BHEL profit dips 8.6%; debt burden at Rs 40K cr

* CMD says the company will strive to recover dues by July

Indias largest power equipment producer Bharat Heavy Electricals Limited (BHEL) reported a first ever dip in profit in more than a decade. The 8.6 per cent dip in its profit for the financial year 2012-13 is,however,better than expectations,said analysts.

Company CMD B Prasada Rao said they have built up an overhang of Rs 40,000 crore of debt.

Last year has been a difficult one as payments have not been forthcoming, Rao told reporters after releasing the results.

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Angel Broking research analyst for capital goods,Amit Patil,wrote a note saying BHELs top-line growth of 1 per cent year on year beats street estimates as well as our estimate of 3.6 per cent decline. Although,net profit declined to Rs 6,485 crore,it was still better than expectations. Share price of the company closed the day with a 2.62 per cent gain at Rs 182.35.

The Indian power sector has been hit by a combination of stalled projects and environmental problems through most of the past three years.

Those which use coal as fuel have an additional problem as supplies have lagged demand.

This has hurt the order flow for power equipment as generation companies have cut back on fresh investments from producers like BHEL.

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Rao,however,said the worst is now over for the sector. He said the company had stopped supplying equipment and providing services to some projects following non-payment of dues by the project developers during the year. It is not that we deliberately stopped supplies but we needed the cash flow. With constraints and capital cost shooting up,we took the step.

The CMD said BHELs order inflow has risen to Rs 31,528 crore as on March 31,2013,from Rs 22,096 crore in the previous fiscal,with a jump of 42 per cent.

BHEL is however unlikely to meet the 12th Five Year Plan target of a Rs 1 lakh crore order book.

The power equipment producer was also hamstrung by the higher pay out to its 49,000 employees.

The bottomline

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The Indian power sector has been hit by a combination of stalled projects and environmental problems through most of the past three years

This has hurt the order flow for power equipment as generation firms have cut back on fresh investments from producers like Bhel

BHELs order inflow,however,rose to Rs 31,528 cr against Rs 22,096 cr in the last fiscal a jump of 42%

The company has stopped supplying equipment and providing services to some projects following non-payment of dues by the project developers during 2012-13