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Engineering and construction company Larsen & Toubro (link) has won a sizeable international order from the Arriyadh Development Authority (link), as part of a consortium to build a metro for the city of Riyadh, in Saudi Arabia. L&T said that it has got an order worth $1.4 billion or Rs 8,250 crore for design, construction and commissioning of a metro project.
Engineering company Bharat Heavy Electricals Ltd, or Bhel, saw its order book rise by a meagre Rs 4,000 crore to Rs 158,000 crore in the December 2010 quarter, compared to the previous quarter. Order book position is a key variable for any engineering company, as future revenue streams are forecasted, based on the order book’s level and growth. There appears to be a slowdown in new projects, which was visible when Larsen & Toubro declared its results too, recently.
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Larsen & Toubro’s performance in the September 2009 quarter is a reflection of the slowdown in capital expenditure in the past. Engineering companies’s revenues fluctuate across quarters, since their revenues are booked depending on the stage of project completion. But expenses will be booked as they are incurred.
Engineering company Larsen & Toubro’s order inflow in FY’09 increased by 24% to Rs 52,000 crore. In the fourth quarter ended March 2009, its order inflows were Rs 12,900 crore, flat compared to last year. The order book is a key measure used to evaluate how much an engineering company’s revenues will grow in the near to medium term.