"Be not afraid for all great power throughout the history of humanity has beenwith the people. From out of their ranks have come all the greatest geniuses of the world.Be not afraid of anything. You will do marvellous work!" - The visionary SwamiVivekananda
The philosophy of this great visionary appears more relevant now than ever before.
India stands at a rare inflection in its existence when there is a coming together ofpolitical stability national vision and economic reforms. We believe that India willretain its position as the world's fastest growing economy; from a sectoral perspectivethis means that there will be larger demand for electricity; the conventional preferencefor generating electricity will have to be balanced with a corresponding increase in powertransmission sector investments.
India's transmission network as on March 2017 was 367851 circuit kilometers oftransmission and 740765 MVA of sub-station capacity fed by 326.8 GW of generating capacityas in March 2017.
While generation has grown more than 11% since March 2011 transmission capacity hasgrown less than 7% since then. The ratio of investment in transmission and distribution topower generation has remained
at less than 50%.
The long-standing skew between power generation and transmission is now reflected inregional imbalances. Northern and Southern India are expected to suffer an aggregatedeficit of 31.5 to 41.1 GW and 13 to 19.1 GW respectively. It will thus become imperativeto import power from power- surplus regions in India. With this in view we believe thatthe Central Government will make unprecedented investments to raise inter-regionaltransmission capacity from 59.5 GW in March 2016 to 91 GW in March 2022. Besides Indiaplans to increase renewable energy capacity from 57 GW in FY2016-2017 to 175 GW by 2022one of the largest global investments in renewable energy warranting specialisedcorridors for power evacuation. This increase will be in addition to a large share ofIndia's 3.40 lacs circuit kilometre network of legacy ACSR conductors which will need tobe upgraded.
I am pleased to state that the Indian government is addressing this national prioritywith the urgency it deserves. It has introduced several policy changes includingamendments to the Electricity Act coal auction and allocation Integrated PowerDevelopment Scheme Ujwal DISCOM Assurance Yojana and Deendayal Upadhyaya Gram JyotiYojana.
The UDAY scheme was launched to improve the financial health of DISCOMS and powerdemand. The scheme will enhance distribution efficiencies moderate power costs reducediscom interest outflow strengthen much-needed financial discipline align consumertariff with power generation costs and restructure the large debt of utilities. On theother hand the DDUGJY scheme will enhance rural power supply and strengthensub-transmission and distribution systems by separating electricity feeders for domesticand agricultural consumption. The country will need nine high capacity green-transmissioncorridors to evacuate and synchronise the grid across electricity produced from renewableand conventional sources.
I am pleased that this transformation in intent has been carried forward faithfully inpolicy content. All projects are now awarded through international tariff-basedcompetitive bidding and for an increased concession period by ten years to 35 years; therehas been a relaxation in norms to accelerate project construction and developmenttimelines; there is a stronger payment security mechanism that protects the interests ofasset owners; the transmission sector share in power sector investments is expected toincrease from 20% (FY2012-16) to 33% (FY2017-21); of the 34 inter-state transmissionprojects awarded through competitive bidding 26 projects were awarded to the privatesector.
As India's largest private transmission
player Adani Transmission is expected to capitalise most effectively on this nationaland sectoral transformation. In the last five years we invested ~US$2 billion in thisbusiness. We currently operate around 5448 circuit kilometer of transmission lines. Wehave invested in the latest technologies resulting in the highest network availability ofover 99.8% in the country which corresponds to the best global standards.
At the end of the year FY 2015-16 the Company had 5050 circuit kilometers ofoperational transmission systems addressing power needs in Northern and Western India. Iam pleased to state that the revenues for FY 2016-17 were H2901.55 crores and bottom-lineH416.43 crores. Our operational EBIDTA margin of 93.34% was one of the best in the sector.
To take the growth ahead the Company is constructing 2369 circuit kilometers inRajasthan Chhattisgarh Madhya Pradesh Maharashtra Jharkhand and Bihar which wereawarded through a Tariff Based Competitive Bidding process. During the current year weacquired GMR's transmission assets in Rajasthan. Following the completion of ourunderconstruction projects and acquisitions our network is expected to increase to 10425circuit kilometers which brings us closer to our stated 2020 target of 13000 circuitkilometers of transmission lines well ahead of schedule.
I am happy to report that in this business of critical national importance this sectorhas a lot of untapped potential. The government has outlined a US$53bn investment plan inthe country's transmission sector over five years the largest ever in a compressedtime-frame. The space is marked by only a handful of large Indian players.
Adani Transmission is attractively placed to capture the vast upside: we are possiblythe fastest-growing power transmission company in the world. We enjoy a leadershipposition in India's private power transmission sector. We possess a robust Balance Sheetthat provides a combination of accruals and the opportunity to mobilise additional debt togrow the business. We have established operating benchmarks that that are among the bestin the country a competence that promises to protect long-term competitiveness. We intendto sustain our momentum to own and operate 20000 circuit kilometre lengths with acorresponding asset value of H40000 crore by 2022.
At Adani Transmission we believe that community welfare and environment responsibilitymust be reconciled with corporate growth. The result is that we are proud of havingtransformed destinies of 1 lac students 6 lac healthcare beneficiaries and more than 11lacs people across 1470 villages through better physical and social infrastructure.
Our company is driven by a vision to be the globally admired leader in the transmissionbusiness with a deep commitment to nation building. We shall be known for our scale ofambition speed of execution and quality of operations. The business outlook appearsattractive and I would like to thank our customers employees shareholders bankersgovernments and the Board for their continued support.