It was one of the first major development initiative - inspired by the Tennessee Valley Authority (1933) in the US - of Independent India. Six decades down the line, the Rs 7,000-crore Damodar Valley Corporation (DVC) – a statutory organisation, created by DVC Act, 1948 – is now preparing for a corporate makeover.

Over and above its chain of barrages and dams (on the Damodar and its tributaries), serving the dual purpose of controlling flood as well as irrigating nearly 6 lakh hectares of farm land in West Bengal and Jharkhand through 2,500 km of canal network, DVC runs nearly 5000 MW power generation capacities (mostly thermal). Another 2000 MW capacity is under implementation.

Corporate plan

It also has a 1000 MW joint venture with Tata Power. While a Corporate Plan, drafted by Deloitte, is now finalised at the DVC end, the corporation is slated to make a presentation before the Union Government this month to initiate implementation process. If it gets the go-ahead, implementation will start as early as April 1.

Though DVC officials are tight lipped, sources at the corporation board – comprising representatives of West Bengal, Jharkhand and the Centre – told Business Line that post-restructuring DVC will continue with social objectives such as flood control and canal irrigation.

But business activities including power generation, transmission and distribution and, captive mining (four assets) will be brought under a corporate entity to be owned by DVC.

The move is expected to help DVC in introducing corporate accounting practices for the power business and unlock value through IPO. The corporation mooted a similar proposal way back in December 2007. Accordingly, a letter of intent (LoI) was also issued to KPMG in January 2008 for a ‘hand holding relationship till IPO’.

Though the initiative lost steam midway, sources say that the corporation had recently implemented profit-centre-based accounting practices, as part of the original agenda.

Accordingly, power and captive mining (in joint venture) are identified as separate verticals. Within power, generation and transmission and, distribution are put in a separate business units (SBU). Creation of mining SBU is under implementation.

Balance sheet cleansing

On the social sector; numerous schools, hospitals, social forestry, agriculture and other such projects are brought under a separate vertical. Opportunities are now explored to transfer such activities to societies and trusts to be funded by DVC. This will serve the dual purpose of cleaning balance-sheet as well as limiting the administrative cost.

Finance, however, is not the only area that received attention. Initiatives installation of optical fibre ground wire across the transmission grid and; renovation and modernisation of old capacities will surely make system more stable and efficient. Energy accounting across distribution network, e-tendering and restructuring of manpower are expected to help cut flab.

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