In a reflection of the current business environment, state-owned Bharat Heavy Electricals Ltd (Bhel) has slashed the number of engineers it plans to hire this year.
“There is an employee cost,” chairman and managing director B.P. Rao said. “I can’t keep on hiring without keeping an eye on what is happening in the sector.”
India’s largest power generation equipment manufacturer used to hire an average of around 1,000 engineers every year, a number that dropped to 250 in the year ended March.
In the current fiscal year, Bhel intends to hire just 200 engineers, human resources director R. Krishnan said.
Most of the firm’s 13,564 executives are engineers.
Bhel’s orders rose 43% to Rs.31,528 crore in the last financial year but it secured no orders from non-state firms. The company has orders worth Rs.1.15 trillion on its book. Bhel had received orders worth Rs.60,507 crore in 2010-11 and Rs.22,096 crore in 2011-12.
“However, we are strategizing in such a way that we should not be found wanting when the orders pick up,” Krishnan said. “Things are improving.”
Analysts, however, have started sounding cautious on Bhel’s prospects.
“Considering visibility on revival of power generation capex continues to remain low, we see Bhel heading into a structural down cycle and thus continue to maintain underperform,” Credit Suisse India Research said in an 8 April report.
Slowing economic growth, high borrowing costs and delays in securing regulatory approvals have hit many infrastructure projects in India, including power plants, hurting the ability of their promoters to repay creditors and vendors.
Power project developers have been struggling with interlinked issues such as fuel shortages, delays in signing fuel-supply agreements and long-term power purchase agreements.
A report of the panel on reforms in central public sector enterprises (CPSE) submitted in November 2011 said: “The panel believes that there is an imperative need for every CPSE to conduct a comprehensive manpower planning exercise. In this process, it should identify the key skills and talent requirements across all levels within the organization from a medium—and long-term perspective.”
The current environment has forced Bhel to relook at its target of achieving Rs.1 trillion revenue target by 2017. Mint reported on Tuesday about customers of Bhel owing the state-run company around Rs.20,000 crore in overdue payments.
“Bhel’s working capital has been rising due to delayed pick-up from customers, rising receivables and decline in customer advances,” the Credit Suisse report said. “While we have optimistically built in working capital improvement each year going forward, Bhel’s working capital cycle could remain elevated during FY14/15 as order inflows are expected to remain subdued at Rs.301-336 billion p.a. (per annum).”
Bhel reported an 8% drop in net profit for 2012-13 from the previous year because of a slowdown in orders. For the fiscal year ended 31 March, the company earned a profit of Rs.6,485 crore, compared with Rs.7,040 crore in the preceding year. It registered a 1% increase in revenue to Rs.50,015 crore in the last fiscal year.