Tata Power Company Ltd (TPCL), the oldest private power generation company in India, plans to transform its traditional manufacturing business into a customer-centric company with 1 crore customer base by 2025. It wants to digitise the business verticals - including power generation, transmission and distribution - and enhance customer experience through data analytics. In the next five years, the company targets to install over 1 lakh electric vehicle (EV) chargers across India.
TPCL, which is in the capital intensive sector, is looking to scale-up its service businesses that need little or no capital investment like EV charging, home automation, distribution services, thermal O&M services and solar EPC. The company is evaluating opportunities in emerging business areas such as microgrids, rooftop solar, energy efficiency solutions and EV charging stations. The company elaborated about the eight-point Strategic Business Obejectives (SBOs) in its latest annual report that include enhancement of efficiency and yield of the plants, debt reduction through sale of non-core assets and scaling up renewable power share to 50-60 per cent of the generation portfolio by 2025.
As customer-centric businesses gain traction among investors, the transformation strategy of TPCL is quite interesting; it is difficult to execute though. For creating a customer-centric organisation, the company intends to roll out value-added services for customers' delight, and improve and measure customer satisfaction. It will be building organisational capabilities to drive the character switch.
TPCL has collaborated with Tata Motors to roll-out EV charging infrastructure and aims to expand its presence further in high EV adoption cities in the country. It is also working on developing a software platform for customers of EV charging and has released a mobile application for them. With the increase in EV adoption, TPCL plans to cover the segments of home, workplace and captive charging through different models and approaches, it said in the annual report.
TPCL has collaborated with the Rockefeller Foundation to roll out 10,000 microgrids to provide innovative solutions for the under-served communities and expand the global microgrid footprint.
It has set new benchmarks in operational excellence and financial returns for the existing businesses. As part of it, TPCL targets to optimise the efficiency of thermal and hydropower plants, and increase the yield from renewable energy portfolio above the design parameters. The reduction of Aggregate Technical and Commercial (AT&C) loss is another target. The company, which is operating in the government-regulated business area, wants to maximise incentives through efficiency improvements.
The turnaround of the 4,150 mega watt Coastal Gujarat Power Limited (CGPL) in Mundra is the most worrying issue before TPCL. The loss of Rs 891 crore in FY20 was lower as compared to Rs 1,654 crore in FY19 mainly due to lower coal prices, optimised blending, effective coal procurement strategy and lower finance cost mainly due to re-financing of external commercial borrowing (ECB) loan. It has rasied Rs 350 crore by issuing non-convertible debentures (NCD) recently.
CGPL's five power procuring states - Gujarat, Haryana, Punjab, Maharashtra and Rajasthan - have agreed to pass on the raw material and power production costs to consumers, but the process is lengthy and it needs approval from Central Electricity Regulatory Commission (CERC). The plant was designed to use the imported coal from Indonesia, however the protectionist law introduced later there escalated the power cost for CGPL.
TPCL has already initiated the divestment of non-core assets. In 2018, it sold telecom and defence assets to deleverage the balance sheet. They sold Cennergi in South Africa last year. Singapore-based Trust Energy Resources Pte Ltd (TERPL), a wholly-owned subsidiary of Tata Power, recently sold its three ships for $213 million. TPCL is in the process to adopt debt-light models through innovative financial engineering and re-structuring. The consolidated debt of the company reduced to Rs 43,559 crore in March 2020 from Rs 44,853 crore a year back.
Leadership and succession planning and workforce planning are the other areas that TCPL is focussing on besides new capability building. Through digitisation, it targets to improve asset performance, enhance customer experience using data analytics and explore new business opportunities. It intends to achieve carbon neutrality by 2050 by reducing fuel consumption and enhancing utilisation of fly ash, which is a byproduct of coal burning.
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