NORTH DELHI POWER LTD: DYNAMICS OF CHANGE

Debi S. Saini* and Jyotsna Bhatnagar*

Anil Kumar Sardana, the Chief Executive Officer (CEO) of the North Delhi Power Ltd (NDPL), was
restless in his office, taking on calls, one after another. But at the back of his mind were several
questions about the direction that NDPL must take. NDPL in a way could be seen as the lifeline to
most of the residents of North and North-West Delhi, where it was the sole agency to distribute
electricity. This company took over a portion of the ailing Delhi-Government-owned Delhi Vidyut
Board (DVB) w.e.f. July 1, 2002. This was done under a privatization arrangement devised by the
Delhi Government. Sardana was called from Mumbai to lead NDPL. Anil Ambani-led BSES owned
the other two companies which took up electricity distribution in the rest of Delhi as per the
privatization arrangement. Sardanas immediate concern was to ensure stabilization of the two-year-
old marriage between the Tata Power and the Delhi Government (Tata Power held 51 per cent shares
in NDPL, and the remaining 49 per cent were with Delhi Government); and eventually to see it
becoming a lasting success. On Sardana asking how to deal with the corrupt DVB employees, Abhay
Saini, NDPLs GM-HR, suggested: We should focus on future rather than the past. Our role is to
bring the DVB-scheme employees into the core values of NDPL, and with this end to rely more on
care and counseling rather than policing and suspicion.

The aggregate annual AT&C (Aggregate Technical & Commercial) losses of all state electricity boards
in India 1 had reached a whopping Rs. 25,000 crores in August 2004; therefore, initiation of
privatization in power distribution in other states appeared only a matter of time. NDPL devised its
vision of becoming the most preferred and admired energy Company. It adopted six values, which
included: safety, agility, care, respect, ethics, and diligence.

CONCERNS AND CHALLENGES OF THE CEO

As per the MOU with the Delhi Government, NDPL was to reduce the AT&C losses from 53 per cent
at the time of acquisition to 20 per cent by 30 June 2007. It was estimated that the Delhi Government
had already been subsidizing DVB every year for its losses by about Rs.1,500 crores through loans
that were never expected to be repaid.2 Some of the key challenges that NDPL was facing since the
acquisition included: dealing with rampant theft by slum dwellers as well as industrial/commercial
consumers; changing the consumer perception of NDPL; promoting consumer service and information
technology (IT) interface at a level comparable with world standards; tackling the nexus between the
vested interests who were responsible for power theft; internalizing in the companys culture a
concept of consumer priority and service; changing the mindsets of a neglected and semi-trained DVB-
scheme workforce; imbibing transparent and ethical working in all administration centres and
employees of the company; and establishing Tata brand image in terms of standards of the Tata
Business Excellence Model (TBEM).

*
HRM Area, Management Development Institute, Gurgaon-122007.
1
After the enactment of the Electricity Act 2003 by Indian Parliament, the power industry stood opened up in generation,
transmission and distribution sector. NDPL was naturally examining the opportunities flowing from this development and
devising ways to tap them.
2
So the Delhi Government expected the new distribution companies to minimize this burden of the Government, and
eventually to eliminate it.
1
 THE TRANSFORMATIONAL AGENDA AND ACTION

NDPL management of took the following major steps to stem the rot that DVB suffered from:

Performance Initiatives

On takeover, one of NDPLs key priorities was to improve operations and maintenance. This meant
minimizing the number and duration of power-supply interruptions, making the fault-repair system
simpler and consumer-friendly, improving power-supply reliability, minimizing or removing the faulty
billing, and replacing the old meters by electronic ones. Some of the performance initiatives taken in
relation to people issues included: payment of salary by crediting it in bank account 3 of the employees
rather than paying it in cash; installing 1200 computers in various offices of the company which just
had two computers before the takeover; imparting training for 18000 mandays during last two years in
quality, customer orientation and computer handling; provision of mobile phones to all executives, Jr.
Engineers & other field staff for better connectivity; sponsoring executive/field staff for training to
different countries.

To begin with, NDPL started working towards building a management information system (MIS).
Sardana sat till 2 oclock in the night to oversee the development of a system of daily reporting of
operations. The MIS (built through software programming) was eventually fully internalized. A full-
fledged performance monitoring cell was created in the corporate office, which directly reported to
Sardana. Internet facilities were installed in each of the 46 zones, and the five circle offices.

In order to deliver improved performance to the consumer, NDPLadopted a 5S concept which

consisted of: sugam (easy), sahyog (cooperation), spasht (unambiguous), sankalp (determination), and
sampark (communication). These initiatives were first of their type in the power sector anywhere in
India. In place of just 20 centers for depositing the bill amount, it made available more than 1000 such
centres to help the customers. The company appointed a Customer Relations Coordinator to whom
complaints on power theft could be made on the telephone, post or the web confidentially.

Rightsizing and Service Conditions

As per the MOU signed at the time of acquisition, NDPL inherited 5368 employees from the DVB.
Sardana devised an attractive voluntary retirement scheme (VRS). Out of the total DVB workforce,
1794 employees sought retirement under the VRS. This included some 90 per cent of the meter
readers 4 who availed the VRS. The recognized union was involved in the rightsizing process
throughout. NDPL employed 482 new employees5 to various positions with new service conditions,

3
This was a big issue with the common workers; they resisted it and raised slogans against the management for this decision,
as they wanted the cash payment of salary to continue. But NDPL was determined to change it as it found that so much of
manpower and time was wasted in withdrawal of money from bank and disbursing the same to workers. This used o last
several days and a chaotic situation could be witnessed around the time when salary was being disbursed.
4
It was found that the highest incidence of corruption was at the level of meter readers, who were often seen colluding with
industry owners in stealing electricity.
5
The new employees were known as NDPL scheme employees. They had separate compensation package on the corporate
pattern. They were also not members of any union. They did not enjoy any pension benefits that the DVB-scheme employees
enjoyed under the MOU. The new employees were very proficient in PPT presentation and data handling.
2
 which among others included more than 300 engineers to facilitate the operations and maintenance
work, and 15 fresh or experienced MBAs in different functional areas. The DVB-scheme employees
continued to be governed by the old DVB-pay-structure as per the MOU (memorandum of
understanding), and were also entitled to pension and retirement benefits as per the DVB structure.

Changes in Organizational Structure

DVB did not have much of an HR function though nearly 150 people were associated with its
Personnel Department who were mostly concerned with maintaining employee-related records
pertaining to leave, personal files, and benefits availed, etc. NDPL reduced this number to 51 and
planned to further reduce it to a figure of 25 to 30. NDPLs HR department got into action for
rationalizing HR procedures, manuals and policies. The vision devised for the HR department was to
create a learning organization which nurtures talent and innovation, and provides
competitive environment that makes NDPL the most favoured company to work for. After
considerable efforts, the HRIS was installed. The company oriented the organization structure to the
needs of the customer. It increased the number of circles from 2 to 5; districts from 10 to 12; and zones
from 40 to 46. It re-defined the structure to ensure the companys 24 hour accountability to the
consumer. The HR department undertook a massive task of writing the job descriptions (JDs) and key
result areas (KRAs) for different positions to promote role clarity.

Every circle, which was responsible for operations and maintenance of the area in its jurisdiction, used
to be earlier manned by 30 to 40 people. In the post-takeover scenario, just 5 people worked in a Circle.
The use of technology, computerization and organizational restructuring helped this change. Almost all
designations were changed from Ex. Engineer, Asstt. Engineer, etc. to manager, assistant manager,
office associate, work attendant, and so on. Re-designation aroused considerable resistance from most
DVB-scheme employees including senior officers. But company was firm to see that through.

Quality focus

The quality concerns of the company could be inferred from its mission, which read: To be the most
preferred and admired energy company we will strive to deliver quality and cost-effective services.
There was a full-fledged Inspection and Quality Assurance department which was responsible to the
GMOperations. The company secured the ISO 9001: 2000 certification for Quality Management
System from Det Norske Veritas of Netherlands for its five departments: engineering, projects, IT
groups of technical services, human resource, and stores group of operations.

Employee Welfare and Performance Incentives

NDPL was supposedly the first such company in India to have started Sarathi, an employee helpline.
Under this any NDPL employee could submit his/her grievance by e-mail or telephone, and this
helpline assisted in giving a time-bound reply to him/her and helped in processing the grievance.
Some of the welfare and performance measures that were being undertaken, among others, included:
insurance amount of employees increased from one lakh to 2.5 lakh; launching of a joint interaction
forum (JIF)6 that included representatives of the union and management; clearing of pending time-

6
The Joint Interaction Forum (JIF) were constituted at the district and circle levels. The key objective of JIF was to facilitate
better consumer service and enhancing the consumer delight. Some of the usual issues discussed at this forum included:
workplace hygiene, health, safety, quality, welfare, quality of work, response time, productivity and maintenance issues, non-
3
 bound promotion cases; improving hygiene in all office buildings; water purifiers installed at all
District/Zonal offices; presenting a wrist watch to all employees on the raising day; uniform allowance
as cash payments in lieu of distributing uniforms; and sports meets for employees dependents.

All employees were served tea twice a day or were paid Rs. 125 per month as tea allowance. A
scholarship scheme with the upper limit of scholarship of Rs. 1000 per month per beneficiary was
implemented for meritorious children of employees. Schemes were devised and implemented for
providing free coaching and computer training to children of the employees. The company also
conducted English-speaking courses for the employees wives. Diwali mela was organized for all
employees and their family members. Eye camps, health camps, and blood-donation camps were
organized to promote social responsibility amongst employees

Union-management Relations

NDPL inherited the DVB workforce along with its two unions. It, however, recognized only the
majority union, and not the other one. The union executive was cooperative with the management in
the takeover process, and even after, barring some minor disturbances. Perhaps one of the most
complex of the three industrial relation (IR) issue was the payment of Rs. 10,000 each to 41
employees widows, whose husbands had died during service of the DVB, which DVB had been
refusing. After some days of negotiation, the CEO and the GMHR responded positively. The CEO
declared that before going home that day he wanted to sign those cheques. Secondly, no promotion had
taken place since 1992. Some people had not had a single promotion for the last 20 years. The GMHR
convinced the CEO about the need to take a positive stand on the time-bound promotion issue. Sardana
put up the case to the Chief Minister, who agreed to provide the Governments share of funds needed
to effect promotions and all 350 cases of time-bound promotions were cleared. The third crucial issue
agitating all workers was uniforms, which was settled to workers satisfaction.7 Further, the GMHR
had before him 80 cases of employee discipline during the DVB days. Some 63 of these 80 employee
files involved petty matters. He closed all but 17 cases of suspension.

There were 89 employees in the work-charge category. They were taken by DVB as their
parents/husbands had died during the DVB-service, the union wanted them to be regularized. The CEO
insisted that they would be taken only if they upgraded their skills. 8 For the graduate employees,
NDPL insisted for a computer test after the computer training. The employees who cleared the test
were regularized; the remaining ones had to be left out.

After the NDPL VRS scheme had been opted, retirement dues became payable. But the Delhi
Government could not meet its responsibilities even after more than two years of privatization. NDPL
had offered to pay its share long time back. These employees organized agitation and dharna at Raj
Ghat in New Delhi to press for the release of their pension dues and arrears. Interestingly, NDPL
management joined the workers protests against the Delhi Government for undue delay. The VP-HR
issued a circular that the raising day would not be celebrated on July 1, 2004 due to non-receipt from

availability of basic infrastructure, performance-related issues, inputs on improvement of processes at various levels,
elimination of waste, lowering costs, information sharing, and skill enhancement of employees through training.
7
They wanted uniform allowance and yet not wear any uniform. Sardana saw no point in enforcing the wearing of uniforms by
them. The issue was settled at Rs. 2700 per year, even as its cost was just Rs. 1150.
8
A special request was made to an Industrial Training Institute (ITI) to help in the matter, which organized a special 12 to 16
weeks technical training to upgrade their skills at the companys cost. Many of them were inducted at higher salaries.
4
 the Delhi Government of the retirement benefit by 1797 retired employees. He also issued another
circular NDPL would not celebrate Puja and Diwali festivals in 2004 for the same reason. Eventually,
Delhi Government released the money, and the matter got settled.

Relations between NDPL management and the recognized union had become quite cordial. The
company sent two batches of union leaders to the Tata Steel plant in Jamshedpur in September, 2003
for 10 days each to observe how cheapest steel was made in the world in a climate of harmonious IR
among 40,000 people. A manager remarked These leaders now talk more practical and sensible, and
have reflected more positive understanding and cooperation in developing performance culture. Later,
these leaders asked the GMHR, When are you sending us to a foreign country for training? Since
the union was common in all three power-distribution companies, the union leaders were highly
critical of the management the two BSES companies.

Performance Management System

The first step taken to improve performance was to develop people for assessing training needs. It was
also decided that the performance appraisal (PA) system for the employees should be kept simple; the
PA form comprised of only two pages. From year 2004, Key Result Areas (KRAs) were developed up
to the level of assistant manager with a view to assessing individual performance. The DVB-scheme
engineers initially showed total resistance to the computer system 9 but gradually realized its
importance. The Joint Interaction Forum (JIF) proved important as representatives of union and
management aired their respective issues of concern there. An in-house quarterly magazine named
Navodaya was launched in November 2003. The company set up its Human Resource Information
System (HRIS). An Entrepreneurship and Knowledge Management (EKM) cell was also set up, which
reported directly to the CEO. The company got feedback about its service from various sources
including the communication received on its website.

The CEO introduced an incentive scheme to promote performance-based culture for employees. Those
who successfully achieved their targets were rewarded with appreciation certificates and target-
compliance mementos. A bi-annual system of communication from CEO was devised and
implemented. Also a Meet the CEO Scheme was introduced wherein each employee could meet the
CEO personally and discuss issues and problems related to efficiency or any grievances. The company
also started a suggestion scheme, but the employees somehow showed inertia in making full use of it.
It even provided for sharing of gains from the suggestions. NDPL also had the policy of posting the
employees mostly near their home to ensure that they remained energetic.

PERFORMANCE AND ACHIEVEMENTS

NDPL improved its functioning on several operational parameters. It benchmarked 10 itself against the
top five utilities in the world. Comprehensive changes took place on HRM front. Speaking of the
progress on this front Sardana observed:

9
Eventually, they got well-versed in handling computer technology; in fact, each one of them prepared his own presentation.
After some time, some kind of competition developed among them to demonstrate their performance with the help of
PowerPoint.
10
In relation to billing errors substantial reduction had taken place since the time of takeover, but they were still believed to be
an area of concern.
5
 One of our biggest achievements is that we have been able to secure our right to govern vis--vis
our DVB-scheme employees. This category of employees should have no fear psychosis about
their job security. Yet the environment is one of accountability. The union cooperation could be
secured through our transparent attitude to collective concerns of people, our belief in their
legitimate right to play their role, and our decision to take on issues head on rather than avoiding
or suppressing them

The company had got better media response for its performance than had been the case with the two
BSES companies. In fact, the other two companies came under severe criticism for non-performance;
so much so they got several warnings from Chief Minister Shiela Dikshit. The company attained
better level of performance and consequently gradual reduction in AT&C losses. As visible from
Figure 1, on 30 September 2004 the AT&C loss stood reduced from 53 to 41.3 per cent, which meant
reduction of about 12 per cent in a period of 27 months from the takeover. A reduction of one per cent
in AT&C loss roughly translated to corresponding gain in companys additional revenue to the tune of
at least Rs. 22 crores. Sardana continuously interacted with Delhi politicians with a view to changing
their attitude towards issues in the Delhi power sector. Each member of the legislative assembly
(MLA) of Delhi was regularly invited to have lunch with the NDPL team.

12 month Rolling AT&C Loss NDPL

55%
54.1%
53.4% Jul 02 (Privatisation) Post
AT&C Loss 53.1%
privatisation
53% climbing up 53.0% reduction in
before AT&C Loss
51.6%
51% privatisation 51.7%
FY 03
51.1%

49% 49.5%
49.0%

47% 47.5% FY 04

46.0% FY 05
45% 45.7%
44.9%
Jul 02-Mar 03 (9 months)
FY 2003-04
43% Committed Reduction - 0.5%
Committed Reduction - 2.25% 42.9%
Effective Reduction - 2.6%
Effective Reduction - 6.1% 41.8%
41% 41.3%

39%
1

4
02

03

04

05
1

4
1

4
-0

-0

-0

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-0

-0

-0

-0
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n-

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ct

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ct

ct
pr

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Ju

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Ja

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O

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A

Figure 1: Twelve-Month Rolling AT &C Loss

Table 1 presents the companys performance since takeover on several parameters. Also, in the year
2003-04 NDPL earned a net profit after tax of Rs. 29.29 crores compared to Rs. 22.21 crores for the
year 2002-03. The company got better media response for its performance than had been the case with
the two BSES companies operating in the remaining parts of Delhi. It was widely believed in and
outside NDPL that some of the key factors responsible for major differences in the performance of
BSES and NDPL included the Tata culture and the leadership of Sardana. The former company had
changed four CEOs in the last 18 months, but NDPL could retain Sardana to carry out its
transformational agenda.

6
CHALLENGES AND LOOKING AHEAD

While Sardana looked back at the progress made on various fronts, he was cautious not to feel
complacent. Reliability of power supply had not been achieved. Only about 30 per cent of the
equipments had been changed; 70 per cent was still old. Its anti-theft drive against the power thieves
was not fully effective. But something that it felt critical was the need to change the mindset of the
Delhi power consumers, a large number of whom were used to consuming power for 50 years without
paying adequately for it; and changing the attitude and skill-levels of a large number of DVB-scheme
employees. A union office bearer remarked: The employees remained fearful of losing their jobs in
the new scenario, despite the security provided to them by the tripartite agreement signed at the time of
acquisition. The nexus between the power thieves and the politicians was seen as quite strong and
breaking its steel-frame a complex task.

NDPL had not yet got 100 per cent loyalty of its people. The administration in the Zonal offices was
still far from satisfactory. Commenting on the change of mindsets that had taken place GM
Operations observed: We have been able to acclimatize about 50 per cent employees into the NDPL
ethos; about 30 per cent are fence-sitters; and about 20 per cent have not changed at all. While
elaborating on some of the challenges that the company faced, Sardana observed: We have not been
able to enforce a sense of responsibility amongst the consumers. While the employee behaviour has
improved for the better, the contractors staff still needs to be trained and subjected to behaviour
modification exercises.

Table 1: Improvement in Power Supply Position since July 2002

SN Parameter On FY Q1 FY
Takeover 2003- 2004-5
4
Reliability Index (%) 98.5% 99.57 99.61%
1. %
2. No. of Transformer Failure per annum 584 248 37
3. Capacitor Availability (MVAR) 252 506 669
4. Mean time taken to repair Cable Faults 11 7 2
(days)
5. No supply Complaints received per day at 8000 2578 2419
Call Centre
6. Load Shedding Share in Delhi (%) 40 17 6
7. Street Lights in working condition (%) < 50% > 99%
80%

The company planned to bring about substantial increase in its performance in regulating power supply
and feeders. NDPL had made a far higher capital investment in the infrastructure than its competitor
BSES; but it still needed to invest more to attend to the issues on hand. Many policy decisions had to
be taken. There was a good bit of tension between employees in the DVB scheme and those working
under the NDPL scheme. In general, DVB scheme employees thought that the union was in collusion
with the management. Some of them were inciting some workers having leadership skills to challenge
the authority of the existing union secretary and take control of the union; such a happening looked
quite probable in the near future. Huge difference had got created between DVB-scheme employee and
the NDPL-scheme employee. A consultant to NDPL remarked:
7
 NDPL-scheme employee remains glued to the computer and is not so conversant with the field
realities. When a customer comes with a complaint, instead of dealing with it himself, he puts the
DVB man in the front. And, the big difference in the salary package of the officials in the two
schemes has also not been taken kindly by the DVB-scheme officials. Of course, the attraction of
the pension benefits and job security under the Tripartite Agreement had prevented them to
switchover to the NDPL scheme, which the company offered to everybody. Only few DVB-
scheme employees have got sufficient recognition for their achievements. NDPL-scheme
employees feel that their contribution has resulted into excellent performance by the company.

Sardana knew that a development of non-cooperation by the union would bring a hindrance in
implementing his reform agenda. He was also deliberating on several questions: What would happen in
2007 when the five-year subsidy contract between the Delhi Government and the three companies was
going to be over? Where would NDPL then stand in competitive reckoning? What roadmap should the
company draw and focus upon so as to march towards its vision? He was searching possible directions
that he and his team would adopt so as to move ahead with greater speed and vigour.

Questions:

1. What were the key HR issues to be handled at the time of the takeover? Examine the role played
by NDPLs HR department in attending to them?

2. What HRM strategy has NDPL been using for realizing its vision? And, how does it look at IR
issues in this regard? Support your answer with examples.

3. In view of the case developments, what course of action will you decide for a speedier march
towards to the companys vision?

4. What lessons in people management do you learn from this case?