Considering the macro picture, India's power sector has a huge opportunity to grow in the future. However, at present, it is beleaguered by multiple challenges. Sluggish industrial demand, unsustainable capacities, lack of long-term PPAs and poor financial health of DISCOMs are adversely impacting the power sector. The Government has taken multiple policy initiatives to strengthen the power sector including path-breaking measures like 24/7 power for all by 2019, increasing domestic coal availability, a proposal to auction coal linkages under SHAKTI and the Ujwal DISCOM Assurance Yojana (UDAY) scheme to improve financial health of the DISCOMs. These measures are expected to provide 'Electricity for all at a fair and just price' which is absolutely necessary as we strive to sustain our position as one of the leading economies of the world.
In the coming years, the emerging power demand will have to be addressed with clean and efficient technologies to meet global commitments to reduce emissions. We are now seeing a lot of focus on solar power, with auction based tariff bids reaching all-time lows. Although a part of the reduction can be attributed to decline in equipment costs, it also raises questions on the long-term viability of projects at such low tariffs. The Government has set ambitious targets for setting up renewable capacities in India; and the viability of projects will be a crucial factor to achieve the long-term goal of energy security for India. In this context, the recent draft proposal of Government to include hydropower as renewable energy and to stipulate a mandatory hydropower obligation (similar to renewable purchase obligation) is a welcome step.
As one of the leading industry players in the domestic sector, we maintained our relentless focus on cost control and operational excellence during the year. During the past year, we continued to move towards a leaner cost structure, reduced our debt levels, ensured prudent capital allocation and maintained efficient plant operations. While these efforts are likely to continue into the future, we would continue to evaluate relevant opportunities for growth - both organic and inorganic.
During FY 2016-17, we saw a continuation of the trend of poor power demand, translating into weak merchant off-take and lower tariffs. This got compounded due to an increasing trend in the price of imported coal, thereby impacting our standalone business. However, at a consolidated level our subsidiaries continued to function as strong pillars of support with their portfolio of long term PPAs and necessary fuel security, thereby insulating your Company to a large extent from the difficult business environment.
During FY 2016-17, your Company delivered a total turnover of ` 8,480 crore on a consolidated basis, achieving a net generation of about 21.6 billion Units. Of this, our hydro plants in Himachal Pradesh, which were acquired in September 2015, operated for the full year for the first time in FY 2016-17, contributing about 5.7 billion Units to the net generation.
We are working towards building a sustainable energy business that can withstand all challenges - present and future. Hence, it is important that we continue to be on the lookout for opportunities to invest wisely and build an enviable portfolio of power assets. Given the stress in the power sector, we are anticipating consolidation in the domestic space, which will offer us good prospects for investing for the future.
We believe our teams have the capability and the commitment to take us to the next level of growth and sustainability. We have steadily enhanced our investments in providing our people need-based training and handholding to build an army of future leaders. Our transformational DNA is best reflected in the way our people respond to challenges, learn from them and move forward to greater glories.
Before I conclude, it is worthwhile to mention that we will continue to work towards our mission to empower communities and help them achieve their aspirations. Besides, our interventions in conserving the environment and reducing the carbon footprint continue to be a priority for us.
On behalf of the Board and the entire leadership team, I thank all our stakeholders for their guidance and support in helping us build a value-focused and energised enterprise.
Best Wishes,
Sajjan Jindal
Chairman and Managing Director
