Tata Power goes for low-end in Mumbai
The intense competition between Reliance Infra and Tata Power in Mumbai's power distribution market has taken a new turn with the latter targetting low-end customers. Manu P Toms reports.business Updated: Mar 22, 2013 22:35 IST
The intense competition between Reliance Infra and Tata Power in Mumbai's power distribution market has taken a new turn with the latter targetting low-end customers.
While Reliance Infra still remains the largest power distributor in Mumbai with a customer base of 28 lakh, Tata Power is rapidly expanding its low base.
"With 10,000-15,000 customers switching over to our distribution service every month, we hope our base will grow from 3.5 lakh to 5 lakh in a year,'' said S Padmanabhan, executive director, Tata Power.
"Five years from now, we will have 15 lakh customers," he added.
"We hope Tata will use its own network to serve those customers. Their acquisition of low end customers will reduce the burden of subsidy on us and will bring parity in terms of consumer mix,'' said a senior Reliance Infra official.
Reliance has accused Tata of cherry picking high end customers and wants Tata to use its own network.
"Despite having managed to achieve lower power purchasing cost, we are forced to charge a higher tariff because of our poor consumer mix. We serve 22 lakh slum customers," said the Reliance Infra official.
"Tata adding low end residential customers may help them expand in volume terms. However, its impact on bottom line looks neutral as power supply to those customers is subsidised," said an analyst.
"It may help Reliance Infra to bring down costs as a bulk of the subsidised customers switch over to Tata Power," she added.