New Delhi, Aug 6 (KNN)  Poor financial performance of the power equipment major BHEL and the shrinking order-book would  be leaving a bruising effect on the company's  vendors which  are small and medium enterprises, located in the vicinity of the company's  different manufacturing facilities.

BHEL's profit for the first quarter of the current fiscal fell by a huge 49.46 per cent to Rs 465 crore. It also saw a 23 per cent drop in the net sales to Rs 6352 crore.  Its order-book inflows shrank by 74 per cent to Rs 1470 crore even as its orders stood at Rs 108,600 crore.

Besides causing turmoil in the stock market, the dismal BHEL performance is causing a lot of anxiety among hundreds of SME vendors who are outsourced manufacturer of spare-parts and other key engineering products used for different sets of electrical and power equipment manufactured by the leading public sector company.

The company which is engaged in the design, engineering, manufacturing, construction, testing and commissioning of power equipment, has 15 manufacturing units in different parts of the country including Hardwar, Jhansi and Hyderabad.  The company has vendors in most of its facilities and flow of orders to these vendors depends on BHEL's business.

BHEL and other domestic manufacturers have been facing a tough competition from the Chinese power gear suppliers who are favourites with some of the private sector power generation companies. The Ministry of Heavy Industries has been pressing for increase in import duty on the imported equipment. However, the generation companies have been resisting the move on the contention that restrictions on import of power gear would ultimately result in the increase of power.

BHEL's woes also stem from the problems in the entire infrastructure sector, confounded by general economic slowdown and policy hurdles like the issues of fuel-linkages and environmental problems.  (KNN/PC)