MUMBAI, Aug 17: After decades of espousing and implementing value systems focused on the community and society at large, the Tata Iron & Steel Company (Tisco) has now decided to attune itself closest to the needs of the shareholder.

Enhancement of long-term shareholder value was the central theme at last weekend's two-day brainstorming session in Jamshedpur, Bihar, which was attended by chairman Ratan Tata, managing director JJ Irani and other directors of the company. A series of presentations were made on the subject by international consulting firms McKinsey & Company and Arthur D Little as well as by the Tisco finance department.

Almost as a demonstration of this thinking, Tisco is planning to withdraw from the National Joint Committee for Steel Industry (NJCSI), the apex body which determines the wages of integrated steel plant workers. Members of the NJCSI include the Steel Authority of India (SAIL), Indian Iron & Steel Company (Iisco), Tisco and the representative unions of the three companies. Tisco's withdrawal from the NJCSI is expected to help it to widen the coverage of modern worker compensation systems through performance and productivity-linked pay and bonus. For a very long time, Tisco has poured money into developing and sustaining Jamshedpur and its adjoining areas, including 800 villages. In most of these areas, the company takes care of everything from infrastructure to environment preservation. Tisco spent Rs 34.2 crore in 1996-97, up from Rs 23.1 crore in 1995-96, even on providing social services for non-employees. These figures are slowly starting to bite as the company looks at areas outside Jamshedpur for its expansion activities.

``Shareholders will play a key role when the expansion activities kick off and their funding pattern crystallises. We have to start treating them (shareholders) better now,'' admitted a company source. Towards this end, Tisco may eventually reduce its `guardian angel' role in Jamshedpur. There is talk already of the company transferring the electricity distribution business in the township to the Tata Electric Companies. On the staff side, Tisco is targeting a workforce reduction of 4,000 through voluntary separation schemes in the current year, over and above the 10,000 it has already reduced.

The spark for the `shareholder value' mantra is being provided by the Tata group chairman himself. Even in the annual report, Tata says on the subject: ``In the case of Tata Steel, it is clear that all future investments in its core businesses or diversification projects must result in the enhancement of shareholder value. This has not been a major consideration in the past, but must become one of the prime considerations in the coming years. Considerable attention is being given to this particular aspect and the management team stands committed to these objectives.''

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.