April 2015 | Gayatri Kamath
'We will continue to bring new technologies to India'
The path that Tata Power has chosen for itself is global and clean, as the company’s chief executive, Anil Sardana, explains in this interview
How has fiscal 2014-15 been like for Tata Power?
Tata Power’s greatest strength has always been the way we operate our assets for steady and benchmarked performance. This year is no different. Our newest assets — the projects at Maithon and Mundra — were commissioned during the last year and are operating well. We have a few old assets — our hydro units are 100 years old and some of the Trombay units are more than 30 years old — but they continue to operate well because they are maintained properly. We will continue to see healthy top-line growth. Our bottom line will be a struggle because Mundra has commercial issues.
In your opinion, what are the strengths of the organisation?
One of our strengths has been the way we manage the diversity and complexity of our businesses. Regulatory management is another forte; we stay on top of norms. Also, we are good at building teams. The last four years have seen a transformation at Tata Power as we have moved from having a purely domestic presence to building an international business.
What was the intent behind the globalisation of Tata Power?
Three years ago we took the call to go international because of the opportunities in global markets. In India, the fruition of projects is and continues to be a challenge, in terms of land availability, environmental norms, regulatory norms, etc. For Tata Power, going international is about de-risking our portfolio, ensuring a stable growth trajectory and earning better returns on our investments. The associated risks may be higher, but we have evolved business processes to deal with these.
What geographies is Tata Power looking at?
In Africa we have wind and hydro projects, and we are participating in distribution management. We are looking at more opportunities there. We are putting up a hydro project in Georgia to evacuate power to Turkey. We have recently completed a hydro project in Bhutan and the power from there will be wheeled into India. We will be a part of the Middle East and adjoining markets and are looking at more opportunities there (we have just finished a two-year distribution project in the United Arab Emirates).
We are also present in South East Asia. In Indonesia we have coal assets, a geothermal project and a 54MW coal-based project. We have won the right to develop coal-based projects in Vietnam and Myanmar.
Are the challenges of the global market different?
The challenges could differ based on the geography, but in the power business the two key aspects are government participation and regulatory norms. This implies that there is an associated risk relating to predictability of laws and regulatory regimes. We are looking at tools like insurance from the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which guarantees that if a country’s laws or norms are changed midway through the project, our returns are protected. This guarantee is only for our international projects as India is still not a signatory to MIGA.
|Anil Sardana, CEO and managing director, Tata Power, talks about the company's operations, green power generation, sustainability and its future in an evolving market. Watch the video|
In terms of our sustainability quest, we have two clear perspectives. First, we have to look at social and land issues. Given that each of our investments requires large amounts of land, and that we are in the coal business, it is important to have a framework for working with the community. We have a strong social interface framework built on the 80:20 corporate social responsibility (CSR) rule. That is, 80 percent of our CSR effort is devoted to broad themes that are mandated throughout the company, and 20 percent is reserved for local initiatives.
The other perspective is that we have set ourselves a target of 20-25 percent power generation from clean and green sources: hydro, wind, solar, geothermal and biomass. We continue to maintain this despite the fact that the efforts are exponentially higher for smaller projects. A typical wind or solar farm generates only 20-30MW; thermal projects can be set up on a bigger scale. Even in our coal projects, we have chosen technologies that help us maintain emission standards that are lower than those prescribed. The coal that we use in Trombay and Mundra is low ash, low sulphur, with insignificant emissions. Internally, we call it gold coal.
What are the new technologies that the company is pursuing?
Tata Power has always been a pioneer in technology adaption. We are now working on new technologies like ultra super critical, which operate on much higher parameters, and we are working on designs of furnaces and boilers that can use any grade of coal. The world is moving towards low calorific value coal — the good coal has already been extracted — and that’s where we are moving, too.
We will continue to bring in new technologies to India, especially those that provide advantages to the consumer. Take thermal storage, which is beneficial for large consumers. We are implementing this for the first time in Mumbai at a large hotel. During times when power is available and the load is light, you create large ice banks. This ice is used to cool the building during the day, when power demand peaks. We partner consumers to make demand consistent, without steep peaks.
Looking ahead, what is Tata Power’s future path going to be?
The consumer will continue to be at the centre of our operations. Our future depends on servicing our customers with state-of-the-art technology. We will look for more opportunities in distribution management, in India and in geographies like Africa. We will look for integrated solutions for our commercial and residential customers so that they benefit from a reliable supply of power at predictable tariffs.
|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
|'The consumer will reign'
Tata Power’s chief operating officer, Ashok Sethi, who has clocked 39 years with the company, shares his views on the organisation’s evolution
|'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
|'A climate of respect is vital'
Chief culture officer and head of business excellence and transformation, Vivek Talwar, on what makes Tata Power a sustainable organisation
|'People policies are linked to the company's strategy'
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