GICS Industry : Building Products l Sub Industry : Building Products l Website : www.bluestarindia.

com

Blue Star Ltd

Key Stock Indicators

NSE Ticker : BLUESTARCO CMP (as on 16 Dec 2010—Rs/share): 428.3 Shares outstanding (mn) : 89.9
Bloomberg Ticker : BLSTR:IN 52-week range up to 16 Dec 2010 (Rs)(H/L): 502.40/351.75 Free Float (%) : 59.9
Face value / Share: 2.0 Market Cap as on 16 Dec 2010 (Rs mn): 38,520 Average daily volumes (12 months) : 37,391
Div. Yield (%): 1.9 Enterprise Value as on 16 Dec 2010 (Rs mn): 38,477 Beta (2 year) : 0.9

Blue Star LTD (BSL) was incorporated on 20th January, 1949 at Mumbai. The company
manufactures commercial refrigeration equipment including water coolers, beverage coolers Key Financial Indicators
among others and components for large central refrigeration and air-conditioning plants. BSL also Mar-08 Mar-09 Mar-10
acts as a distributor for various products.
Revenue (Rs mn) 22,279.0 25,600.6 25,278.5
KEY HIGHLIGHTS EBITDA ma rgins (%) 10.3 10.6 11.1
PAT (Rs mn) 1,737.1 1,802.6 2,114.6
Largest sales service provider
PAT ma rgins (%) 7.8 7.0 8.4
BSL continues to retain its eminent position in the market place as a superior value added service Gea ring (x) 0.1 0.1 -
provider. The total tonnage maintained under various categories of after-sales solutions make the EPS (Rs /s ha re) 19.3 20.0 23.5
company the largest after-sales service provider in the country. While the customary warranty and PE (x) 22.1 7.8 18.2
annual maintenance services continues to be the mainstay, the company's focus into the service
parts and accessories arena has resulted in increased responsiveness and easy availability of
P/BV (x) 14.8 3.8 8.0
genuine parts RoCE (%) 81.1 74.6 64.1
RoE (%) 74.5 57.7 50.1
New products launched in FY10
EV/EBITDA (x) 16.9 5.2 13.7
n.m. : Not meaningful
BSL has increased its product portfolio and has launched a comprehensive range of star-rated
window and wall mounted split air conditioners to meet a wide range of requirements. The
company launched energy labeled Air conditioners available in wide range of 2, 3 and 5-star rating Shareholding (As on September 30, 2010)
and in multiple capacities. It has also launched an innovative cooling solution for seeds called DII Others
'Precision Climate Seed Storage (PCSS) System'. 11% 41%

KEY RISKS

• Stiff competition from major MNCs like Samsung, LG, and Sony.
• Uncertain global economic scenario could affect company’s business prospects

Stock Performances vis-à-vis market

Returns (%)
FII
YTD 1-m 3-m 12-m 8%
Promoter
BLUESTARCO 16 -1 -8 20 40%

NIFTY 12 -1 2 18 Indexed price chart

(index) ('000)
Note: 160 450
1) YTD returns are since April 1, 2010 to Dec 16, 2010. 400
140
2) 1-m, 3-m and 12-m returns are up to Dec 16, 2010.
120 350
100 300
250
80
200
60 150
40 100
20 50
0 0
Jul-10
Jan-10

Feb-10

Sep-10
Dec-09

Jun-10

Aug-10
May-10

Oct-10

Nov-10
Apr-10
Mar-10

Volumes (RHS) BLUESTARCO NIFTY

CRISIL COMPANY REPORT | 1

Blue Star Ltd
BACKGROUND

BSL is one of India's largest central air-conditioning company with a network of 29 offices, 5 modern manufacturing facilities, 700 dealers and 2600 employees. The
company fulfils the air-conditioning needs of a large number of corporate and commercial customers and has also established leadership in the field of commercial
refrigeration equipment ranging from water coolers to cold storages. The company has also started offering Electrical Contracting and Plumbing & Fire Fighting Services.
BSL’s other businesses include marketing and maintenance of hi-tech professional electronic and industrial products. BSL has business alliances with world renowned
technology leaders such as Rheem Mfg Co, USA; Hitachi, Japan; Eaton - Williams, UK; Thales e-Security Ltd., UK; Jeol, Japan and many others, to offer superior products and
solutions to customers. The company has manufacturing facilities at Thane, Dadra, Bharuch, Himachal and Wada which use state-of-the-art manufacturing equipment to
ensure that the products have consistent quality and reliability. Electro Mechanical Projects & Packaged Air-conditioning Systems contributes ~70% of total revenues

COMPETITIVE POSITION

Peer Comparison
Fedders Lloyd Hitachi Home & Lloyd Electric &
Blue Star Ltd. Voltas Limited Corpn. Ltd. Life Solutions (India) Ltd. Engineering Ltd.
Mar-10 Mar-10 Jun-09 Mar-10 Mar-10
Revenue (Rs mn) 25,278.5 48,287.3 4,602.0 6,382.1 8,187.0
EBITDA ma rgins (%) 11.1 10.1 6.6 9.3 10.0
PAT (Rs mn) 2,114.6 3,845.6 116.7 461.4 338.1
PAT ma rgins (%) 8.4 8.0 2.5 7.2 4.1
Gea ring (x) - - 0.8 0.5 0.7
EPS (Rs /s ha re) 23.5 11.6 14.5 16.6 13.0
PE (x) 18.2 18.9 5.8 12.6 5.5
P/BV (x) 8.0 7.2 1.3 2.9 0.5
RoCE (%) 64.1 58.0 9.8 29.0 9.3
RoE (%) 50.1 44.1 8.1 37.1 8.7
EV/EBITDA (x) 13.7 14.0 12.1 8.6 5.5
n.m: Not meaningful

FINANCIAL PROFILE Key Financial Indicators

Economic slowdown impacted top-line growth Units Mar-08 Mar-09 Mar-10
Revenue Rs mil li on 22,279.0 25,600.6 25,278.5
BSL’s revenues declined by ~1% in FY10 and stood at Rs 25.2 bn against Rs 25.6 bn in
FY09 on account economic slowdown. While the Electro Mechanical Projects and EBITDA ma rgins Per cent 10.3 10.6 11.1
Packaged Air conditioning segment showed marginal growth ~3%, Cooling Products PAT Rs mil li on 1,737.1 1,802.6 2,114.6
and Professional Electronics and Industrial Systems recorded a decline of ~2% and
~14 % respectively. PAT ma rgi ns Per cent 7.8 7.0 8.4
Revenue growth Per cent 39.2 14.9 -1.3
Effective cost control measures helped the company to improve its EBITDA margins
to 11% in FY10 against 10.6% in FY09. EBITDA growth Per cent 98.2 18.1 3.1
PAT growth Per cent 144.2 3.8 17.3
Gea ring Ti mes 0.1 0.1 0.0
RoCE Per cent 81.1 74.6 64.1
RoE Per cent 74.5 57.7 50.1
INDUSTRY PROFILE

Air conditioners

The room air conditioner industry was valued at around Rs 56 billion in 2009-10. Rising disposable incomes, boom in real estate industry – residential as well as commercial,
stable prices of household appliances, rising distribution network & availability of financing schemes are the main demand drivers for the industry. The air-conditioner (AC)
market is divided into room ACs and central ACs which include central plants, packaged or ducted systems and VRF systems. Room ACs can be further divided into Windows
ACs and Split ACs. Earlier, the RAC industry was skewed towards window ACs. However, currently, the split AC segment constitutes 53 per cent of the industry`s volume in
2009-10.

CRISIL COMPANY REPORT | 2

Blue Star Ltd
ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10
Net Sales 21,967.2 25,231.7 24,984.5 Equity share capital 179.9 179.9 179.9
Operating Income 22,279.0 25,600.6 25,278.5 Reserves and surplus 2,417.1 3,470.6 4,612.1
Tangible net worth 2,596.9 3,650.4 4,792.0
EBITDA 2,301.0 2,717.4 2,800.3 Deferred tax liablity:|asset| 35.9 6.2 -14.7
EBITDA Margin 10.3 10.6 11.1 Long-term debt 0.0 0.0 0.0
Short-term-debt 365.4 236.0 89.3
Depreciation 220.0 259.1 347.6 Total debt 365.4 236.0 89.3
Interest 43.8 187.4 44.1 Current liabilities 6,530.8 6,963.3 10,025.4
Other Income 359.5 21.6 44.2 Total provisions 984.9 1,079.7 1,160.4
Total liabilities 10,513.9 11,935.6 16,052.4
PBT 2,398.2 2,381.9 2,765.4 Gross block 2,576.2 3,175.6 3,242.9
PAT 1,737.1 1,802.6 2,114.6 Net fixed assets 1,533.9 2,108.9 1,867.6
Investments 45.7 43.8 42.0
PAT Margin 7.8 7.0 8.4 Current assets 8,934.3 9,782.8 14,142.7
Receivables 4,858.5 6,468.3 6,282.1
No. of shares (Mn No.) 89.9 89.9 89.9 Inventories 2,897.4 2,274.8 2,794.8
Cash 26.7 56.5 132.2
Earnings per share (EPS) 19.3 20.0 23.5 Total assets 10,513.9 11,935.5 16,052.3

Cash flow Ratio

(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10
Pre-tax profit 2,396.8 2,292.4 2,452.8 Revenue growth (%) 39.2 14.9 -1.3
Total tax paid -690.4 -609.0 -671.6 EBITDA growth(%) 98.2 18.1 3.1
Depreciation 220.0 259.1 347.6 PAT growth(%) 144.2 3.8 17.3
Change in working capital 407.0 -291.5 -1,141.4
EBITDA margins(%) 10.3 10.6 11.1
Cash flow from operating activities 2,333.4 1,651.0 987.4 Tax rate (%) 28.8 25.6 24.3
Capital Expenditure -613.0 -824.3 -215.9 PAT margins (%) 7.8 7.0 8.4
Investments and others 7.3 1.9 1.8
Dividend payout (%) 36.2 34.9 34.0
Cash flow from investing activities -605.7 -822.4 -214.1 Return on Equity (%) 74.5 57.7 50.1
Equity raised/(repaid) 0.0 0.0 0.0 Return on capital employed (%) 81.1 74.6 64.1
Debt raised/(repaid) -525.1 -129.4 -146.7
Dividend (incl. tax) -736.5 -736.5 -839.0 Gearing (x) 0.1 0.1 0.0
Others (incl extraordinaries) -485.3 67.2 288.2 Interest coverage (x) 52.6 14.5 63.5
Debt/EBITDA (x) 0.2 0.1 0.0
Cash flow from financing activities -1,746.9 -798.7 -697.5
Change in cash position -19.2 29.9 75.8 Asset turnover (x) 9.4 8.9 7.9
Opening cash 46.1 26.7 56.5 Current ratio (x) 1.1 1.2 1.3
Closing cash 26.7 56.5 132.2 Gross current assets (days) 146 139 204
n.m : Not meaningful;

QUARTERLY RESULTS

Profit and loss account

(Rs million) Sep-10 % of Rev Sep-09 % of Rev Jun-10 % of Rev Sep-10 % of Rev Sep-09 % of Rev
No of Months 3 3 3 6 6
Revenue 6,963.6 100.0 5,668.3 100.0 6,652.1 100.0 13,615.7 100.0 11,070.5 100.0
EBITDA 688.3 9.9 682.7 12.0 612.6 9.2 1,300.9 9.6 1,311.9 11.9
Interes t 48.7 0.7 12.8 0.2 20.0 0.3 68.7 0.5 17.1 0.2
Depreci a tion 78.9 1.1 86.7 1.5 75.5 1.1 154.4 1.1 168.6 1.5
PBT 560.7 8.1 635.6 11.2 521.4 7.8 1,082.1 7.9 1,178.6 10.6
PAT 386.3 5.5 494.4 8.7 371.5 5.6 757.8 5.6 906.1 8.2

CRISIL COMPANY REPORT | 3

Blue Star Ltd
FOCUS CHARTS & TABLES

Rs mn Quarterly sales & y-o-y growth Per cent Rs mn Quarterly PAT & y-o-y growth Per cent
10,000 50 900 400
40 800
8,000 700
30 600 200
6,000 20 500
10 400
4,000
300 0
0 200
2,000
-10 100
0 -20 0 -200

Sep-08

Sep-09

Sep-10
Dec-07

Dec-08

Dec-09
Jun-08

Jun-09

Jun-10
Mar-08

Mar-09

Mar-10
Sep-08

Sep-09

Sep-10
Dec-07

Dec-08

Dec-09
Jun-08

Jun-09

Jun-10
Mar-08

Mar-09

Mar-10
Sales Sales growth y-o-y (RHS) Net Profit Net profit growth y-o-y (RHS)

Rs/share EPS Per cent Movement in operating and net margins

10 18

15
8
12
6
9
4 6

2 3

0 0

Sep-08

Sep-09

Sep-10
Dec-07

Dec-08

Dec-09
Jun-08

Jun-09

Jun-10
Mar-08

Mar-09

Mar-10
Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10
Mar-08

Sep-08

Mar-09

Sep-09

Mar-10

Sep-10

OPM NPM

Shareholding Pattern (Per cent) Board of Directors

Dec 2009 Mar 2010 Jun 2010 Sep 2010 Director Name Designation
Promoter 40.1 40.1 40.1 40.1 As hok Moha n Adva ni (Mr.) Executive Cha irma n, Promoter-
FII 6.2 7.5 7.4 8.0 Director
DII 7.5 7.6 10.0 10.6 Suneel Moha n Adva ni (Mr.) Vice Cha i rma n & Ma na gi ng
Others 46.2 44.8 42.6 41.3 Director, Promoter-Di rector
Sa tis h Ni lka nth Ja mda r (Mr.) Ma na gi ng Director
Sha i les h Vis hnubha i Ha ribha kti Non-Executi ve Di rector
(Mr.)
Pra deep Ma ll i ck (Mr.) Non-Executi ve Di rector
Gurdeep Kul bhus ha n Singh (Mr.) Non-Executi ve Di rector
Sures h Na rs a ppa Ta lwa r (Mr.) Non-Executi ve Di rector
Vir S. Adva ni (Mr.) Wholetime Di rector

Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

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CRISIL COMPANY REPORT | 4