this technology to an industrial level remains a challenge due to limited hydrogen availability.
• HIsarna Process: This innovative technology eliminates the need for pre-processing raw
materials, reducing energy consumption and CO2 emissions by at least 20%. The HIsarna process
also significantly decreases emissions of hydrogen, sulphur dioxide, nitrogen, and nitrogen oxide.
• Carbon Capture and Utilisation (CCU): Steel plants are implementing CCU facilities using amine-
based technology to capture and reuse carbon dioxide on-site. In India, the captured gas with
higher calorific value is redirected to the plant’s gas network for more efficient industrial heating.
The move towards Sustainable Steel
Circular Economy and Recycled Steel:
• The adoption of a circular economy
model is crucial for the sustainable
transformation of steel production.
• Recycled steel, combined with green
electricity, offers a promising solution
for decarbonisation.
• Ongoing research aims to enable
multiple cycles of steel reuse without
compromising quality, allowing for
increased use of steel scrap in the
manufacturing process.
Technology Impact on Future of Steel
Artificial Intelligence: Revolutionizing Steel Production. AI applications:
• Enhancing yield
• Enhancing throughput
• Enhancing quality
• Reducing energy consumption in mining and manufacturing processes
• Reducing emissions in mining and manufacturing processes
• Improving process control through AI-assisted operator decisions
• Implementing predictive models for asset management and equipment
failure prevention
• E.g. Tata Steel has deployed over 250 AI models across their value chain,
delivering critical insights for timely and effective decision-making
Technology Impact on Future of Steel
Industry 4.0 and the Future of Steel….ushering in a new era of steel
production. These enable:
• Hyper-personalized experiences for customers and stakeholders
• Improved efficiency and productivity across the supply chain
• Enhanced sustainability practices and resource optimization

India has shown remarkably accelerated progress and is expected to be

more so in the coming years
Business Model Canvas
 Stories of Change - Steel Company Transformations
• Tata Steel's Digital Transformation: Tata Steel has embarked on a comprehensive digital transformation journey,
leveraging AI and IoT to optimize production processes, reduce costs, and enhance product quality.
• ArcelorMittal's Smart Manufacturing: ArcelorMittal is implementing smart manufacturing solutions to improve
operational efficiency, reduce energy consumption, and minimize waste.
• JSW Steel's Sustainable Steelmaking: JSW Steel is focusing on sustainable steelmaking practices, including the use
of renewable energy sources and advanced recycling technologies.
• POSCO's Smart Factory: POSCO is building a smart factory to automate production processes, increase
productivity, and improve product quality.
• Baosteel's Industry 4.0 Adoption: Baosteel is adopting Industry 4.0 technologies to enhance its supply chain,
logistics, and customer service.
• ThyssenKrupp's Digital Twins: ThyssenKrupp is using digital twins to simulate and optimize production processes,
reducing downtime and improving overall performance.
• Nucor's Focus on Automation: Nucor is investing in automation technologies to increase production efficiency and
reduce labor costs.
• Gerdau's Circular Economy Initiatives: Gerdau is implementing circular economy practices to reduce waste and
conserve resources.
• SSAB's Hydrogen-Based Steelmaking: SSAB is pioneering hydrogen-based steelmaking to reduce carbon emissions
and create a more sustainable future.
• JFE Steel's Smart Maintenance: JFE Steel is using predictive maintenance techniques to minimize equipment
failures and optimize maintenance schedules.
Collaboration across the Organization (Internal Stakeholders)
• Issues to identify before we get into the Tata Steel Case
Collaboration across the Organization (Internal Stakeholders)
• Communication Barriers
• Miscommunication: Lack of clarity, ambiguity, or misunderstandings can lead to confusion and delays.
• Ineffective Communication Channels: Using inappropriate channels or relying solely on email can hinder timely and efficient communication.
• Language Barriers: Differences in language or jargon can create obstacles, particularly in diverse organizations.
• Siloed Thinking and Turf Wars
• Departmental Silos: Teams working in isolation, focusing on their own goals, and neglecting the broader organizational objectives.
• Competition and Rivalry: A competitive mindset among departments can hinder cooperation and collaboration.
• Lack of Trust: A lack of trust between teams can lead to mistrust, suspicion, and a reluctance to share information.
• Cultural Differences
• Diverse Workforces: Differences in cultural norms, values, and communication styles can impact collaboration.
• Generational Differences: Different generations may have varying work styles, preferences, and expectations, leading to misunderstandings.
• Lack of Shared Goals and Objectives
• Unaligned Goals: Different teams may have conflicting or misaligned goals, hindering collaboration.
• Unclear Expectations: A lack of clarity regarding roles, responsibilities, and performance expectations can lead to confusion and inefficiency.
• Ineffective Leadership
• Poor Leadership: Ineffective leadership can stifle collaboration by creating a negative work environment, micromanaging, or failing to provide clear
direction.
• Lack of Support: A lack of support from leadership can hinder collaboration efforts, particularly when resources or authority are needed.
• Technological Challenges
• Technical Difficulties: Issues with technology, such as incompatible systems or slow internet connections, can disrupt collaboration.
• Lack of Training: Insufficient training on collaboration tools can limit their effectiveness.
• Time Constraints and Workload
• Heavy Workloads: Excessive workloads can reduce the time available for collaboration and teamwork.
Digital Transformation at Tata Steel
• TV Narendran, CEO Tata Steel, 2013
• Concrete business and cultural transformative steps to “future-ready” the firm by
• deleveraging and instilling financial discipline
• acquiring new companies (within steel- Bhushan & other small firms)
• entering new segments and adjacent businesses – B2B to B2C: In 2018, it accelerated its B2C drive by launching an e-commerce platform,
Aashiyana (“Home” in the Hindi language), to sell products directly to retail clients. Aashiyana’s offerings had grown from solid steel bars to Tata
Steel home construction products (doors, windows, furniture) and services (design, service providers). New Materials: fiber-reinforced polymers
(FRP), graphene, and advanced ceramics (10% by 2025).
• launching programs on
• Digital transformation – since 2016, “Jayanta (CIO)’s job was to install the infrastructure, educate us, push projects, do whatever
it takes, but the transformation had to be owned by the business.” …needed to build a Digital Mindset
• Agility – with Mckinsey, stepwise approach at levels, measurable goals, performance review, pick the right person as
replacement at retirement (someone who can drive change), 360 degree feedback on responsiveness, people development
skills, accountability, collaboration, and a ‘work from anywhere’
• Safety
• Sustainability – advanced tech, lower carbon footprint but net-zero is ambitious, complex and costly. Training of senior
executives at Cambridge Institute of Sustainability
• Impact
• By 2022, Tata Steel had become India’s largest steel producer by volume.
• Consolidated revenues stood at INR 2.4 trillion [$32 billionb]
• EBITDA margins were at 26%, up from 9% in 2013
• Net debt to equity was down from 1.8 to 0.5.
• Tata Steel’s stock price had outperformed the benchmark NIFTY Metal index over the last five years
• An analyst observed, “Aggressive. Assertive. Confident. After a decade, the business has a veritable
spring in its step.”
Digital Transformation at Tata Steel
• While Indian steelmakers had access to a low-cost workforce and local iron
ore reserves, there were challenges
• Significant logistic costs, since most Indian steel plants were inland
• Unreliable power
• Inadequate and unaffordable finance
• Limited coking coal supplies.
• Combined financial impact of above- a steel company in India that
bought raw materials at market prices could have a delivered cost to
the market of $80-$100 higher than other markets (see Exhibit 7)
• Indian steelmakers also lagged on technological know-how, with high
value- added steel representing a marginal 8% of finished steel versus
a global average of 20%.
• Global headwinds
• The steel industry was the world’s second- biggest energy consumer
• Manufacturers were under pressure to cut emissions
• Indian steel producers lagged leading global peers on CO2 emissions
by 30% per ton of crude steel.
• Digital disruption was another major challenge.
• Industry 4.0, consisting of technologies ranging from the Internet of Things to
drones and robots, offered solutions to many issues in the steel production chain,
but adopting these technologies implied higher costs.
Digital Transformation at Tata Steel
• Tata Group Vision & Ethos
• Tata Steel’s history was intertwined with that of modern India.
• The firm was ahead of its time in following labor best practices, including 8-hour workdays, medical leave, bonuses, provident fund,
and skill development programs.
• It developed Jamshedpur into a model town, embodying Jamsetji’s belief that “in a free enterprise, the community is not just another
stakeholder but is, in fact, the very purpose of its existence.”
• Tata Steel’s long history of giving back to the community was highlighted in its 1989 campaign through the slogan, “We also make
steel.”
• Narendran took charge at a difficult time.
• Global steel demand had collapsed, leading to a secular price decline
• The European debt crisis followed, jeopardizing Tata Steel’s European business.
• The firm had a net debt-to-equity ratio of about 1.8 in FY14
• Simultaneously, the firm’s iron- ore mines had closed for the first time in its 100-year history. Importing iron ore at a significantly
higher cost subsequently put the firm under financial pressure.
• Beyond the financial crunch, cultural change was also the need of the hour.
• Narendran had inherited a workforce that was comfortable and set in its way of doing things.
• Narendran ruminated, “When I took over, I was the youngest MD of Tata Steel. If, at 48, I’m the youngest, this is a very
traditional company.
• How do you pivot a company with such a rich history to become more forward- looking when most employees are lifers?”
• Though the firm had modernized in bits, its operational efficiency was lagging.
• “We were seen as a strong continuous improvement company, not an innovative company.
• Someone once told Narendran, ‘We are the best public sector company to work for in India.’
• Respected for how they dealt with the community and employees. But they were not viewed as a leader in technology.”
Financial discipline
• Shift from a focus on the next big capital project to looking at what we needed to
constantly do to hit the targets:
• lower fixed and variable costs,
• improve the supply chain,
• change the product mix,
• decide what we sell, to whom we sell and how we sell,
• inventory and spares management.
• Koushik Chatterjee CFO- “We need to ensure that margins stay at a certain level.
Input price inflation is 5%-7% per year; we need to improve continuously to cover
these costs.”
 Creating a Digital Mindset
• “Jayanta’s job was to install the infrastructure, educate us, push projects, do whatever it takes, but the transformation had to be owned by
the business.”
• For that the buy-in of the Tata Steel leadership team was important. Jayanta was given freedom to design the way
• He began by putting in place a reverse mentoring program….. Sixteen high potentials under 30 were chosen to mentor senior leaders,
including Narendran, to introduce them to basic digital concepts such as search engine optimization, augmented reality, Industry 4.0 and
data analytics + International Road Trips
• Next, Banerjee’s team rolled out programs to create capabilities across the firm…..“We set up a ‘digital value acceleration’ team that acted
as catalysts or evangelists. They would go around the firm to explain analytics.
• The goal was to create a belief system.” The team also launched a mandatory program in which conversational video modules deconstructed key concepts.
• Investment in IT Infrastructure- upgrading the firm’s archaic technology, augmenting its IT network, cloud, computing, and cyber security
capabilities
• “Globally, firms were spending 2% of revenues on digital; at the time, we were at 0.3%. We needed to get to at least 1%.”
• Embraced cloud- you don’t go to data…data comes to you
• Success demo was important- Embarked on working on ideas that could be bottom-up, stemming from a business need; top-down, driven
by a strategic goal; or outside-in, inspired by best practices at competitors
• For bottom-up ideas, business teams had three directives: to create or re-imagine business models to leverage digital, identify disruptive
opportunities and threats posed by digital, and build richer experiences for key stakeholders.
• The target was to “think big, start small, scale fast.”
• To encourage digital adoption, performance metrics were balanced between short- term performance and long-term improvements. A
monthly committee was set up for leaders to discuss technology adoption across the value chain.
• Two criteria to assess projects. The first was that the project had to generate significant financial value given that he had an overall target
of generating $2 billion in EBITDA savings and an expectation of a 6-8X return on funds invested. The second was that it should significantly
impact the stakeholder experience. Banerjee explained, “Digitalization can offer intangible benefits as well, for example, by improving
safety, that can create a long-term competitive advantage.”
• To counter resistance from old school of thought- “People complained that I hadn’t funded their requests for investment in operating
assets, but I was giving a lot of money to Jayanta. They said we are a steel company; we should invest in steel assets rather than digital
ones.” Further, divisions running traditional cost-saving programs felt marginalized, fearing digital cost-saving projects would take the
limelight. Narendran assuaged their concerns by acknowledging everybody’s contributions. “Rather than waste time figuring out who
contributed how much to the savings, I said, as long as Tata Steel benefits, let everyone take the credit and share it. The key was to build
momentum and keep things moving.”
• Digital was part of every review…... “Narendran’s persistence in tracking targets pressured the organization to change. No initiative to
Digitalizing Manufacturing Processes and Operations
• Banerjee’s team worked extensively with business teams across the production chain to find ways to “digitalize”
processes. His team worked with business operations to help them identify problems. Banerjee explained,
“Change does not happen through technology; it happens through mutual trust and belief. We needed to
understand the business context, translate pain points into IT language, and find solutions. If the context is not
understood, projects will fail.”

• E.g. using technology and analytics to eliminate product defects.

• Tata Steel product quality was not at par with global leaders like Nippon Steel. Quality can be improved either by inspecting out more
defects or through better process control.”
• Traditionally, Tata Steel posthumously inspected each coil, rejecting defects as they were found.
• A review of the process revealed that over 400 interdependent parameters determined quality in the production process, and there was
only so much manual inspection and intervention possible in such a value chain.
• Working with the operations team, Banerjee’s team developed a digital “surface inspection system.” .....They installed sensors along the
length of the production chain. AI and machine learning analyzed data collected from these sensors, identifying production patterns for
every steel grade and deviations from the standard trend, i.e., the defects.
• Meeting workplace resistance---- some workers felt threatened by the change. Banerjee’s team spent a lot of time with these workers,
explaining how technology could help them do their jobs better rather than take them away. He explained, “The operator who used to look
at the sheets through the naked eye and make a judgment call is now equipped with a high-definition surface inspection system, calling
out the cracks or defects early on and making better decisions. The operator still takes the call, but the error count has reduced. We call it
‘assisted AI.’”
• Other examples- Counting pipes, assess BF flame temperatures, contract worker, digitisation of paper & pen,
supply chain processes, local-market level forecasting,
• As more evidence was available, more buy-in happened. Demands started coming from Bottom-up , slowly
organisation critical processes owned it..... Over time, as technology became embedded across the firm’s
operations
• Management of Change- Narendran reflected, “In any change program, some people start running straight away,
while others take time to understand the potential. Marketing and sales were quicker to adapt than operations
and engineering. The naysayers need to be pushed. Digitalization is a journey, not a destination.”
• Hiring open minded people, liberal distribution of credits and acknowledgement
• NOW......We have over 850 digitalization projects in place. I don’t have to push them; they push me. We cannot
 Digitalization at the Customer End
• B2B to B2C – Less price sensitive, better margins
• Worked through influencers- architect, contractor & satisfied customers
• To improve brand recognition, Tata Steel started packaging its products. “Historically, we had no wrappers,
packaging, or price. We started to work on these fronts to create our brand differentiation.
• Building Customer confidence- Steel was sold traditionally by the kilogram, and customers did not know if they
were being cheated. Further, architects quoted steel requirements in meters. We started selling steel by the
piece, resolving the issue of customers having to weigh the steel to ensure they had not been defrauded. The
change was powerful.
• Strong Supply Chain for marketing....By 2014, 2-3 distributors in each state, through which it cumulatively had
links with 10,000 hardware stores across the country......“This is the largest such distribution network in the
country in our sector,” .............“Competitors can copy our packaging, branding, or pricing strategy, but creating a
retail distribution engine in India is difficult.”
• We have endeavored to give distributors a 16%-24% annual return on invested capital. This channel also stands
to benefit from Tata Steel’s B2C growth.
• In May 2018, Tata Steel launched Aashiyana...next slide
Digitalization at the Customer End
• B2B to B2C – Less price sensitive, better margins
• In May 2018, Tata Steel launched Aashiyana ( “house”), an e-commerce platform to sell steel rebars. Sell in in
smaller amounts, directly to the consumer. Distribution system allowed guarantee delivery within 72 hours of
purchase anywhere in the country
• Average purchase offline is about 1.6 tons per customer, but on Aashiyana, it is 2.7 tons per customer. Revenues
from Aashiyana had grown to INR 14.7 billion in FY22, up 100% from the previous year.
• While sales from Aashiyana were still relatively small, it helped Tata Steel generate new customer insights and
retain a longer touch time with consumers through their home- building journey (typically 12-18 months), thus
adding to brand equity and recall.
• Riding on the success....progressively, started selling its other existing steel products on Aashiyana.
• Tata Steel also ventured downstream into the manufacturing and selling of steel doors, windows, and furniture.
• Aashiyana also began to offer services such as designs, estimates, and new material ideas and listed key service
providers by location.
• The firm also planned to offer other Tata Group companies’ construction-related products, such as Voltas air
conditioners, Tata Capital loans, Tata AIG insurance, Croma home appliances, and Tata Sky cable TV connection,
on the platform. Once Tata Steel acquired the customer, it had visibility over customer needs and could cross-sell
Tata Group products.
• Currently, we touch only 25% of the customer’s wallet. Can we leverage our platform to reach 100% of the
customer’s wallet and own the customer journey across all construction related products?
The Sustainability & ESG
Pressure
• India’s steel industry contributes to around 2 percent of its GDP, but also
accounts for 12 percent of its CO2 emissions
• Indian steel manufacturers also have higher specific energy
consumption, about 6-6.5 GCal/ TCS, compared with world average of
4.5-5.0 GCal/TCS.
• Therefore, the industry needs to shift to green steel technologies.
• Regulatory requirements now because India signatory to COP (Net zero
by 2070)
• Also helps in
• Brand building, better marketing, increasing cosumer demand
• Obtain financing from global investors who are aligned with sustainable goals
• Build or match competitive advantage...else get left behind
Sustainability Strategy ....increased focus
• Key ESG Strategies
• Low-Carbon Technologies: Investing in technologies like H-DRI, EAFs, and CCUS to reduce carbon
emissions.
• Renewable Energy: Increasing the share of renewable energy in the energy mix to power steel plants.
• Circular Economy: Promoting recycling and reuse of steel scrap to conserve resources and reduce waste.
• Water Conservation: Implementing water-efficient technologies and recycling wastewater.
• Air and Water Pollution Control: Investing in pollution control equipment and adhering to environmental
regulations.
• Social Responsibility: Prioritizing worker safety, community development, and ethical sourcing practices.
• Use AI & Smart manufacturing to increase control, safety, quality and timely action...reduces wastage
• Transparency and Reporting: Disclosing ESG performance through sustainability reports and adhering to
global reporting standards like GRI and SASB.
• Government Initiatives: playing a crucial role in promoting sustainability in the steel industry
through various initiatives:
• Production-Linked Incentive (PLI) Scheme
• National Green Hydrogen Mission: This mission aims to make India a green hydrogen hub, which can be
used as a feedstock for steelmaking.
Sustainability Strategy ....increased focus
• Key Sustainability Challenges and Opportunities
• Carbon Emissions: The steel industry is a major source of greenhouse gas emissions,
primarily from the iron-making process. To address this, steelmakers are exploring
technologies like carbon capture, utilization, and storage (CCUS), hydrogen-based
direct reduction iron (H-DRI), and electric arc furnaces (EAFs) powered by renewable
energy.
• Resource Depletion: The industry relies heavily on natural resources like iron ore
and coking coal. Sustainable mining practices, resource efficiency, and recycling are
crucial to minimize environmental impact.
• Water Consumption: Steelmaking involves significant water usage. Water
conservation measures, wastewater treatment, and recycling are essential to reduce
water footprint.
• Air and Water Pollution: Emissions from steel plants can pollute the air and water
bodies. Strict adherence to environmental regulations, pollution control
technologies, and monitoring systems are necessary.
• Social Impact: The industry's operations can impact local communities. Responsible
sourcing, fair labor practices, and community development initiatives are important
USING SCIENCE FOR CLIMATE COMMITMENTS:
MAHINDRA SANYO SPECIAL STEEL
• Anand Mahindra, Chairman of the Mahindra Group, in spearheading climate leadership
in India, by focusing on the proactive steps taken in steel manufacturing by Mahindra
Sanyo Special Steel Limited (MSSSPL) to address climate change through science-based
targets.
• October 2021 COP26 Glasgow Summit, India had committed to achieving net zero by
2070
• Corporate Expectations in this backdrop high.... And Mahindra Group was looking at an
opportunity to do more to mitigate the impacts of climate change, esp. achieving carbon
neutrality by 2040
• Mahindra Group had already been leading the way for climate action among corporates
in India....now it was looking at:
• how could it catalyze the scaling of processes and strategies to a wider group?
• how could it expand its sphere of influence to address GHG emissions across the value
chain?
USING SCIENCE FOR CLIMATE COMMITMENTS:
MAHINDRA SANYO SPECIAL STEEL
• report by the Carbon Disclosure Project (CDP)1 revealed that global warming, water stress, and increased
carbon prices have put a significant amount of the steel sector’s economic value at risk. Major steel-
producing countries, including China and India, are water stressed, with depleted freshwater tables and
extreme weather events such as floods and droughts becoming increasingly common. Almost half the
world’s steel-producing capacity is located in such high-risk regions (from a climate change perspective).
These countries use steel widely in construction, manufacturing, and various production processes.
• The businesses benefit from setting science-based targets that can spur
• increased innovation potential,
• greater resilience against regulatory uncertainties,
• improved credibility among the new generation of investors, customers, employees, and other stakeholders
• sharper competitive advantage
• Value chain activities that contribute to Scope 1, Scope 2, and Scope 3 emissions where MSSSPL has
committed to reducing by 35% by 2030.
• Controlling options for Value Chain Emissions: levying a carbon fee on Scope 3 emissions, transitioning to
green hydrogen to reduce dependence on fossil fuels, and engaging with suppliers through training and
awareness-building programs
USING SCIENCE FOR CLIMATE COMMITMENTS:
MAHINDRA SANYO SPECIAL STEEL
1. How are businesses threatened by climate change? What opportunities
could MSSSPL exploit by pursuing SBTi commitments?
2. What were the major sources of Scope 1, Scope 2, and Scope 3 emissions at
MSSSPL? How was MSSSPL addressing these emissions to meet its SBTi
commitments?
3. How could MSSSPL address Scope 3 emissions to improve the sustainability of
its value chain activities?
4. How could MSSSPL successfully scale up its climate initiatives to influence
other businesses to bring in climate action into their value chains?
Value Chain Mahindra Sanyo
FIRM HUMAN TECHNOLOGY INBOUND OUTBOUN MARKETING AFTER-
INFRA- RESOURCES DEVELOPMENT LOGISTICS D & SALES SALES
STRUCTURE MANAGEMENT PROCUREMENT OPERATIONS LOGISTICS SERVICE

MSSSPL Financial, Recruitment, Process Office Order Packaging, Order Customer Installation,
Metrics Planning, Training, Design, supplies, office processing production processing managemen education &
(Exhibit 5) Accounting Compensation, Product equipment, , control, for finished t training
, Investor etc. Design, machines, transporta quality goods, , sales upgrades,
Relations, Market components, t ion, control, dispatch/tr analysis, warranty,
etc. Testing, etc. storage, maintenanc a market complaint
Research & raw e nsportation research, resolution,
Development, material , etc. , delivery, promotion, repair &
etc. delivery, invoicing, advertising maintenance
manufactu etc. , etc. services, etc.
r ing, etc.
Definition of Scope 1, Scope 2, and Scope 3 Emissions
Type of Emissions Definition Activities Causing Emissions

Scope 1: Direct Emissions from source owned - Emissions from combustion in owned or controlled
GHG Emissions or controlled by the company.a boilers, furnaces, vehicles, etc.
- Emissions from chemical production in owned or
controlled process equipment

Scope 2: Indirect Emissions from the generation - Generation of electricity, heat, or steam purchased by
Emissions of purchased electricityb the company from a utility provider
consumed by a company where
the emissions occur physically at
the facility where electricity is
generated
Scope 3: Other An optional reporting category - Extraction and production of purchased goods and
Indirect GHG that allows for treatment of all services
Emissions other indirect emissions that are - Business travel
a consequence of the activities - Employee commutes
of a company but from sources
not owned or controlled by the - Waste disposal
company. These are also known - Use of sold products
as value chain emissions. - Upstream & downstream transportation distribution
- Investments
- Leased assets and franchises
MSSSPL has set an SBTi commitment to reduce their Scope 1, 2, and 3
emissions by 35% by the year 2030 over the baseline year of 2016.
Toward this end, the company has undertaken the following measures:
● Addressing Scope 1/Direct emissions: MSSSPL followed the EAF route in the steel manufacturing process and used 65% scrap steel as the
basic raw material. It installed oxy- fuel technologies in its furnaces, installed a 6 MW waste heat recovery boiler, installed new burners
for preheating ladles, and improved pump efficiencies.
● Addressing Scope 2/Indirect emissions: MSSSPL was taking incremental steps to reduce its dependence on fossil-fuel-based energy
sources and increase the share of renewable energy in its energy mix. An energy policy was formulated to ensure that the energy
utilization in various stages of the manufacturing process was optimized. MSSSPL set a target of cumulative reduction in specific
electricity consumption and specific oil consumption by 20% and 70%, respectively. Energy-efficient low carbon lighting and motion
sensors were also installed in its premises. MSSSPL also installed a 4 MW solar power plant to reduce electricity consumption by 2%.
About 4% of its power requirements were now met from renewable energy sources.
● Addressing Scope 3 emissions: The major sources of Scope 3 emissions at MSSSPL were from procurement activities such as purchased
goods and services, including capital goods and fuel- and energy-related activities across the value chain. MSSSPL conducted an
Environmental Lifecycle Assessment (E-LCA) for its products to assess their environmental impact due to production, consumption, and
disposal. Plans were underway to conduct a Social Lifecycle Assessment (S-LCA) to assess the social aspects of its products and their
impact throughout their lifecycle. It had company-specific sustainability dashboard metrics across 30 environmental, social, and
governance (ESG) parameters to map progress along the sustainability journey of the company, which helped track and monitor Scope 3
and other indirect GHG emissions. The company worked on training and capacity building for its suppliers and engaged with them at
regular intervals on several aspects related to energy efficiency, emissions reduction, safety measures, lifecycle assessment, etc. The
company is currently reporting on 11 of the 15 Scope 3 emissions categories.
Climate-Change Related Risks to Steel Businesses
Physical Risks ● Supply chain disruptions due to water scarcity, power shortages, obstructed transportation,
etc., caused by extreme weather conditions.
● Loss of assets due to the impact of extreme weather events such as physical damage to
buildings and equipment.
● Declining productivity due to increasing temperatures.
Legal Risks ● Litigation risks in the form of lawsuits against businesses for inadequate reporting and
disclosures where compensation may be sought for previous undisclosed emissions.
Market Risks ● Fluctuations in demand and supply due to climate-change-related events.
● Failure to recognize market trends and business opportunities presented by climate change.
For instance, climate change may impact the revenue streams of fossil-fuel-dependent
businesses.
● Changing consumer preferences.
Technological Risks ● Mitigation and adaptation are not alternatives and need to be pursued actively. Climate change
impact is usually felt after a long-time lag, and hence it is important to adopt technological
changes in incremental steps when there is still time and it is still affordable, by investing in
energy- saving equipment, setting up renewable energy infrastructure, developing green
buildings, new irrigation systems, etc., which will prevent large-scale and prohibitively
expensive technological disruptions later.
Reputational Risks ● Corporates are increasingly associated with inadequate actions to curb GHG emissions. They
are perceived as environmentally “dirty.” Climate change is not only an environmental problem
but also a socioeconomic issue that businesses must factor into their brand valuation and
reputation.
Regulatory Risks ● Unanticipated international, national, and regional policy actions and regulations on curbing
GHG emissions. If actions are not taken now, regulations may put a higher price on CO2
emissions in the future, which can pose a huge threat to investor portfolios.
● Regulations to increase energy costs.
Opportunities associated with its SBTi commitments for climate change
mitigation, thus easing the transition to a low carbon future
● Increased Innovation potential: Deploying oxyfuel technology to reduce dependence on oil consumption, improving heat
transfer in combustion, reducing the pollution load, switching to green hydrogen to enable carbon-free steel production,
and increasing the use of scrap steel for manufacturing were some of the measures MSSSPL took to achieve product and
process efficiencies with minimal environmental impact.
● Resilience against regulatory uncertainties: Through eco-friendly business practices, MSSSPL significantly reduced the high
costs associated with unanticipated regulatory policies needing strict compliance. The evaluation of capital projects could
also be improved if the potential costs of environmental corrective measures are incorporated in the company’s
sustainability strategy.
● Greater confidence and credibility: A company focused on community relations and public opinion will factor in the
environmental and social costs of doing business. Greener business models in steel such as producing steel from hydrogen
fuel, deriving electricity from renewable sources, and increasing the share of scrap steel in raw material usage are some
measures that would inspire confidence in the new generation of ethically conscious young investors, customers,
employees, and other stakeholders.
● Sharper competitive advantage: Through energy-efficient steel manufacturing, MSSSPL could gain a significant cost
advantage over its competitors. By-products of steel production such as slag, sludge, and dust could either be recycled and
used in its manufacturing processes or sold for other applications, thus generating newer revenue streams. Thus, MSSSPL
could help create a circular economy by identifying avenues of using steel production waste in other processes.
•
POSSIBLE OPTIONS FOR MSSSPL TO ADDRESS VALUE CHAIN
EMISSIONS
Options for Measures
MSSSPL
Carbon fee An internal carbon pricing would help MSSSPL prepare for future stricter regulations on cutting carbon emissions. The amount collected from the fee
charged per metric ton of carbon emissions could be used to fund sustainability initiatives within the value chain of MSSSPL. To reduce the financial and
environmental costs associated with employee business travel, one of the major sources of Scope 3 emissions, MSSSPL could put a price on the estimated
carbon emissions from each flight journey.
Virtual To reduce vehicular emissions from employee commutes to the workplace, virtual meeting formats and flexible work-from-home models could be
work-from- deployed to the extent possible.
home
models
Green MSSSPL could improve product, process, and energy efficiencies by reducing its dependence on coal for production and replacing it with green hydrogen.
hydrogen Green hydrogen is being paraded as the fuel of the future by the Indian government and governments across the world. Although expensive, green
hydrogen production uses renewable energy for hydrogen production, which could significantly mitigate MSSSPL’s carbon footprint with minimal impact
on the quality of steel. If MSSSPL adopts green hydrogen in its processes, it could gain a competitive advantage and influence other larger corporates in
India to
green their production processes and supply chain.
Supply chain To the maximum extent possible, MSSSPL should source all its materials and products locally to not only save on costs, but also to help decarbonize the
engagement supply chain significantly. MSSSPL could offer resources in terms of financial and information support to their supply chain partners to assist them with
their sustainability journey. Suppliers who refuse to follow a low carbon trajectory could be dropped or replaced with more environmentally conscious
vendors. Being a large corporate, MSSSPL should play a leading role in training and capacity-building programs aimed at raising awareness among suppliers
on issues such as product life cycle assessment, GHG emissions reduction measures, energy efficiency, safety measures, reducing emissions from
transportation, etc.

Science- SBTN integrates the planetary boundaries framework into the SBTi target setting process. The planetary boundaries represent nine ecological ceilings:
Based ocean acidification, climate change, chemical pollution, nitrogen and phosphorous loading, freshwater withdrawals, land conversion, biodiversity loss, air
Targets pollution, and ozone layer depletion. We have transgressed four of these boundaries, and business organizations and governments need to collaborate to
Network strategize pathways to bring these ecological boundaries within safe operating limits for humanity to thrive. MSSSPL could be a part of this global alliance
(SBTN) and the first within the sector to set targets that involve not only GHG mitigation but each planetary boundary that is affected by steel
production directly or indirectly, as proposed in the SBTN framework.
End Note
• Leaders will need to think and act as connectors, ensuring that employees down the hierarchy
understand the vision and are involved in the decision-making process.
• For scaling up sustainability actions and for them to succeed, strong networks must be built that
buzz with constructive actions to reinforce the constructive policies that leaders want to spread.
• This will reinforce a positive mindset among employees through habit-forming rituals.
• For instance,
• encouraging employees to conserve electricity by switching off appliances and lights in office
spaces that are not in use;
• disposing of garbage appropriately; going plastic-free;
• inculcating a reduce, reuse, recycle culture are some progressive steps toward building a
socially and environmentally conscious organization.
• It is only when this mindset of the leaders has been assimilated within the organization that
leaders can create the right company-level culture for conducting business responsibly.
Sources

• A tech-enabled transformation of the steel sector is underway – RDTMT, [Link]

• Self-Reliant India Scheme - Production-Linked Incentive (PLI) Scheme – Policies – IEA, [Link]
• Production Linked Incentive Schemes for 14 key sectors aim to enhance India's manufacturing capabilities and
exports – PIB, [Link]
• Govt's infra push to steer steel demand to 221 - 275 million tonnes by FY 34: Report, [Link]
• Import Duty Cuts: A Game Changer for India's Steel Industry – Shyamsteel, [Link]
• Adoption of green steel technologies – PIB, [Link]
• Green steel: design and cost analysis of hydrogen-based direct iron reduction - Energy & Environmental Science
(RSC Publishing), [Link]
• Understanding the New Steel Import Regulations: What You Need to Know,
[Link]
• Environmental Compliance for Companies in India: Key Legislation and ESG Guidelines, [Link]
• Energy & Environment Management in Steel Sector | Ministry of Steel | GoI, [Link]
• Circular Economy - Tata Steel, [Link]
• 85% Indian professionals set to invest in upskilling for FY25 - The Economic Times, [Link]
 Q&A

Thank you and

all the best