April 2015 | Gayatri Kamath
'We have to slog our assets'
There are challenges as well as opportunities on the path that Tata Power has chosen to take, says chief financial officer Ramesh Subramanyam
How has Tata Power’s performance been in the financial year 2014-15?
On the positive side, the Mumbai and Delhi distribution businesses are continuing to do well. These are our cash cows, along with the Maithon project, the joint venture with Tata Steel and some of our subsidiaries like Powerlinks. Most of our projects are on track and even Mundra is performing well on technical parameters. In terms of financial performance, there were two adverse factors. The first is global coal prices. A large part of our bottom line is based on revenues from our coal mines; because of lower coal prices performance here was subdued.
The Mundra operation continues to put pressure on our performance. It did benefit from the lower coal prices, thanks to a reduced import bill, but overall it still struggles with the fixed commercial tariff. We are hoping we will have some good news on that front this year.
What is the reputation of the company among investors?
We are seen as conservative, reliable and trustworthy; there is a lot of investor confidence. Our rights issue last year evoked a positive response from the market.
How will Tata Power progress with its growth plans? Will it be organic or inorganic growth?
We are looking at new investments. For example, we have recently acquired a new wind company near Nagpur. But we have to be careful because the balance sheet is stretched. That is the biggest challenge for the company. The key is to manage growth innovatively, to balance risks and opportunities. We are also looking at innovative investor platforms, where our stakes are smaller but we manage the projects.
How will the company manage its balance sheet?
First, we have to slog our assets. At Mundra we are trying to creatively work towards reducing our losses. At Maithon we are looking for alternative buyers for about 150MW. Second, our existing pipeline of investments has to deliver projects on time. We keep a close watch on our investments overseas to ensure progress. Third, we are inculcating a frugal culture within the organisation. We also want to buy cheaper power, which will make our distribution businesses more profitable.
What is the company’s approach to managing its global projects?
Going global has been a big learning for us — new geographies with their local laws, large partners, different ways of project execution. At the same time, there are big opportunities overseas, where our experience and capabilities gives us a huge advantage. Going global has de-risked the business.
|Know more about Tata Power's fascinating journey:|
|Overview: 100 years of high-wattage performance
A century ago, Tata Power ran a single hydroelectric project in India. Today it has grown to a $5.6-billion global enterprise, with coal mines in Indonesia, wind farms in South Africa, energy projects in Turkey and Zambia and technology partnerships in Australia. It is India's largest integrated private power producer, spanning power generation, transmission, distribution and trading
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|'The consumer will reign'
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Employee engagement is critical to improve staff morale and the sense of belonging in the company, says human resources head Chetan Tolia
|The going is green
A presence across hydro, wind, solar and geothermal makes it easier for Tata Power to target a cleaner energy portfolio
|Chain of excellence
From renewable power to consumer friendliness, Tata Power’s associate entities have set the standard for the industry
|For country and community, in the spirit of giving back
The corporate social responsibility initiatives of Tata Power have made a tremendous difference, in a wide variety of ways, to the lives of the countless people they have touched
|'We were getting marginalised'
Tata Power had to think beyond Mumbai to stay relevant in a rapidly changing industry, and that’s what it did, writes Prasad Menon
|From dependable to adaptable
Tata Power has grown spectacularly in scale and spread thanks to its ability to reinvent itself, says Adi Engineer
|When 'farmers' became 'hunters'
Where once reliability and continuity were prized, Tata Power has moved on to find its balance and to flourish in a business arena rendered volatile, writes Firdose Vandrevala
|'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
|A pioneer all the way through
FC Kohli on the company where he made his mark as an information technology whiz, at a time when government permission was needed to get computers installed