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| Companies see slower order book growth | |
| B G Shirsat & Deepak Korgaonkar / Mumbai October 29, 2008, 0:17 IST | |
The global credit crisis has slowed order growth of Indian construction and engineering companies, indicating that several big projects, planned earlier, are being pushed back either for lack of capital, or because they have become unviable now.
Orders in the second quarter grew by 52.44 per cent, compared to a 136.29 per cent jump in the first quarter. Data culled from information given by companies to stock exchanges show that 65 firms have bagged orders worth Rs 60,588 crore in the second quarter as compared to Rs 39,745 crore in the same period of the previous financial year. Sequentially, orders grew 29.73 per cent.
Comparatively, companies recorded a 136.3 per cent jump in orders in the first quarter of FY09 and 127.55 per cent in the fourth quarter of FY08. The orders grew at a slower pace of 46.48 per cent in the third quarter of FY08 compared to 155.66 per cent in the second quarter of the same financial year.
Order flows are unlikely to improve in the near future since banks have become extremely cautious about sanctioning fresh loans to projects. “In the past two weeks, across the banking system you have a situation where banks are not sanctioning new lines,’’ Credit Suisse analyst Neelkanth Mishra said in a report to their clients.
Most of the orders in the second quarter were awarded by public and private sector firms, accounting for 45 per cent (21.1 per cent), while the share of overseas orders dropped to 19.41 per cent (26.84 per cent). Rest of the orders, or 35.59 per cent (52.06 per cent), came from various states and the Central government.
State governments have given construction orders to Siemens, Bharat Heavy Electricals Ltd (Bhel), HCC, BGR Energy and ICSA India. Larsen & Toubro (L&T), ABB, BEML, Punj Lloyd, Man Industries and Thermax bagged orders from the Centre. Foreign orders were mostly from West Asia for infrastructure development, power equipment, oil pipelines and technology work.
L&T, India’s largest engineering firm, showed a robust 60 per cent rise in orders in the quarter, but a marginal 2 per cent sequential growth. Punj Lloyd, however, registered a 160 per cent jump in orders in the period. India’s biggest power equipment maker, Bhel, saw its orders decline by 18 per cent year-on-year (y-o-y) and quarter-on-quarter (q-o-q).
Construction and engineering companies won 27 orders, accounting for almost 47 per cent of the total orders received in the second quarter. Many of the engineering and construction firms deal mostly with big corporations, and hence there has been no impact yet.
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