Capital goods sector toplines under stress on cash flow woes
- Elections 2014 LIVE: Record 79 pc polling in Bengal; Jaswant Singh writes to EC against Raje
- Congress releases CD of Uma Bharti calling Narendra Modi 'Vinash Purush'
- Admiral Dhowan appointed as new Navy chief
- CAG empowered to examine accounts of private telecom companies: Supreme Court
- IPL 7 Live Cricket Score, DD vs RCB: DD steady but slow
Bharat Heavy Electricals Ltd (BHEL) has been forced to deliberately withhold dispatches of finished equipment to a number of project developers during the last quarter in a desperate bid to put pressure on them to make payments, an indication of the worsening struggle for even the larger capital goods players.
While the move dented the topline of the state-owned equipment firm during the quarter ended September 30, executives from the company say this sort of action is warranted to secure the long-term interests of the company. "The step has worked with some customers, who have quickly organised their finances to make payments to us," a BHEL executive said. With power project developers struggling with cash flow problems and the sustained slowdown in investments dampening demand from industrial business segments such as cement, paper and metallurgical industries, players in the capital goods sector — considered a proxy for investment sentiment — are less than upbeat about the prospects in the coming quarters.
"In general, order finalisations have slowed down. Cash flow problems have badly hit power sector customers. In the industrial sector like mechanical and electrical products that include motors, transformers, compressors and valves, which typically has shorter cycle time, orders have come down as new capacities are simply not getting added due to the slowdown in the industry." BHEL's 'other income' component too has fallen sharply during the September quarter, with advances coming in at the time of new order bookings drying up.
Private sector engineering major Larsen & Toubro too has been faced with a weakening of order inflows in the power equipment space, even though the company managed to more than compensate for this by redoubling focus on the other infrastructure areas such as urban infrastructure and water segments. The company reported a 30 per cent growth in its order book in the September quarter, aided by strong execution and a surge in infrastructure sector orders amid weak power equipment and export order inflows.
- Activist, her aide booked for cheating in attempt to frame acquitted murder accused
- Extended Monorail running hours fails to pull crowd
- HC orders action against Essel World for causing harm to mangroves
- Cops crack bar girl’s murder case after waiter’s tip-off
- Railway to provide plastic pouches for commuter IDs
- Last safety check for Metro to begin April 18