With its order book seeing a revival, the government is hopeful that Bharat Heavy Electricals Ltd (Bhel) can reverse the three-year long trend of declining profits.
Rajan Katoch, secretary, department of heavy industries, which controls Bhel, said: “One should expect Bhel’s turnaround over the next six to eight months. Large orders are under process which should help it record healthy numbers.”
Bhel, India’s largest power equipment manufacturer, has seen its revenue decline from Rs 48, 352 crore in 2011-12 to Rs 30, 788.6 crore in 2014-15.
Net profit during the same period has declined from Rs 11, 223.5 crore to Rs 1,450.4 crore. This has hit EBITDA margins have dropped by half from 22.6 % to 10.9 %.
In fact on January 13, 2015, Bhel’s market capitalisation of Rs 36, 300 crore dwarfed that of its rival Siemens by more than 10%.
“After these orders the future of the company looks relatively bright. As of now it is running at 30%-35% of its capacity, but soon we expect more orders to come in,” Katoch added.
Having said that, in 2015-16 the order flow of the company improved. Apart from a Rs 17, 900 crore order for a power plant in Telangana the company’s order book saw 60% increase in this fiscal. It has also emerged as the lowest bidder to supply equipment for a 1,300-MW joint-India-Bangladesh power project.
“The company will start delivering the equipment in phases of these orders in next three months,” Katoch said.