Tata Chem takes SBU route to fire up businesses
Economic Times — August 16, 2003

Tata Chemicals has created three strategic business units (SBUs) by forming independent management teams for the chemicals, fertilisers and salt additives’ divisions.

The move, aimed at bringing in a sharper business focus, has resulted in each SBU being handled by a chief operating officer (COO) from August 1. Many Tata group companies, including Tata Motors and Indian Hotels, follow the SBU model.

Kapil Mehan, former director (marketing) of the company, has now taken over as the COO of the fertiliser division, while R Mukundan, who was heading the company’s Mithapur division, has taken charge as the COO of the chemicals division. Mr Mukundan, who had been responsible for establishing higher safety standards at the Mithapur chemical complex, will now be based in Mumbai.

Satish Sohoni, who has held various senior positions in the Tata group company Rallis, has been bought in as the COO of the newly-formed food additives division. Mr Sohoni was chosen mainly due to his long-standing experience in the fast moving consumer goods (FMCG) industry. Prior to joining Rallis, Sohoni was with Hindustan Lever (HLL). The COOs will report to the managing director, Prasad Menon.

“The company operates in three different markets that are complex in nature. Hence, a reorganisation was essential to provide a clear focus,” said a top Tata Chemicals’ official. While chemicals and fertiliser account for 40% each in the company’s total sales, salt brings in the balance 20%. In the last two years, many executives in the company has moved from one division to another, creating a culture of cross-functioning. The company has a total employee strength of 2,700, of which 60% is in the chemicals division.

Kapil Mehan, who has been instrumental in the company’s marketing success, now faces the challenge of consolidating the fertiliser business, mainly by taking strategic control of the PSU units that are up for sale. Tata Chemicals is widely perceived to be a major contender for National Fertilisers, the price bids for which will be invited shortly. The company is also in the process of expanding its agri-retailing business.

Mr Sohoni will have to drive the growth of the food additives’ business by identifying new areas. The division, which mainly markets the Tata Salt brand, is now exploring various business options.