Problems In North Delhi Power Limited

Introduction:

The organization chosen for our analysis is North Delhi Power Limited (NDPL). The company is involved in the business of distributing electricity in the North and North West areas of Delhi. NDPL is a joint venture between Tata Power Limited and Government of Delhi. It was formed on July 1, 2002 as a result of the privatization of electricity distribution in Delhi.

Purpose of the report:

The report aims at analyzing the operational performance of NDPL, identifying the reasons for the high Aggregate Technical and Consumption (AT&C) losses and proposing the solutions to reduce the same.

Profile of the company:

NDPL distributes electricity to more than 0.91 million consumers, which include domestic, agricultural and industrial consumers. The total revenues for the company for the year 2004-05 was 15.87 billion rupees with a net profit of 0.56 billion rupees.

Symptoms:

The company is ridden by many problems both on the technical and the administrative fronts. The major problems faced by the company are:

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* The distribution network of the company still has a very high Aggregate Technical and Consumption (AT&C) losses of around 35% of the total revenues, as compared to the American Electric Power, which has an AT&C of 3% of revenues.

* The company has losses of around 11% of total revenues in the collection of bills which is substantially high.

* Almost half of the distribution loss is due to the pilferage of the transmission lines resulting in the loss of revenues.

* The company still lags far behind in the use of latest technologies in its distribution network, which could significantly reduce its AT&C losses.

* Unethical practices by some of the officials who connive with the offenders, resulting in huge losses in collections.

* Tampering of mechanical billing meters by the consumers.

Analysis:

A SWOT analysis of the company is performed as shown below:

Strengths:

* Large pool of available cash which could be used for productive purposes

* Availability of sufficient number of skilled people in the organization

* Legislative power to come up with regulations

Weakness:

* The transmission and distribution network mostly consists of old and inefficient equipments and transmission lines.

* Presence of certain disloyal employees in the company who act against the interests of the company.