12
ET Intelligence Group: After a lull of nearly six years, the executable order book of engineering and construction (EC) companies reported meaningful increase in FY18.
According to a report by CLSA, the total EC order backlog grew by 12 per cent year-on-year after adjusting for the impact of the Goods and Services Tax (GST).
The reported order backlog of the companies was suppressed in FY18 since it excluded excise and other tax elements after the implementation of GST.
In the previous year, these taxes were a part of the order value.
Total order backlog of the EC companies was Rs 8.1 lakh crore at the end of FY18.
Of the total order backlog, nearly 62 per cent was contributed by the construction companies, followed by 24 per cent from capital goods companies catering to the power sector.
The order backlog picked up in the second half of FY18 due to the momentum in the road construction and projects from power and transmission segments.
The order inflow was slow in the first half if the fiscal.
This led Larsen Tubro, India’s largest infrastructure company, to cut the order inflow guidance in the first half though it ended the year with 7 per cent higher order inflow at Rs 1.5 lakh crore.LT’s order book growth was mainly aided by the public sector projects.
Consequently, the share of the domestic orders in the total order inflow increased to 76 per cent in FY18 from 70 per cent in the previous year.
The domestic order flow grew by 15 per cent in FY18 to Rs 1.17 lakh crore.
The road sector has emerged as significant contributor to the total order book in FY18 thanks to a record pace of orders from the National Highway Authority (NHAI) and Ministry of Road Transport and Highway.
The orders of NHAI were two times higher than the order value in FY18 compared with the previous year.
As a result, the order backlog of road construction companies including Sadbhav Engineering, Nagarjuna Construction, Dilip Buildcon, and IRB grew by 72 per cent, 80 per cent, 36 per cent and 51 per cent, respectively, in FY18.
The investments in transmission and distribution from the Power Grid Corporation and state electricity boards boosted order backlog of KEC International, and Kalpataru Power by 57 per cent and 25 per cent in FY18.
India’s largest power equipment company BHEL also recorded 12 per cent growth in order backlog.
The buoyancy in the orders is likely to continue in the current fiscal based on the commentary of the companies after the March quarter results.
LT has guided for 10-12 per cent order inflow growth, while BHEL expects revenue of Rs 32,000 crore in the current fiscal.
