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It is back to glory days for EPC companies and a very healthy sign for India's infrastructure development agenda. According to a compilation by ProjectsToday, the order inflow of project contracting business has seen a rebound in the second quarter of 2009-10. Fresh orders during the second quarter (July to September) of the current year, at Rs 68,741 crore, were 23 per cent higher than that in the same quarter of 2008-09.

Even within the current year, the second quarter has seen doubling of new order inflows compared with the first (April to June).

What's more, the buoyancy is seen happily trickling into the second half of the year, with October 2009 enjoying a 11 per cent year-on-year growth in new orders.

Orders on hand
	Rs. Crore
Larsen & Turbo	81,623
BHEL	125,800
HCC	15,542
Punj Lloyd	26,808
IVRCL Infrastructures	19,000
Patel Engineering	9,900
KEC International	5,543
Simplex Infrastructures	10,000
GMR Infrastructures	8,400*
Total	302,616
*Value of NHAI projects for which qualified to submit RfP

The current year opened on a sombre note with the new orders business clocking Rs 26,545 crore-a steep fall of 57 per cent from Rs 62,269 crore in the first quarter of 2008-09. Political uncertainty due to the general elections and the fallout of the global meltdown of late-2008 did have a dampening effect, but the situation now seems reversed and the EPC business is clearly in positive territory.

Power generation and distribution accounted for two-fifth, metro railway, roadway, port and airport works together another one-fifth, and mineral oils, petroleum, pipeline and LPG projects around one-seventh in value of works awarded during July-September.

With bulging orders, the EPC companies are assured of robust business. The total order books of the nine companies covered (see table, 'Orders on hand') add to around Rs 3 trillion-nearly four years of their sales (going by 2008-09 data).

Larsen & Toubro Ltd recorded a healthy growth in order inflow for the second quarter of the current year aggregating Rs 18,365 crore, which was 47 per cent higher over the corresponding quarter of the previous year. Total order book at the end of the quarter reached Rs 81,623 crore (+31 per cent).
The company's E&C segment reported an order inflow of Rs 17,004 crore (+63 per cent) with large orders secured from the hydrocarbon and power sectors. The segment's order book stood at Rs 79,857 crore as on September 30, 2009. The company also secured, in early November, a Rs 6,897 crore EPC contract for the 3x600 mw supercritical boiler turbine generator units from Mahagenco for its Koradi project.

Contracts awarded
	2008-09		2009-10
	Nos.	Rs. Crore	Nos.	Rs. Crore
April	54	16,891	39	10,134
May	44	14,833	27	7,871
June	50	30,545	67	8,540
July	63	28,078	82	22,215
August	57	13,339	74	28,771
September	54	14,556	60	17,755
October	41	14,881	49	16,515

Bharat Heavy Electricals Ltd had yet-to-be-executed orders of about Rs 1,25,800 crore at the end of second quarter. Recent orders secured include the Rs 5,040 crore contract from Jindal Power for setting up the 2,400-mw extension stage in Chhattisgarh and Rs 205-crore order for a gas turbine generating unit of 126 mw each from the Sultanate of Oman.

Pratibha Industries Ltd secured two orders in October: first Rs 150-crore BOT project for construction of multi-level parking with commercial development at New Delhi Railway Station-cum-Airport terminal of Airport Express Line, from DMRC; and the other a Rs 24.72-crore contract for supply of API grade pipes from Gail (India) Ltd.

Big boys do well financially in Q2

 

Six major selected EPC companies recorded 13 per cent rise in net sales to Rs 18,541 crore during the second quarter of the current fiscal, which led to 22 per cent increase in profit after tax to Rs 1,546 crore. While expenditure escalated less by 10 per cent, interest cost shot up 50 per cent over the year. Incidentally, the aggregate performance was vastly impacted by two giant EPC players-Larsen & Toubro Ltd and Bhel-that achieved a respective 26 per cent and 39 per cent rise in PAT.

The other four companies together recorded 47 per cent decline in PAT, notwithstanding a decent 14 per cent rise in net sales. Hindustan Construction Company Ltd suffered 72 per cent decline in PAT and Punj Lloyd and GMR Infrastructures Ltd saw their PAT tumble to half their respective levels a year ago.

Larsen & Toubro and Bhel are conglomerates: L&T got 86 per cent of income from engineering and construction and 14 per cent from electronics, electricals, machinery, industrial products etc., and Bhel received 77 per cent from power sector and 23 per cent from industry segment.

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