The state of BHEL’s order book at the end of the December 2013 quarter couldn’t have been more depressing; at R1 lakh crore, the backlog had shrunk to its lowest level in 22 quarters. With enough power generation capacity stranded for fuel, it wasn’t surprising that orders for turbines and boilers were down to a trickle. However, thanks probably to gencos having signed more fuel supply agreements with Coal India Ltd (CIL), there’s been a smart pick-up in BHEL’s orders in recent months with an estimated R12,000 crore of orders flowing in during Q4FY14; while orders for equipment tend to be lumpy, the amount is more than the combined inflows in the nine months to December. While BHEL might not manage to bag orders of R40,000-45,000 crore next year, like it used to before the slowdown set in, the jump in orders in recent months is encouraging and might be the first indication of a revival in the demand for capital goods.
Indeed, there are other sectors that seem to be showing some signs of bottoming out; in the commercial vehicles space, a fairly good proxy for the economy, the year-on-year fall in the output of medium and large trucks has slowed significantly in January and February. While the yoy fall in M&HCV volumes in September was nearly 42%, in January it was a relatively smaller 17.4%. Given how truck utilisation levels are at historic lows of around 50-55%, which effectively means half the country’s fleet is idle, the troughing out could take another six months—as rating agency CRISIL points out, a modest recovery could take place in the second half of FY15 primarily driven by a pick-up in mining activity. A turnaround in the passenger car industry might not be far away either—February saw an increase in volumes of 1.4% compared to a fall in almost every month over the past year and the recent cut in excise duties has allowed manufacturers to lower prices which should spur sales. The good news is that some infrastructure build-up is taking place; the contract for the third line of the Mumbai Metro is expected to be awarded in a few months and construction of the R23,000 crore underground corridor likely to start in early 2015. Now that NHAI is reworking highway projects, some of these should get off the ground. But for capacity utilisation in the steel and cement sectors to rise