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B H Kothari - a tribute Permanent secretariat for TN GIM Paytm karo... Wise Presidents S V Raju – a ‘good’ true liberal Multi-faceted Venkat China invests in India L&T: focus on infrastructure and more infrastructure… The Jan Dhan bonanza Russi Mody – a tribute Kudos to NDTV... West Bengal: mindless malignancy Adapt Vajpayee dinner diplomacy Padma Bhushan for A Ramakrishna to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines The balancing act Like Hinduism: many paths to reach God... GNS - 100: our first subscriber Towards speedy justice Delhi Chalo... 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The why of tax incentives Welcome focus on core competence Building loyalty through the stomach The few handicaps... Liberal imports idling indigenous capacities MHC should not return to its old indisciplined ways A rich pool of talent not utilised…. Breaththrough in malaria control The rise and fall of Annamalai University Tax agriculture Small units prefers to remain small... The star of Spencers is no more Sweeter prospects for sugar Reliance’s TV – 18 ready to launch Tamil News Channel Poor quality of university VCs Kulandai was a giant Welcome GST Poor representation for Kerala and TN in Cabinet Land reclamation from sea appears cheaper! IPL - no surprise this scam Cutting the nose to spite the face Airlines in India: cost and space Eternal support for capitalisation of PS banks Of course, Gujarat is vibrant A more liberated TN… Noble nonagenarians... The sea- saw battle continues... Plummeting profits of PSBs ONGC at KG Basin Why this malaise in medical education? 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Welcome focus on core competence

The logic of sticking to knitting seems to be impacting large public sector corporations. When such a project was set up in a green field site far removed from major cities, there was the need to provide a vast range of facilities and social infrastructure. For example, when the Rourkela Steel Plant was set up in the 1950s in Odisha, the area lacked basic amenities like housing, roads, power, schools, hospitals, markets, etc. Substantial portion of the initial capital had to be spent on creating these facilities. Over the years the administration had to cope with managing a vast range of activities that had been taking its attention away from the core activity of producing steel. It plunged several public sector corporations into losses. It also resulted in bloating the workforce to levels that became unmanageable.

Tata Steel at one time had a workforce of over 70,000. A large portion of these were engaged in activities that had little to do with the production of steel. eg: managing the township, providing water supply, electricity, maintenance of roads, running schools, hospitals, sports, museum, etc. A bold decision was taken to relieve the company of most of these non-core activities. Aided by the boom in the steel sector post-2000, the company effectively hived off many of these activities to separate institutions and offered liberal VRS packages. In quick time it reduced total workforce by half. Several other corporations followed suit and succeeded in improving productivity per employee and focused on their core activities.

This has become necessary in the context of stiff competition from across the globe. There is pressure to improve incremental capital output ratio and ensure higher productivity per unit of capital employed. This has been achieved by a few sectors like the automobile and auto component industry by taking recourse to a higher degree of automation, vendor development and improving supply chain management.

 

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