Faster project execution lifts BHEL net by 33%

CORPORATE SCORECARD

The company has posted a net profit of Rs 384.41 crore for the quarter compared with Rs 288.91 crore posted in the corresponding quarter of the previous financial year (2007-08).

"The huge profit is the result of a highly packed order book of about Rs 96,000 crore and their timely execution. In fact, the net profit has been 2 per cent above what was targeted by the company," said a senior official of the company.

Total income increased by 34.32 per cent at Rs 4,620.98 crore (Rs 3,440.24 crore).

This comes at a time when the industry had been raising concerns about the company's order execution capabilities and expecting the company's margins to come under pressure due to high input costs.

"A major challenge for BHEL has been to secure a timely execution of orders owing to shortage of critical components," said an industry expert.

The equipment manufacturer faced critical shortage of castings and forgings in the last quarter ended March 2008, which according to experts had resulted in a dismal 4 per cent growth in revenues.

While only about 50 per cent of the orders booked by the company are covered by escalation clauses, experts have been expecting a better growth on the basis of the company's plans to add new manufacturing capacities.

The company has set a target Rs 25,000 crore in revenues and a net profit growth of 27 per cent by the end of the current financial year.

BHEL is the country's largest manufacturer of power equipment with a current manufacturing capacity of about 10,000 mw.

The company plans to ramp up capacity to 15,000 mw by the end of the current plan period.

Shares of the company's in today's trade declined by Rs 24 to close at Rs 1,506.45. The results were announced after the market hours. In the last one month, the share price has gone up by 7.19 per cent.

Currently, the company caters to around half of the power equipment needs of the country. But it is facing stiff competition from Chinese manufacturers such as Dongfang and Shanghai Electric.

The Chinese manufacturers are together going to supply above 20 per cent of the power equipments required in the current year to help the country achieve the target of 11,061 mw of capacity addition by the end of the year.