BHEL Net Profit Slips by 58%

Quite in-line with the sluggish growth during last fiscal, BHEL’s performance in Q1 also remained stagnant as its net profit witnessed a new low at Rs 193.5 crore during quarter ending June 2014 as against Rs 464.43 crore earned during corresponding period last year, a drop of 58%. The company’s topline performance also slipped to Rs 5502.7 crore during Q1 as against Rs 6996.6 crore earned in previous year, registering a fall of 21%.

Company management has put onus of this performance on the slackening in power sector demand and dearth of new orders from the sector. “Till now I haven’t seen any improvement on the ground as far as new order from power sector is concerned. Though government is trying very hard but it will take some time to show some improvement”, said B P Rao, CMD, BHEL.

Power sector equipment segment remained the biggest laggard for the company as revenue from the segment came down to Rs 4144 crore as against Rs 5378 crore earned last year and Rs 12210 crore earned in the preceding quarter. Industry segment also witnessed a decline and augmented the woes of the company. Order book position also plummeted during Q1 from around Rs 1 lakh crore outstanding during Q4 to Rs 97400 crore, clearly showing depleting order book owing to slowdown in both power and industry segment. In coming days, double whammy for the company could be the liquidity crisis as lot of money has been stuck with the equipment purchaser due to slowdown and very slow pace of power project execution.

Company is waiting for new orders from NTPC for its new plants and is hoping that new initiatives taken by the government will soon show results. Company is also focusing on solar energy segment as new announcement has been made in budget and it is already working on a 4000 MW solar power project in Rajasthan with few other companies. All in all it seems that situation will continue to be the same for next couple of years and will only see some improvement during FY16.