April 2015 | Cynthia Rodrigues
'It was easier to run back then'
KM Gherda remembers the days of Tata Electric Companies, of ‘reasonable returns’ and a business where the big complexity was accounting for three rather than one
The Khopoli Power station, commissioned in 1915, was owned by the Tata Hydroelectric Power Supply Company. Some years later, Tata Hydro applied for a licence to set up another hydroelectric station, at Bhivpuri, which was owned by the Andhra Valley Power Supply Company. Andhra Valley paid a licence fee to Tata Hydro, which had leased the operating licence to it. Later, Tata Hydro applied for a licence to set up a power station at Bhira and transferred it to Tata Power Company for a lump sum fee.
Accounting was a problem because the licence fee had to be calculated and after that the managing agents’ fees had to be calculated — and there were no computers at the time.
The three companies were collectively known as the Tata Electric Companies. The Electric Supply Act provided for 10 directors. So the three companies were required to have 30 directors. In the early days the companies were managed by EBASCO, an American consultancy firm, and the managing agents were Tata Hydroelectric Agencies, whereas the managing agent for all the other Tata companies was Tata Industries.
A unique feature was that the directors of the three companies met jointly and minutes were maintained for these joint meetings. However, due to the government’s company law provisions, the minutes of the three individual companies’ meetings were separately recorded, although the members did not meet separately.
If a bank account had to be opened for any one company, it was first approved by the joint board and then incorporated in that particular company’s minutes. The Company Law Board later gave special permission for a single managing director for all three companies. This was after the abolition of the managing agency system, during which time the managing agents appointed a director in-charge to supervise and manage the enterprises.
Running this combined entity was comparatively easy at that time as all costs could be recovered and a fixed percentage, termed ‘reasonable return’, could be earned by the companies. Moreover, debt recovery was not a problem as there were only about 100 consumers, among them textile mills, Indian Railways and the Bhabha Atomic Research Centre, and power could be cut off if the bills were not paid on time.
|Walwhan Dam has been a Tata Power mainstay|
It is interesting to note that when the Tata group applied for two 60MW thermal units, the then chief minister wanted to know why two units were required and asked whether one 60MW unit would not be sufficient for Bombay. Today, of course, the scene is totally different. Tata Power has expanded geographically since those days, starting from Jamshedpur. There have been many challenges, fuel availability, pollution control and so many others. Relations with the workers have also generally been good. The workers are well aware of the contribution that they are making to the nation.
Tata Power is a much larger and more complex enterprise now and managing it is much more difficult than it was in the olden days. My good wishes to the company.
KM Gherda was with Tata Electric Companies from 1967 to 1994. He served, most prominently, as the company’s managing director and, later, its vice chairman.
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