Power equipment major BHEL took in its stride a slowing order inflow and posted a 21 per cent expansion in net profits for the March 2012 quarter over the year ago. Adjusted sales also grew a respectable 20 per cent.

But it was the industrial segment that undertakes transportation and renewable energy projects which came to its rescue this time around too. The segment's contribution to sales climbed to 25 per cent from the 18 per cent in the March 2011 quarter. The superior profits the segment offers could have also helped overall operating margins. In the coming quarters though, there was some strain on margins owing to BHEL's need to lower its bidding price to secure some of NTPC's bulk orders. Still, cost efficiencies, as it gradually indigenises its super-critical technology, could help.

BHEL ended with Rs 1,35,000 crore of orders or 65,000-70,000 MW of projects, though new orders are a third of the previous year's inflows. BHEL expects 14,000-15,000 MW of orders in the ongoing fiscal. Many of the bulk tenders that it bagged in 2011-12 will add to the order book this year. BHEL's stock climbed 3 per cent for the week.

Losses for Tata Power

Aggravated by two exceptional items, Tata Power incurred losses in the March 2012 quarter, the second time in three quarters. Rupee depreciation, leading to higher projected costs, resulted in the company writing down the value of its Mundra power project by Rs 815 crore. Tata Power changed its exchange rate assumptions on costs from Rs 42/dollar to Rs 45.5 a dollar over the life of the project. It also expects the cost of servicing debt to rise due to depreciation of the rupee flows. It can pass on foreign exchange variation on only coal through its power tariffs.

With realisations capped, the company has taken on the rupee hit upfront. With the latest write-down, Tata Power has cumulatively reduced the cost of its Rs 17,000-crore Mundra power project by a total of Rs 1,790 crore, after ‘impairment'.

Tata Power also accounted for the cost of preparing a mine when incurred, instead of amortising it, as had been the norm hitherto. Had it not been for these costs (impairment and expensing deferred costs), Tata Power would have earned a profit before tax of Rs 812 crore instead of the Rs 327 crore loss it reported. The company's stock lost 2.5 per cent for the week.

Sedate quarter for Suzlon Energy

Suzlon Energy had a sedate March 2012 quarter with consolidated revenues dipping 7.9 per cent over a year ago. It also closed the quarter with losses of Rs 300 crore as against Rs 211 crore profits a year ago. Lower volumes in India appeared to be the key reason behind the decline in sales.

On the bright side, Suzlon had a good year in terms of order inflows. At close to $7.4 billion (Rs 41,000 crore), the order book provides revenue visibility for the next couple of years.

In terms of volume, orders increased by a good 24 per cent. Suzlon's German subsidiary, RePower, clearly proved to be the driver for orders, contributing 64 per cent to the order book in volume terms.

However, Suzlon's net debt-to-equity remains quite high at 2.1. With FCCBs due for retirement next month, the company is lining up new funding avenues to repay the same. It will seek a month's extension from its bond holders for this. But the repayment and new loans simply mean that the current debt will be replaced by a fresh one. The stock ended up 3.5 per cent for the week.

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