BHEL posts Rs 138 cr profit in Q2FY17 after 14 quarters of negative topline growth

Bharat Heavy Electricals Limited (BHEL) registered a topline growth of 12 per cent at Rs 6,780 crore and posted a profit before tax of Rs 138 crore as against a loss of Rs 293 crore in the corresponding period last year. This is after 14 straight quarters of negative topline growth that BHEL has registered positive growth. The turnover of the company increased to Rs 6,780 crore in Q2FY17, from Rs 6,070 crore during the corresponding period last financial year.

The company said strategic initiatives put in place by the new management have begun yielding results and the company is well on its way to getting back on the growth trajectory.

"We are resolutely focused on achieving the immediate target of regaining growth. Specific steps of expeditious execution and cost cutting coupled with efforts to enhance executable order book have been initiated by the company," said Atul Sobti, the newly appointed chairman and managing director of BHEL.

The company said that as part of the new shift in the corporate plans, it will be creating new verticals to capitalise on the massive infrastructure spending by the government. "Special focus would be on Indian Railways, defence and other industrial products to drive the next wave of growth," said the company’s statement.

BHEL would also focus on sustainable energy development by offering engineering, procurement and construction (EPC) solutions in solar and an environment-friendly supercritical technology in the thermal sector.

The company has an order book position of Rs 1,03,300 crore at the end of the second quarter of this financial year. In the first half of the current financial year, BHEL’s turnover has shown a double-digit growth of 19 per cent and profit after tax has increased to Rs 187 crore compared to a loss of Rs 130 crore in the corresponding period of the previous year.

The lull in the power sector had affected the whole supply chain, with EPC players feeling the heat of decreased orders. (Read more http://www.business-standard.com/article/economy-policy/power-sector-s-woes-now-spill-over-to-equipment-makers-115081000046_1.html

EPC companies like BHEL, Alstom India, Larsen & Tourbo, Lanco Infratech and Bharat Forge etc are witnessing subdued demand from the power sector which has led to their order pipeline going dry. Profits of BHEL plunged by 82 per cent during Q1 2015-16 over the past year, owning mostly to their decrease in sales to the power sector.