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|
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:|
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