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Bharat Heavy Electricals Ltd (BHEL), the country’s largest power equipment manufacturer, posted a 6% decline in net profit for the financial year ended March owing to increased financing cost, delayed payments pulling down interest earnings and increased manpower cost.
This is the first time the company’s profits have been squeezed in eleven years since 2001 and reflected the general slowdown in the power sector.
The company posted a net profit of Rs 6,614.7 crore last financial year as compared to Rs 7,039.6 crore in the previous year. Total income of the company increased marginally by 0.6% to Rs 49,546.3 crore from Rs 49,244.4 crore in 2011-12. Revenue from power sector increased 4.5% to Rs 39.567 crore while industry segment revenue declined 9% to Rs 10,604 crore last fiscal.
The dismal revenue flow was a result of slowdown in order inflows, particularly from the private sector, that prevailed last fiscal.
The equipment giant has last month said it might miss its revenue target of Rs 1 lakh crore set for the current five year Plan period ending March 2017. “However, we do not anticipate a major problem as a bulk of our orders still comes from public sector companies,” Chairman and managing Director B P Rao had recently said.
Despite what Rao said was “depressing power scenario”, low-base effect pushed Bhel’s order inflow 43% during the year ended March 2013. The company witnessed fresh order flow of Rs 31,528 crore in 2012-13 as compared to Rs 22,096 crore in 2011-12. This is in stark contrast to the annual order inflow of around Rs 60,000 crore in the previous three financial years.
For the fourth quarter ended March, the company’s Profit after Tax (PAT) declined 4.2% to Rs 3,238 crore. Experts said the relatively small margin contraction of only 100 basis points year-on-year during the quarter still comes as a positive surprise on the operating front. “Bhel reported a 2.1% decline in top-line to Rs 18,850 crore as industrial slowdown continues to delay execution,” said Amit Patil, Research Analyst at Angel Broking.
Going forward, he expects order inflows to be tepid owing to investment slowdown and issues hurting growth of power sector.
The company’s share closed at Rs 195.8 on the Bombay Stock Exchange (BSE) yesterday, down 3.7% as compared to previous close.
