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Over the last one year, the NDA government is reported to have cleared stuck infrastructure projects worth Rs 6 lakh crore across 10 sectors. This data though, when juxtaposed with the continuing struggle of core sector companies and capital goods firms, conveys a somewhat divergent story.State-run equipment maker Bharat Heavy Electricals Ltd, for instance, reported its worst results in at least five years, with a sharp 24 per cent drop in turnover in its provisional numbers for 2014-15. The company’s receivables from clients during the first three quarters of the year mounted to about Rs 19,924 crore, a pointer to the distressed cash flow situation that is likely to have worsened on account of the power, steel and cement companies stretching their finances to the limit in the recent coal block auctions. Although BHEL’s order inflows went up 10 per cent last fiscal, much of this was attributed to orders coming in on account of the creation of Telangana state, even as private sector orders dried up almost completely.L&T, the country’s largest engineering and construction firm, is struggling too, with the company having cut its order book position twice this year already. “When we started this year, it looked like a 20 per cent order growth would be possible. We have seen a growth of about 16 per cent in the (first) three quarters… the growth rate now looks to be somewhere in the 15-20 per cent range,” R Shankar Raman, whole-time director and chief financial officer of L&T, said when the company released its third quarter numbers.

In line with the distressed state of core sector firms, Tata Steel India has seen a significant fall in its operating earnings due to weak steel prices and demand conditions, with margins expected to face a squeeze amid a fall in steel prices, according to a senior Tata Steel executive.

The faltering demand for electricity, a key indicator of whether a revival is taking shape, further punches holes in the government’s nascent recovery script. Electricity prices in the spot market this year are at their lowest in five years, something that prompted Power Minister Piyush Goyal to claim at a recent CII event that lack of demand could mean that India could end up with a “power surplus situation” this year.

“The demand (for power) is being met. I’m now concerned that with this rate of growth, I could end up with surplus coal and surplus power… I don’t know what to do with it,” Goyal said at a CII event here on March 16. The prices in the day-ahead market on the IEX — India’s largest power exchange — bear this out, with quotes pegged at 2.82 per unit (kWh) in 2015, down from 3.59 last year, 2.84 in 2013, 3.53 in 2012, 3.56 in 2011 and 3.69 in 2010.

The continuing core sector struggle is reflected in the analysts rating of firms in this sector, with brokerage house Bank of America Merrill Lynch, on April 1, reiterating its “underperformance” rating on BHEL and trimming its earnings estimates for the three years spanning 2015-17, citing weak order flows. “We believe that order flows for the sector, at 8-9 GW (gigawatt) per annum in FY15-17, are likely to disappoint, compared to guidance of 15-17 GW, and execution challenges are likely to persist,” the brokerage said in an April 1 note.

All of this contrasts with the status report issued by the projects monitoring group (PMG), an inter-ministerial panel of the Union government, which claims to have cleared 178-odd projects that have been stuck for at least two years for want of clearances from central agencies and state governments and in particular, lack of environmental clearances.

Data furnished by the government, which point to economic activity gaining momentum, include the CMIE capex database which suggests that new investment announcements grew in 2014-15 by 80 per cent in value terms, with the total value of proposed investment at Rs 9.9 lakh crore in 2014-15 as compared to Rs 5.5 lakh crore in 2013-14.