India Inc aims to repeat last qtr's performance

Bags orders worth Rs 14,000 crore in the first three weeks of 2012

India Inc expects to repeat last quarter’s strong sequential growth in order inflows in the three months through March. In fact, it has already received orders worth Rs 14,000 crore in the first 20 days of this calendar year, almost a third of the value of orders received in January-March 2011.

Orders are flowing to infrastructure companies from power projects, state governments for water projects and private companies for construction of buildings. The order flow data indicates some signs of revival in the capex plan of India Inc. In the December quarter, India Inc had posted 16 per cent growth in order inflows on a quarter-on-quarter basis, at Rs 46,429 crore.

Public sector mineral and metal company NMDC has signed a contract for a by-product plant package for its upcoming three-million tonne integrated steel plant at Nagarnar in Chhattisgarh. The total cost of the package is Rs 509 crore. NTPC also plans to take up another mega project in the South, a 4,000-Mw plant in Pudimadaka, near Visakhapatnam.(Click here for MATCHING STEPS)

Ramesh Chandak, managing director of KEC International, an infrastructure engineering, procurement and construction company, said, “Next year also, orders from projects in pipeline will continue to come, but the time will be difficult from the point of view of new orders from greenfield projects, as there are some delays in the capex plans of companies.”

Orders from PowerGrid increased by 108 per cent to Rs 11,240 crore in the first nine months of this financial year. According to an analyst at First Global Research, since the company awards 50-70 per cent of its total orders in the fourth quarter, it is most likely to award another Rs 10,000-12,000 crore of orders this quarter.

By bagging seven orders worth Rs 1,540 crore in the first 20 days of 2012, IVRCL has taken the lead in terms of the number of deals. Orders are for construction of water plants, buildings and roads.

Balram Reddy, director (finance), IVRCL, said, “The central bank has signaled a reversal in policy by cutting the reserve ratio. This will reduce the interest cost eventually, and the infrastructure sector will be looking forward for better order flows also.” As far as government orders were concerned, he said there were delays in processes like designs approvals and getting other clearances.

KEC International has put up a good show by getting three orders worth Rs 1,964 crore from domestic and overseas clients. It received orders worth Rs 1,253 crore from Saudi Arabia, the US and Afghanistan in various segments like transmission, power, water, cables and telecom.

Chandak said, “Order flows in the last quarter of a financial year are usually higher, as government utilities have to utilise allocations and see that orders are placed. Hence, for the next two months, order flows will be higher.”