Indian Institute of Management

Ahmedabad IIMA/ BP0372

Reliance Energy -2008

On October 14, 2008, the leadership team of Reliance Energy was in a meeting to review the
results of its first customer-employee satisfaction surveys conducted by an independent
market research agency, and an independent counseling agency respectively. Following the
review they were to recommend initiatives to strengthen the relationship between the
employees and the customers to Mr. Lalit Jalan, CEO and Director of the company. They
were aware of the key elements of the revised vision and mission statements of Reliance
Energy like ‘International standards of customer care,’ ‘Competitive cost,’ and ‘Delivery of
reliable and quality products and services’. The team was of the view that successful
deployment of the above vision elements across the processes, systems and people would
lead to the development of the company’s image as an industry leading customer-friendly
organization and provide a competitive edge in the reforms era initiated by the Electricity
Act of 2003. The act had provided for the induction of multiple players in the same licensed
area.

The Company

Reliance Energy was incorporated in 1929 in the erstwhile name of Bombay Suburban
Electric Supply Limited for distribution of electricity in the suburban region of Bombay, now
Mumbai. The company purchased bulk power from The Tata Power Company Limited and
retailed it in the suburban region. For information on the licensed distribution area of
Reliance Energy in 2008, please refer the map in Exhibit 1.

Over the years, the company extended its distribution activities to Delhi and Orissa. It also
took up Engineering, Procurement and Construction (EPC) activities in the power sector.
Besides, it also set up its own power generation units in Maharashtra, Kerala, and Andhra
Pradesh. In 1988-89, Mr. Dhirubhai H Ambani, founder of the Reliance Group, a group of
companies with business interests in the petrochemical sector, acquired a five per cent stake
in the company. In 1992, the name of the company was changed to BSES Limited. The
Reliance Group took over its management and control in 2003. Consequent to the takeover,
the name of the company was changed to Reliance Energy Limited in 2004. In the
subsequent years, it diversified into infrastructural areas such as construction of highways,
roads, bridges, metro rail and airports, and manufacturing of cement. The company’s name
was further changed to Reliance Infrastructure Limited in 2008 to reflect its diversified
operations. ‘Reliance Energy’ was retained as the brand name under which Reliance
Infrastructure distributed power in the licensed area of Mumbai. Mr. Lalit Jalan, an MBA
from Wharton School, MS in Computer Science from the University of Pennsylvania and a B
Tech from IIT Kanpur, was appointed as the CEO of the company. The Board of the
company was managed by eminent professionals from diverse fields.

Prepared by Professor Mukund R. Dixit, Indian Institute of Management, Ahmedabad.

Support provided by the executives of Reliance Energy in developing the case, and funding support
provided by the Research and Publications Division of Indian Institute of Management, Ahmedabad,
are gratefully acknowledged.
Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for class
discussion. They are not designed to present illustrations of either correct or incorrect handling of
administrative problems.
© 2014 by the Indian Institute of Management, Ahmedabad
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The Act

With a view to augment capacity in the generation, transmission, and supply of electricity
and promote competition, the Government of India had opened the power sector, hitherto
reserved for the central and the state government enterprises, to companies in the private
sector. The State Electricity Boards were asked to unbundle generation, transmission, and
distribution of power and promote independent companies to look after these activities and
induct competition in each of these segments. A separate act called Electricity Act 2003 was
passed towards this effect. Under this, each State Government was required to set up an
Electricity Regulatory Commission to regulate the tariff and competitive activities of the
players. The Maharashtra State Government had set up Maharashtra Electricity Regulation
Commission (MERC) to oversee the functioning of the players and approve the tariffs. The
players could appeal to the Appellate tribunal if they were not satisfied with the judgment
of the commission.

Activities and their Organization

By 2008, Reliance Energy served 2.8 million customers as against 2 million customers in
2000. The customers were categorized into subsidized customers, forming 75 per cent of the
total customer base, who paid tariffs lower than Average Cost of Supply, and subsidizing
customers who paid tariffs higher than Average Cost of Supply. Another classification
adopted by the company was into categories such as premium, high value, mid-segment,
and mass segment customers based on contribution to bottom line. The premium and high
value customers comprised of malls, hotels, hospitals, institutes, government offices,
industrial units, high end apartments and residential complexes. The mid and mass-segment
comprised of slums, low and middle class residential customers. Reliance Energy had noted
that their customers were highly dispersed, and also that electricity was essential for
sustaining the daily lives of the customers. Electricity was with them from early morning
when they got up till they switched it off to go to bed. It was with them in their education,
entertainment, office work or play or relaxation. It participated in their festivals and get
together celebrations. Its presence was seldom noticed, but its absence was definitely
noticed.

Till 2004, the company was organized into five geographical divisions – North, East, Central
South, and South Central. Each geographical division was responsible for operations and
maintenance, commercial, recovery and customer interface. The activities of the division
were integrated at the corporate office. In 2004, the divisions were split into Operations and
Maintenance, and Business. They reported to Head, Business, and Head, O&M, respectively,
at the corporate office. Between 2004 and 2005, the company recruited five professionals
from various businesses outside the power industry and posted them as the heads of
various divisions. The idea was to treat electricity business in a competitive situation as fast
moving consumer goods and bring in similar management systems and processes. The
Branding Function located in the corporate office offered branding support to all the other
functions of Reliance energy in providing unified communication to the customers.

Operations and Maintenance

As a distributor of power, Reliance Energy procured power in bulk from Tata Power, a
power generating company of Tata business group, Dahanu Thermal Power Station –
Reliance’s own generating unit, and independent power producers. The Operations and
Maintenance division of Reliance was responsible for assuring the quality of power and
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responding to customer complaints. On receiving a complaint from a customer, the division

dispatched a line man who attended to the complaint. In case of major faults, a supervisor or
an engineer visited the sites and attended to the complaints. In 2008, Reliance Energy had
assured 99.9% supply. The peak demand for power in 2008 was 1,464 Mega Volt Ampere
(MVA) as against 1,408 MVA in the previous year. The company had been able to utilize on
an average 72.92 per cent of the capacity as against 69 per cent in the previous year. The
installed capacity of distribution transformers had increased by 245 MVA to 3,648 MVA.
With the addition of 189 new substations, there were 4,909 substations at the end of the year.
The company continued to focus on control of loss of power through a variety of technical
and physical means mentioned below.

 Maintenance of network loading at an optimum loading level.

 Refurbishment and replacement of old cables and distribution transformers.

 Installation of capacitors to reduce inductive loads in the system.

 Implementation of Distribution Management System measures including installation

of fault passage indicators.

Business Function

The Business function of Reliance Energy was concerned with the following activities:

 Tariff related affairs: Fixing the tariff and getting it approved by the regulatory
authorities.

 New Connection and Installation: Responding to new connection requests and

installing the necessary equipment for supplying power and billing for the power
used.

 Metering and Billing: Reading the meters and preparing bills for the electricity
consumers.

 Collection and Recovery: Collection of the payments made through various channels
and recovering dues.

 Vigilance and Theft Control: It was noticed that a few customers engaged in
misdeeds relating to the use of power. This had to be checked through regular
vigilance.

 Regulatory Affairs: Interface with the Maharashtra Electricity Regulatory

Commission and other regulatory authorities related to the distribution of power.
The Regulatory Department enabled interactions with business heads and other
business verticals for matters relating to tariff fixation, submission of cost details,
appeals for revisions and obtaining licences to continue to distribute electricity.

Each customer connection was provided with an electric meter that measured the quantity
of electricity consumed. At the end of the month, Reliance staff members noted the meter
readings, prepared a bill for the electricity consumed, and sent the bill to the customers. On
taking over, the Reliance Energy team had redesigned the bill and presented it in English,
Hindi, Marathi, and Guajarati, the languages understood by the customers. A bill in Braille
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was also brought out to help the visually impaired customers. In addition to the amount to
be paid, the bill carried education tips, personalized messages, past consumption trends. The
date of the next meter reading was also announced in the bill. The bill amount was also
communicated in an SMS alert on the customer’s mobile phone. The next meter reading
dates were also conveyed in an SMS, a day earlier to the actual meter reading date. There
was a provision for sending the bill by e-mail to registered customers. In addition, the
company provided energy audit services to its customers and helped them cut down
electricity costs. Information on payments made, status of Electronic Clearance Scheme
(ECS) / Voluntary Deposit Scheme (VDS) services were also sent through SMS. The
payment options available to the customers included payment at Reliance customer care
centres, collection centres, authorized vendor outlets, authorized branches of banks and
drop boxes, pay-by-SMS and online payment.

In accordance with the mandate of Central Electricity Authority, Reliance Energy had
begun installing electronic meters and by 2008, had replaced 1,61,810 single phase and
20,359 poly phase electromechanical meters and had installed electronic meters for all new
consumers. If payment was not made within the stipulated time, the company charged a
penalty, and disconnected the power supply if nonpayment persisted. The supply was
restored only after the full bill was settled. The company had set up a recovery division to
attend to these issues. The Reliance customer care centre addressed the grievances of the
customer like excess billing, and also responded to requests for new connections, duplicate
bills, and complaints about erratic supply or failures in supply. Customers could also call a
toll free number on 24x365 basis and register their complaints or post their queries. The call
centre was managed by the Reliance BPO located in Dhirubhai Ambani Knowledge Centre,
New Mumbai. Customers could also log on to a website www.rinfra.com and register their
complaints and requests, engage in chats or make calls and access useful information.

Setting up the Customer Service Function

In January 2004, Mr. Lalit Jalan restructured the organization to meet its vision of providing
international standards of customer care and face emerging challenges. One of the initiatives
was to set up a separate customer service function. Mr. Jalan was clear that the challenge
was to reinvent customer service in the distribution business and link it effectively with
other operations of the company.

To begin with, it was found necessary to enhance the attitude of the employees towards the
customers before promising the customers a qualitatively different opportunity to relate to
the company. Reliance Energy leadership noted that there was a need for attitude building
of employees towards managing customer expectations. This had resulted from operating
unchallenged for close to seventy-five years in a monopoly market. Some manifestations
were extended customer waiting time at the centres, repeat customer visits, inadequate
handling of agitated customers, etc. A customer care team under Head, Customer Service,
was put together by recruiting people from other companies with a good track record, not
necessarily with a background in power sector. The idea was to make a clean break and not
worry about the burden of unlearning.

Reliance Energy benchmarked the infrastructure of the erstwhile customer redressal cells
against financial services and telecom sector companies and prepared a template of the
customer friendly design of customer care centres. Based on the design, eight customer care
centres (CCC), two in the North, two in the East and one each in South and Central and two
in South Central parts of Mumbai were set up. Starting mid 2004, each centre worked from
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Monday to Saturday from 9.30 am to 5.00 pm with a lunch break from 1.00 pm to 1.30 pm.
A single window concept was developed to meet all the customer requirements, namely,
new connection, complaints, change of address, payments, and reconnection. Earlier there
were separate counters for each task of the customer. In the new design, it looked more like
a financial service outlet with a queue management system and other customer friendly
services. In addition, a call centre was set up to attend to the customer complaints twenty
four hours a day for all the 365 days. The customers could call a dedicated number (made
toll free subsequently in 2009) and interact with the customer care professionals. The
customers could get clarifications regarding payments, meter readings, request for duplicate
bills, no supply complaints, and report hazards like fire and shock.

IT Implementation

Erstwhile BSES Ltd had also taken up major initiatives in computerization since 1982. It had
implemented Supervisory Control and Data Acquisition System (SCADA) system in January
2000. SCADA was a sophisticated system that enabled the company to acquire data on the
performance of the power distribution infrastructure. On taking over, Reliance Energy noted
that the computer applications were sporadic and unintegrated. There were applications of
various software vendors on various platforms. It decided to integrate them with one
package and gain efficiency. Accenture, an IT and management consulting company, was
appointed to review the various applications and suggest an integrated package. The
consulting company recommended the installation of an Enterprise Resource Planning
(ERP) package developed by SAP, a German company. The recommendations were
accepted and the ERP was implemented in 2005. SAP provided an integrated approach to
the management of various functions. It provided an opportunity to access customer related
data centrally. SAP also enabled the company to monitor the ‘meter to cash’ cycle – the
activity set from reading the meter to obtaining cash payment by the customers. The focus
was on being technology driven. This enabled the company to use technology intensively in
catering to the needs of the customers. Figure 1 provides a perspective of the applications of
technology.
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Figure 1: Customer and Technology Applications

Source: Company Records

SCADA: Supervisory Control and Data Acquisition System,
GIS: Geographical Information System, DMS: Distribution
Management System, FPI: Fault Passage Indicator, APFC: Automatic
Power Factor Correction, EMS: Equipment Management System,
ISU: CCS: Industry Solution Utility-Customer Care Solution,
AMR: Automated Meter Reading, MRI: Meter Reading Instrument,
OMS: Outage Management System, OFC: Optical Fibre Cable.

Employees

In 2008, the customer care function employed 90 people, spread across eight customer care
centres, each centre having 10-12 members. They had been with BSES for more than fifteen
years and were mostly science or commerce graduates from local colleges. The average age
of the male members was 43 and that of the female members was 40. The workforce was
unionized and the union often influenced policy and process formulations, and decisions.
The employees were routinely exposed to standard training programmes but rarely got
opportunities for focused and customized programmes.
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The employees stayed far away from the workplace and had to commute for more than 45
minutes to reach their workplace. A typical routine before getting to the desk to work was
freshening up, performing a small pooja and exchanging pleasantries with colleagues.
Beverages and snacks during office hours were served at the workplace by the canteen staff.
The employees brought their lunch in a tiffin box from home or went out for lunch during
the lunch hours. It was noted that the employees tended to limit themselves largely to the
work assigned to their desks, solved their problems themselves and did not consult their
colleagues. This at times had resulted in customers having to go from one counter to the
next to seek solutions and return the next day, if a satisfactory solution was not found.
Repeat visits of the customers were not uncommon.

Two main training institutes – Versova Technical Training Centre (VTTC) for Technical
Training and Reliance Energy Management Institute (REMI) of Reliance Energy met the
behavioural and developmental training needs of the company under the leadership of
Public Private Partnership Model (PPP) since 2008. REMI was recognised as a unified
training centre when Reliance Energy diversified into infrastructure, cement and
transportation sectors.

Customer Satisfaction Survey

In October 2008, Reliance Energy leadership decided to check how the new initiatives of the
customer service function rolled out since 2005 in the endeavour to deploy its vision and
mission to gain competitive advantage against the background of Electricity Act 2003 had
been perceived by the customers, and to what extent they were satisfied with the service
provided at the CCCs. An independent market agency was commissioned to survey the
customers and report the findings. The agency, in collaboration with the customer services
team identified the following parameters to gauge the satisfaction levels of the customers
visiting the customer care centres. It had interacted with a sample of 1450 customers and
submitted its report. The report indicated that 22% of the respondents perceived that their
level of satisfaction with the service was between ‘very good’ to ‘excellent’. The overall
quality of customer care executives was rated between ‘very good’ to ‘excellent’ by 26% of
the respondents. Similar was the response for the overall quality of customer complaint
handling. 14% of the respondents had rated the customer care experience between ‘fair’ and
‘poor’. Similarly, 20% of the respondents had indicated that the quality of customer care
executives and the customer complaint handling was between ‘excellent’ and ‘very good’.
Customer service leadership was nonplussed by the results. They had not expected such a
low score. They were especially concerned about behavioural and functional scores of CCC
employees.

Employee Satisfaction Survey

Parallelly, an employee satisfaction survey was also conducted by an independent

psychologist to sense the level of satisfaction of the employees in the customer care centres.
The survey attempted to capture employee loyalty scores, and employee scores on task and
people factors. The survey revealed that 68% of the employees were truly loyal to the
organization. 78% of the employees agreed that the company showed concern, valued ideas
and recognized achievement. In comparison, 69% of the respondents opined that the
company was fair. The consultant had pointed out that the industry average for these factors
was around 58%.
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Task before Leadership team of Reliance Energy

In the context of the above results, the leadership team of Reliance Energy was required to
review the implications of the customer satisfaction survey, and think through a set of
initiatives to strengthen the customer employee interface for sustainable competitive
advantage. The leadership team was fully aware that Mr Lalit Jalan would want the
initiatives to be sustainable, future looking and non-imitable as envisioned in its vision and
mission to give Reliance Energy a strategic competitive advantage. They also desired that
the quality of service of Reliance Energy should be of international quality.
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Exhibit 1
Geographical Coverage of the Distribution Area

Source: Company Records