April 2015 | Cynthia Rodrigues

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

During my short stint at Tata Power, the company saw many changes internally and externally. Internally, the main thrust was to convert excellent ‘farmers’ into aggressive ‘hunters’. We had a ring-fenced licence for Mumbai with little or no competition. Fuel costs were passed on and oil accounted for about 30 percent of our energy cost. Capital costs were a boon: the higher they were, the better our returns. The focus was on reliability and continuity.

The challenge lay in convincing others that this placid state of affairs would not continue for long. There was passive agreement but not active commitment. We had to make the elephant dance by ‘burning platforms’ internally. Subsequent external changes helped.

We were a floating bridge with no anchor either on the fuel side or the customer side. All our fuel was purchased. Gas supplies were restricted due to declining production at Bombay High. Coal burning was low due to pollution control norms and the company’s restricted ability to burn coal in the boilers.

Our revenue in money terms was rising faster than the units generated because of escalating fuel costs that were passed on to our consumers. We began to burn coal in our boilers and got the Maharashtra Pollution Control Board’s approval to increase our coal burning without compromising on actual emissions. Coal burning increased from 1,500 tpd to 5,800 tpd. On the consumer side, we had few retail customers and two bulk customers, of which only one had a long-term contract.

Several cost-cutting measures were undertaken. A 3SCR (significant, sustainable, speedy cost reduction) initiative was launched, anticipating the competition Tata Power would have to face in the future. We began to centrally control several substations through remote switching from our Dharavi control centre. This led to a mindset change, from cost pass through to cost competitiveness.

With the new Electricity Act, generation was delicensed, open access became an option and distribution reforms were expected to follow. To expand the business we set up a joint venture with Damodar Valley Corporation for the Maithon power project.

The distribution of power in Delhi was opened for privatisation and we successfully bid for one of the three circles. Anil Sardana was cajoled to join us and head this business. I am really happy to see him as the chief executive of Tata Power today.

Power trading also became a possibility and a subsidiary was launched to pursue this. We successfully participated and completed the first public-private partnership in India. To improve coordination and motivation, the Carnac substation was revamped to accommodate employees from the Sterling and Dharavi offices. A well-equipped clinic was opened at Carnac.

The Dharavi receiving station in Mumbai
So many changes happened in those days in Tata Power. Employee engagement and employee satisfaction increased significantly for people in both the officer and union categories. The company ethos changed from operational excellence at high cost to business excellence at optimal cost.

Our efforts were acknowledged in 2005 when we got the Wartsilla Mantosh Sondhi Award for excellence and value-based leadership. We were also placed among the top five best-managed companies in India by AT Kearney and Business Today. At the insistence of the then chairman Ratan Tata, a long-term strategic plan was made. This, I believe, set the stage for expansion and growth.

Tata Power is well poised to be even more successful in the next 100 years. The times have changed and so has the company. However, my personal view is that since power is a regulated business, global expansion will have its constraints and special restrictions. I wish Tata Power all the very best.

Firdose Vandrevala was with Tata Power from 2001 to 2005. He was the company’s managing director from September 2002 to July 2005.

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
'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
'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
'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