| Summary of Contents 
SHAREKHAN SPECIAL 
Q4FY2007 Capital Goods earnings 
            preview 
The Working Group 
            on Power for the 11th Five-Year Plan has envisaged an addition of 
            around 69,000 megawatt (MW) of power generation capacity during the 
            plan period (FY2007-12) and an additional capacity of 86,500MW 
            during the 12th Five-Year Plan. Looking at the current status of the 
            10th Five-Year Plan's (FY2002-07) capacity addition programme, these 
            targets looks quite aggressive since the government had planned a 
            capacity addition of 41,110MW during the 10th Plan period whereas 
            the actual achievement is likely to be around 25,000MW (only 61% of 
            the target). Out of this about 17,995MW of capacity had already been 
            commissioned till December 31, 2006. However the fact that a total 
            of 31,345MW of capacity is already under construction gives the 
            panel's plan a lot of credibility.
 Looking at the huge power 
            generation capacity addition programme of the government (totaling 
            to around 155,000MW in the next ten years), the order flow momentum 
            for the capital goods companies engaged in the power sector, such as 
            Bharat Heavy Electricals Ltd (BHEL), Crompton Greaves, Bharat 
            Bijlee, Indo Tech Transformers, KEI Industries and Genus Overseas, 
            is expected to be robust. Going by the recently announced 
            provisional results of BHEL, wherein its order flow for the full 
            year ended March 2007 registered an increase of 88% to Rs35,633 
            crore and the order backlog stood at an all-time high of Rs55,000 
            crore, the time ahead for power ancillary companies appears even 
            more 
      promising.
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