Now in its centenary year, the company says there is ample scope if the government opens up the sector in a transparent manner
Anil Sardana
Age: 55
Designation: CEO and MD, Tata Power
Career: Has worked with NTPC, BSES, Tata Power Delhi Distribution
Highlights: Has three decades of experience in the power and infrastructure sector
Tata Power joins a small club of Indian corporations that have been in business continuously for 100 years. The company began with a 12 MW hydro unit in Khopoli (near Mumbai) in 1915, which was built by transporting equipment on horse-drawn carriages from Mumbai. Over the years, it has grown into India’s largest integrated power company and is trying to build a global footprint. Tata Power and its subsidiaries now have an installed capacity of close to 8,600 MW.
The journey, though, has not been smooth, especially in recent years. Its biggest bet, the 4,000 MW Ultra Mega Power Project (UMPP) at Mundra, Gujarat, which is based on imported coal, is reeling under losses after the Indonesian government changed its rules on coal pricing in 2011. Losses at Mundra are threatening the viability of the company. Tata Power’s MD-CEO Anil Sardana, however, is hopeful of better times ahead. He spoke to Forbes India about the challenges facing the company and his vision for Tata Power. Excerpts:
Q. Four years ago, Tata Power took a call to hold investments in India and look for opportunities overseas. Are you happy with the results?
Let me answer your question with a specific example. In December 2011, we bid for a hydel project in Georgia and one in Himachal Pradesh. In February 2012, we were lucky to be awarded both, to put up power plants of roughly 400 MW each. Today, in 2015, we have completed about one-fourth of the Georgia tunnelling and construction work whereas not even a brick has been put up in the Himachal project. It is likely that in 2017, when the Georgia project is complete, the Himachal project will be in the same shape.
Yes, four years ago, we started looking globally. In retrospect, we are very happy about that decision. It is sad that 65 years after independence, we are still unable to guarantee quality power to our consumer. This is obviously hurting the entire process of development. Although there are many problems, we have shown that they can be tackled. We were able to turn around a state-owned enterprise [North Delhi Power], which could not be competitive for many decades. Today, the same set of employees has achieved global performance standards.
The power business obviously needs a lot of capital and there is so much to do. Commercially, Tata Power is in tremendous pain. Despite the huge opportunities in business, there is little action on reforms on the ground. After the presidential decree in Indonesia, which made our UMPP non-profitable, we have been pleading for government support to contest it. But we didn’t have any luck. We are going through the corridors of power trying to explain that we can’t continue like this. We continue to supply power from the Mundra project because of our commitments, but that too is in great financial stress. If nothing is done, the project will collapse.
(This story appears in the 20 March, 2015 issue of Forbes India. To visit our Archives, click here.)