The trickle has turned into a deluge. India Inc's order book has more than doubled to an all-time high of Rs 73,320 crore in the second quarter of the current financial year, compared to the first quarter. On a year-on-year basis, the increase is 21 per cent.
An analysis of order book announcements by 63 companies shows that capital goods, engineering and infrastructure have led the way, cornering 86 per cent (Rs 63,439 crore) of the total orders. The remaining Rs 9,881 crore went to gems & jewellery, pharmaceuticals and telecom. Larsen & Toubro (L&T) topped the list with new orders worth Rs 14,253 crore.
The order backlog is equally impressive and suggests strong revenue streams for the next few years. Electrical equipment giant Bharat Heavy Electricals Ltd has an order backlog of over Rs 117,000 crore, which could see the company through for the next four years. Engineering major L&T has a total order book of Rs 70,000 crore, which is almost 1.75 times its annual turnover.
It's not the big boys alone who are comfortably placed. For example, BGR Energy, which has won contracts worth Rs 1,633 crore each for two power projects, has an overall order position of Rs 12,500 crore, providing a revenue stream for more than three years.
The bulk of orders has come from public sector undertakings and central and state governments. Foreign companies accounted for a quarter and the private sector for the rest.
India Inc's bosses are predictably upbeat. Pervez Umrigar, managing director of Gammon Infrastructure Projects, said the infrastructure sector has a huge long-term potential.
"The financial position was grim last year, but now it is recovering. I hope complete recovery will take place by this year-end."
Bankers said the order book would continue to be impressive. The banking sector's exposure to the infrastructure sector went up 35 per cent year-on-year and is expected to improve further.
ICICI Bank's Managing Director & CEO Chanda Kochhar said she expected the next level of credit growth to come from project finance apart from home and auto loans. For example, the government's $20 billion roads programme is well on track and a lot of orders are expected to flow into the books of Indian companies.
