Resolve From A Loss-making Unit To Setting Benchmarks In Efficiency And Productivity, The Journey Of Essar Steel’s Pune Facility Is An Inspiring One

Mitesh Shah

Managing Director

Steelco Gujarat


Transformation, in the context of a manufacturing set up, is not just about modifying or replacing the equipment or infrastructure. It is also about changing mindsets.

Perhaps, more. When Essar Steel acquired a loss-making unit near Pune, the new management that took charge was mindful of this. More than the, under-utilized capacity, the huge inventory and the ill-maintained machinery, the management realised that it had to focus on the people and their overall ap­proach towards work.

Essar Steel bought the assets of Shree Pre-coated Steels in 2009 as a strategic move to enhance its foot­print across different product segments. Rechristened as the Essar Steel Pune Facility (ESPF), the new facil­ity was acquired to significantly add to Essar Steel’s share of value-added products. However, before it could bring in the benefits, ESPF had to be turned around in every sense starting with its people.

Not only was the facility over staffed with contract workers, there was absolute lack of uniformity both in terms of the actual attire as well as the workflow. Imagine a shop floor filled with dhoti-clout workers wearing white Gandhi caps (instead of safety helmets) with the barest of regard for safety and housekeeping. And most of them had been working at the plant for the last 18 years.

“Actually, we had to bring about a major cultural change, es­pecially with respect to safety, housekeeping, training, skill de­velopment, and the alignment of employees towards a common organisational goal,” Says Mitesh Shah, CEO, Essar Steel Pune Fa­cility.

“The biggest transformation has been a change in mindset and the work culture,” Shah adds. The new management identified four key areas for transfor­mation. These included HR, administration, l LSE and, obviously, operations.

TO, start with, a huge emphasis was given on employee engagement through training and education. Mukund jagirdar, head HR and administration explains that strikes were a frequent feature during the initial stages after the takeover. Workers came without official attire and the union often took on an aggressive approach. So while stringent practices were put in place to inculcate discipline, the fo­cus was to settle issues amicably. “It was important for us to instil a feeling of security in them,” says lagirciar. “We didn’t want them to feel like we were here to get rid of them. Instead, we wanted them to feel like we were here to help them grow.’

According to Virendrasinh Gohil, head of health, safety and en­vironment, there was no safety culture at the plant when it was acquired. “Employees rarely wore helmets and safety shoes. To change the existing mindset and bring in a new work culture was a big task but one that we have done successfully through various training programmes, competency assessments and audits that have been conducted since we took over, ” he says.

Today, there is a mandatory number of training hours that every employee must undertake, depending on the nature of his job at the facility. The training programs are aligned around the vision to promote learning and provide advanced training opportunities for building capabilities. These flexible training modules – including leadership and mentoring programmes and team-building work­shops – are designed to provide continuous opportunities for the growth and development of employees. This has re­sulted in improved productivity and enhanced com­mitment from the employees at Pune.

A unique safety park was built so that all personnel can reinforce their knowledge on the usage of PPE (personal protection equipment) and safe work practices on a continuous basis. The safety park has a wide array of equipment on display, such as PPE used; fall protection and rescue equipment; data sheets on the PPE and safe work practices. The plant has developed an USE training centre with audit And visual systems. Through the concept of ‘One Day Safety Officer’, individual employees are given the responsibility to under­stand and ensure plant safety thus increasing both awareness and involvement.

When Essar took over the plant in 2009, the fire protection was inadequate. Since then, 89 fire hydrant points and, four water sprinkler system have been installed across the plant. A new fire water pump house was also recently commissioned. The plant has also customised its own tractor-mounted fire tender to provide emergency services in house. There is 100 per cent ‘Lock out & Tag Out’ for electrical energy isolation by modifying the old electrical panels for locking facility. A well equipped fire control room and dedicated fire team is always ready to tackle emergency. Essar also has a mutual tie-up with BPCL, wherein both organisa­tions will aid each other during emergencies till the arrival of ex­ternal help. Owing to the safety practices observed at the plant, the number of incidents from the first year when Essar took over has dropped by 95 per cent. Routine health checks and medical cam­paigns are also conducted on a regular basis.

Since Essar Steel has taken over, productivity has increased by 20per cent and product diversification has gone up by 25 per cent. The facility now offers 4,000 different shades of colour-coated steel, available in a diversity of colours and surface finishes, including the recently launched wood finish colour-coated steel.

The plant has witnessed an increase in overall sales by 127 per cent in domestic sales from 681 T to 155 KT and a reduction in cus­tomer complaints by a whopping 70 per cent. Also, the cost of pro­duction for PPGI (pre-painted galvanised iron) or pre-coated steel per tonne has been brought down by 20 per cent. The overall inven­tory – which was at an all-time high prior to the takeover – has gone down by 72 per cent since the acquisition.

Jagirdar believes that productivity at the Pune Facility has gone up because of synergy and a feeling of unison. “People are now equipped with multiple, updated skills through a training pro­gramme called ‘Utkarsh, which means progress or development.


“We had to bring about a major cultural change, especially with respect to safety housekeeping, training, skill development, and the alignment of employees towards a common organizational goal.”

Mitesh Shah, CEO, Essar Steel Pune Facility


Instances of grievances and disputes have reduced. “Now, the focus is on growth, development and engaging with employees and their families,” he adds.

Various employee engagement initiatives like employee sug­gestions schemes, employee connect through “Town Halls’, sports tournaments and ‘It’s Coffee Time’ have proved to be successful. `It’s Coffee Time’ is an open dialogue between groups of employees and the CEO. “We recently even organised an income tax awareness campaign before tax return deadlines this year. The idea is to help employees save money through rightful means,” says Shah, the CEO. The union wrote an appreciation letter because HR helped them save money. It was a good feeling that we were able to help.”

C onsidering the product mix, the key activities at the plant in-clude pickling, rolling, annealing, galvanising and colour coat­ing. From the operational perspective, huge changes were brought across these functions, For example, in terms of pickling modifica­tion, the old acid process and rinse tank were replaced with new tanks. This increased productivity by 17 per cent due to the increase in speed from 60mpm to 100mpm. A change in the combustion system at the continuous galvanising line (CGL) resulted in im­proved product quality in terms of mechanical properties required in supply of finished grade steel for white goods and high strength steel requirements,

Of the two colour coating lines, the second was revamped com­pletely. This also involved changing the NIR oven to gas oven. Be­sides decreasing the power consumption from 280 to 90 kwh per tonne, this also increased line speed from 60 to 120mpm.


“It was important to us to install a feeling of security. We did;t want them to feel like we were here to get ride them. Instead, we wanted them to feel like  we were here to help them grow.”  Mukund Jagirdar, CEO, head HR and administration

The Productivity was enhanced from 350 to 500 tones. With the view of further bringing down the energy costs, the facility chose open access power supply against the regular grid connection. This re­sulted in huge savings of Rs60 lakh per month.

Several changes were also introduced in terms of quality assur­ance. For example, incoming plant batch sample testing was started before dispatch of the paint. This is helping in reducing the online rejection of the plant.

Introduction of Mar resistance testing has helped in eliminating the complaints of tool marks during profiling. Since various paints are supplied by different suppliers, simulation test of storage con­dition and performance was started. This has helped in identifying the poor quality paints.

Further, employees are made aware of customer feedback and expectations by discussing these in the daily morning meetings as well as in separate meetings where all the shift-level people are called and briefed.

A key aspect of the transforma­tion process has been the focus on sustainability, Owing to the new technologies and processes that have been put in place, the plant is now also a zero-waste company. Since the acquisition, the green belt area has increased by 50 per cent across the 57-acre plant. One of the major initiatives undertaken in this context was upgrading the Effluent Treatment Plant (ETP)-2 and the installation of a multi-effective evaporator, which ensures zero discharge of treated water — saving 50 cubic metre of water per day.

Another responsible initiative undertaken at the Pune Facility is the installation of a well-equipped environment lab oratory. The lab is stocked with the advanced equipment to monitor effluent, stack and ambient air. “A dedicated environment chemist is also an hand for daily analysis of samples and ensuring that the facility remains compliant with pollution control norms,” says Gohil.

As a result of the overall transformation, Essar Steel’s Pune facil­ity has today become India’s largest colour-coated steel producer and the largest exporter of colour-coated steels. Thus, this acquisi­tion through the amazing transformation has also catapulted Essar Steel as a whole into becoming the country’s only steel plant with integrated facilities from heavy plates, hot rolling, cold rolling, gal­vanising and colour coating.


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