Despite an easing of raw material costs and lower employee expenses, the weakness in BHEL’s sales in the January-March 2013 quarter carried through till the profits. A general economic slowdown and pricing pressures saw top-line growth dip by about two per cent to Rs 18,850 crore over the same quarter last year. Besides this, lower other income and higher finance costs - partly due to a stretched working capital cycle - pulled down profits. Net profits for the quarter came in at Rs 3,237 crore, four per cent lower than last year.

margins weak

The pressure was more visible in the industrial segment, which brings in about one-fifths of the revenues. Margins in this segment dropped to 21 per cent from around 30 per cent in the same quarter last year.

Power segment margins remained more or less flat at around 26 per cent. Overall operating margins stood at 24.2 per cent, about a percentage point lower than the January-March 2012 period.

Delayed orders

On the orders front, BHEL received a boost from long-pending orders finally being awarded. These include orders under bulk tendering by NTPC and the Suratgarh project of the Rajasthan SEB.

This, along with orders from Central and state-owned enterprises, helped total order inflow for the March 2013 quarter come in at around Rs 20,957 crore. It ended the year with total order inflows of Rs 31,650 crore, making for a 43 per cent increase over 2011-12. The order inflow was slightly above the company’s expectations of Rs 25,000-30,000 crore.

However, cancellations and higher execution of orders resulted in the outstanding order book at end-March 2013 dropping 15 per cent to Rs 1.15 lakh crore, compared with end-March 2012. While the management expects the orders from the government sector to continue, the outlook at this point is nothing to write home about.

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