BPR Case Study: ASEB

Genesis
ABC State Electricity Board (ASEB) was established in 1961 to undertake
generation, transmission, and distribution of electricity in the State.
Over the years, ASEBs financial health deteriorated due to various
factors.

It survived due to subsidy from the State Government; in 1995-

96, the State subsidy payable had gone into arrears totaling Rs.369 crore.
The gap between peak demand and supply had reached almost 45 per cent by
1993-94.

Though, the consumer strength increased to more than ten lakhs,

the overall financial performance deteriorated. Table below shows the

comparative position of ASEB for 1994-95.
Return on Net
Fixed Assets
ASEB
1EB
2EB
3EB
4EB
5EB
6EB

-16.4%
-11.83
-12.79
4.74
-0.08
-16.2
-13.3

Non
Technical
Losses
27%

7%

Debtors
in Sales
Months
7.6
6.1
7.0
4.6
1.6
4.2
1.83

Tariff
as % of
Cost
82.8%
87.8
80.3
99.6
97.2
71.6
74

PLF
34.9%
53.1
37.8
56.5
48.3
51.4
52.9

Customers
per
Employee
38
153
53
93
99
80
60

Source: Annual Reports of the respective SEBs.

ASEB Organization structure

Each distribution division was managed by a divisional manager (Executive
Engineer) who reported to the circle manager (Superintending Engineer).

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The latter, in turn, reported to the Zonal General Manager

(Chief

Engineer), who reported to the Board of Directors at the corporate office.

Each division was divided into sub-divisions which were managed by
Assistant Engineers. Each sub-division was again divided to sections which
was managed by a junior engineer.
Financial performance of a sample division
1996

1997

(Amount in

(Amount in

crore)

crore)

Collection
Power purchase cost
Employee salary
Maintenance and other costs

10.4
7.8
6.2
4.4

10.8
8.1
6.6
4.8

Net profit

-8.0

-8.7

Processes followed by the utility

Energy Delivery

Meter
Reading

Bill
Preparation

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Bill
Distributi
ontion

Collection

Credit
Control

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As we can observe, the organization was collecting little over 50% of its
expenses. As ASEB was a government organization, jobs was secured and
promotions were time bound. There was little incentive for officers to
ensure adequate performance of their units.

Many employees were actually way over retirement age but had official age
below retirement age. The organization had strong unions and unions
resisted any attempt to remove unproductive employees.

Many of the processes such as meter reading and bill preparations were
manual. This required significant effort and cost for the organization.
Since the bills being generated manually, often customers got one bill for
a period of 6 months. This resulted in significant amount. Since the
customers were not mostly in a position to pay 6 months bill plus arear in
one go, they usually lodge some sort of complaint. This in turn again
consumed significant effort on the bill preparation team.

Since all officers of the organization came from engineering function,

they had little interest in carrying out commercial activities for the
organization.

Energy accounting for the organization was carried out at the division
level on an annual basis. There was a consolidated profit and loss statement
for the organization.

Assignment

Your team has been assigned to assist the organization in conducting BPR program
for this organization.

What are the aspects you would like to change and why?

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Please prepare an action plan (between 8 to 10 slides) as a team.

Each team will be allowed 10 minutes to present its analysis and 5 minutes for
question answer.

All teams must submit their assignment presentation prior to the session.

This assignment carries 2.5% of total weightage.

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