The bad run for country?s largest power equipment maker, Bharat Heavy Electricals, continued in the July-September quarter of the current fiscal with the company reporting a sharp 64.22% y-o-y drop in its net profit, the fifth successive quarter where the profit fell compared to the year-ago period.
BHEL?s net profit fell to R455.95 crore in Q2 from a level of R1,274.45 crore in the corresponding period of previous fiscal, on a 11.31% drop in revenue to R9,842.25 crore. This clearly indicated the pressure on prices. In Q1 this fiscal, BHEL?s profits nearly halved from the year-ago period, at R465.4 crore.
The slowdown in the power sector and consequent paucity of new orders along with fuel and clearance-related delays impacted the equipment maker?s sales adversely.
The company, which is also facing delays in getting payments from its current customers, is unable to find new buyers as several power projects are either delayed or run into bureaucratic hurdles forcing it to service largely its existing clients.
BHEL shares closed at R140.45 on BSE on Wednesday, a fall of R1.85 or 1.30%. The fall in top-line is largely on account of reduced margins with the company being constrained to offer discounts to clients.
The rupee?s fall jacked up import costs which also hit profitability. The company also attributed the sharp fall in profitability to its decision to merge Heavy Plates and Vessels Plant (HPVP) ? erstwhile Bharat Heavy Plate and Vessels (BHPV) ? with itself.
Financial results for the second quarter includes results of HPVP which clocked a turnover of R16.69 crore and profit before tax of R(-)191.35 crore. The impact on reserves and surplus is reduction by R311 crore, the company said in its filing to exchanges.
?In view of this, figures for the current reporting period are not comparable with the previously reported period figures,? the filing said.
?The situation is very bad as fresh orders are not coming while execution of earlier orders have also slowed down resulting in lower supplies by BHEL. While the performance is expected to improve in coming months, the company will still be far short to fully utilise its annual power equipment capacity of 20,000 MW,? an official related to the company told FE requesting anonymity.
While the company has not disclosed the the amount of new orders booked during the quarter or the first half period, as per an internal government report BHEL booked orders for a mere R4,470 crore or 22.44% of the H1 target in the six month period of current fiscal ended September.
