1. Lofty GDP data belies slowing activity in capital goods sector

Lofty GDP data belies slowing activity in capital goods sector

Even as data revisions have effectively positioned India as one of the world’s fastest growing economies this fiscal...

By: | New Delhi | Published: February 13, 2015 8:14 AM
GDP data, BHEL, L&T

BHEL and Larsen & Toubro continue to face headwinds. (Reuters)

Even as data revisions have effectively positioned India as one of the world’s fastest growing economies this fiscal, indicators of underlying activity in the economy fail to bear this out.

Bharat Heavy Electricals Ltd (BHEL) and Larsen & Toubro (L&T) — the two flag bearers of the crucial capital goods sector that is widely considered to be a proxy for investment sentiment — continue to face headwinds.

BHEL on Thursday announced a sharp 69 per cent drop in third quarter net profit at Rs 212.6 crore, hit by lower revenue and operating income. L&T, on Monday, had indicated that a recovery in its domestic business was “up to a year away” and had pruned its order book growth target to between 15 and 20 per cent for the fiscal ending March 31, against an earlier target for a 20 per cent rise in new orders.

It was the ninth consecutive quarter the BHEL’s earnings slipped on a yearly basis, with net sales of the state-run firm dropping 28.2 per cent to Rs 6,078 crore during October-December quarter from Rs 8,462.4 crore in the year-ago period, dented by sluggishness in both the power and industry segments.

A senior BHEL official said that capital goods manufacturing being a late-cycle business was expected to see some visible improvement “only after few quarters”. During the second quarter, the equipment firm had flagged another worrying sign of deferred payment from clients, reporting a marginal decline in receivables and that it was targeting a substantial portion out of opening balance.

During the third quarter, the earnings before interest and tax of BHEL’s mainstay power business crashed 62 per cent to Rs 458.7 crore, with margin falling 710 basis points at 9.4 per cent. The company said its outstanding order book was Rs 1,03,900 crore as on December 2014, marginally up from Rs 1,03,700 crore in the second quarter of this fiscal and Rs 1,00,600 crore from the third quarter of 2013-14.

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  1. H
    Harry Potter
    Feb 27, 2015 at 3:24 pm
    At LnT, the top-bres (schizophrenic Egyptian Mummies) have displa geriatric trait of biting more than they can chew and digest. Dear Investors/Analysts - Watch Out! LnT top-bres were on selling spree, leading the pack Chairman Mr Naik sold his LnT shares (Rs 1200 apiece) worth 70 crores in 20 days - March 2014. Post Q1-2014 results LnT plunged by 8 %, biggest intraday decline since July 2009. Hydrocarbon subsidiary suffered losses of 900 crores, sans stake at Dhamra Port (2500 crores) LnT would have posted losses. Modi /Market euphoria saved LnT going below Rs 1300 during q2, a striking closed range of 1200 of March 2014. Part stakes at LnT Inra sold to Canadian FII - (2000 crores), expecting VGF (Viability Gap Funding) of 3000 crores Hyderabad Metro project. Stake or post losses, Deep Sea or devil? Post Q2 results LnT share plummeted from high of 1673 to low of 1450 (17 Dec, 2014). Post Q3 results another big intra-day fall of 7.44 % and no wonder a 52 week low of 900 post Q4 results?------------------------------------------------------------Expensive CXO Maha Kumbh Mela at LnT - what is the number of CEOs at LnT and all its subsidiaries (138), their CTC? How far higher, this is to manage LnT group revenues of $14 bln than Mr Sikka (aged 46) of Infosys highest paid professional CEO (Rs 30 cr) in India, entrusted with business worth $ 8 bln in revenues. At LnT, just Chairman Mr Naik (aged 72) and group CEO Mr Vankatramanan are pegged at 21 and 14 crores. Information Age leaders, top-man of TATA group, Infosys, Microsoft are in their 40s, why this super 70s at LnT? Chairman Mr Naik’s jaw-dropping musings on succession – QUOTE- You find a man in the world who will kill himself four times a day, has worked for more than a hundred years-- There is no such person.-- None of us here (at senior level) are working for money -UNQUOTE. Please refer ToI article – Vibrant Gujarat summit Day 1: 25 private jets bring high-flyers. Excerpts – Cabinet ministers arrived via scheduled flights -- private jet of AM Naik left immediately after arriving –. Biggest shareholders at LnT are state owned LIC/UTI. To restore Insutional Integrity at LnT, PM Mr Modi should intervene to fix retirement age at L&T to 60 - ASAP!---------------------------------------------Like BCCI, L&T is no less cozy club, an Old-Men club enjoying Fire Proof jobs and stratospheric compensation. Any CXO/MD level official ever got fired in last 5/10 years or resigned on morals grounds at L&T? Please refer TOI article – whistleblower was right: CBI. Excerpts –Golden Quadrilateral Project--M/s L&T had misrepresented the facts. BS Article – Rajya Sabha nods for whistle blowers bill. Excerpts– sacrifice of Satyendra Dubey, an Indian Engineering Service officer who was killed after he tried to reveal corruption in the Golden Quadrilatera-. Please refer International Business Times article – $100 Million Sought as New Discrimination, Immigration Violations Complaint Filed against L&T. Please refer ET article – World Bank bars L&T for 6 months over forgery. ---------------------------------Biggest shareholders at L&T are state owned LIC/UTI. To restore Insutional Integrity at L&T, PM Mr Modi should intervene to fix retirement age at L&T to 60 - ASAP!.

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