You are here: Home » Companies » Features
Business Standard

New orders slow down for India Inc in September quarter

This, as stalled projects increased by 7.6% in the quarter

Dev Chatterjee  |  Mumbai 

New orders back on slowdown lane in September quarter

After a pick-up in the first few months of the Narendra Modi government, the number of new orders bagged by Indian companies has fallen by 30 per cent in September 2015 quarter compared to the year-ago quarter, statistics submitted to the stock exchanges by Indian companies show.

In the September 2015 quarter, the Indian firms announced new orders worth Rs 46,976 crore compared with Rs 66,867 crore announced in the same period of FY15.

In the quarter ending June this year, Indian companies had announced new orders worth Rs 76,553 crore — the best quarter since the Modi government took charge at the Centre and promised to remove all the bottlenecks of the infrastructure sector.

New orders slow down for India Inc in September quarter
In the January-March 2015 quarter, the order inflow to Indian companies was down 11.85 per cent to Rs 49,599 crore on a year-on-year basis.

The slowdown in new orders in the infrastructure and power sectors comes in the backdrop of a report by the Centre for Monitoring Indian Economy, which said stalled projects increased by 7.6 per cent in the September quarter — mainly due to the steel sector, which accounted for 50 per cent of increase in the stalled projects. Two major stressed sectors — iron, steel and power generation — now account for 22 per cent and 30 per cent, respectively, of all stalled investment projects.

The slowing orders are attributed to a slowdown in the economy in which large projects are still stuck. Besides, Indian banks, which are the main financiers of corporate India, continue to struggle under the burden of stressed loans — at about 10 per cent of overall loans, analysts said.

“Unless stalled investments are revived, thus freeing up resources at banks, new investments may not prosper,” warned an HSBC report dated October 5.

According to CEOs, the Indian government is taking several steps to revive growth such as the promise to expedite Rs 5 lakh crore worth of orders in infrastructure, railways and power sectors to boost the economy. “The government is taking steps and we’ll see a pick-up in new orders only in the last quarter of this financial year,” said the CEO of a large firm.

With poor order flow in the September quarter, analysts are expecting Indian infrastructure companies to report weak numbers for the September quarter. “We expect weak execution increase for most engineering and construction companies due to lack of pick-up in order inflow,” said a Bank of America Merrill Lynch report.

Apart from the government, the public sector companies are expected to give orders in the coming months as almost every big company is investing in creating new capacity or expanding existing capacity.

In FY16, public sector firms will spend 16 per cent more in capital expenditure to Rs 1.5 lakh crore, which will result in big orders for Indian companies.

First Published: Sat, October 10 2015. 22:24 IST
RECOMMENDED FOR YOU