analyst meet presentation by ashok m advani, chairman & managing director may 28, 2007

ANALYST MEET

Presentation by

Ashok M Advani, Chairman & Managing Director

May 28, 2007

Analyst MeetAnalyst MeetMay 28, 2007May 28, 2007

Agenda

• About Blue Star

• Financial Highlights

• Business Highlights

• Construction boom

• Retail boom and cold chain

• Outlook


About Blue Star


Introduction

• Blue Star is India’s largest central airconditioning and commercial refrigeration company

• Founded by Mohan T Advani in 1943• Listed on Bombay Stock Exchange in 1969• Only 50 Indian companies listed on BSE are more

than 60 years old- Blue Star is one of them• Professionally managed; largest pool of HVAC

engineers in the country• Focused on corporate, commercial, and

institutional customers• Unbroken record of profits and dividend payment


Blue Star today

Total Income Rs 1607 crores

Net Profit Rs 71 crores

Employees 2181

Manufacturing Plants 4 (plus 1 under construction)

Offices 23

Dealers 680


Market Capitalisation

455

1275

148 254

1888

0

500

1000

1500

2000

31 Mar 03 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07

(Rs crores)

- -


Financial Highlights


Blue Star Financial Performance2006-07 2005-06

Total IncomeGrowth over previous year

1607.41 +36%

1178.62+27%

Operating Profit (PBDITA) excl Non-operating incomeGrowth over previous year

116.92 +35%

86.68+50%

Profit Before TaxGrowth over previous year

92.60+34%

69.09+32%

Profit After TaxGrowth over previous year

71.18+46%

48.90+25%

Shareholders’ Funds 212.97 172.71

Borrowings 89.05 75.87

Capital Employed 302.02 248.58

Operating Cash Flow 60.12 18.36

(Rs crores)


Key Ratios2006-07 2005-06

Gross Margin (excl. Non operating Income) 22.40% 22.80%

Operating Margin (excl. Non operating Income)

7.30% 7.40%

Return on Capital Employed 32.1% 30.1%

Return on Shareholders' Funds 33.4% 28.3%

Earnings Per Share (Rs.) 7.91 5.44

Dividend Per Share (Rs.) 3.00 2.40

Capital Turnover 5.32 4.74

Debt/Equity 0.42 0.44

Inventory Turnover 6.61 6.06

Receivables (Days Billings Outstandings) 80 74


Carry Forward Order Book

Segment March 06

March 07 Growth

Central Airconditioning

495 633 28%

Cooling Products 21 48 128%

Professional Electronics

49 74 51%

TOTAL 565 755 34%

(Rs. crores)


Total Income

CAGR = 30.9%

716.06

930.92

1178.62

1607.41

0

300

600

900

1200

1500

1800

2003-04 2004-05 2005-06 2006-07

(Rs crores)


Profit After Tax

71.18

48.90

32.5539.16

0

20

40

60

80

2003-04 2004-05 2005-06 2006-07

CAGR = 29.8%

(Rs crores)


Return on Capital Employed

33.80%30.00% 30.10%

32.10%

0%

10%

20%

30%

40%

2003-04 2004-05 2005-06 2006-07


Return on Shareholders’ Funds

25.10%26.40%

28.30%33.40%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2003-04 2004-05 2005-06 2006-07


Earnings Per Share & Dividend Per Share

1.80 2.002.40

3.00

3.62

4.35

5.44

7.91

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

2003-04 2004-05 2005-06 2006-07(* Face value Rs 2.00 per share. Previous years’ figures on a like-to-

like basis)

Earnings

Dividend

Rs.


Shareholding Pattern (as on March 31, 2007)

40.30% Promoters

37.65% Indian Public

8.39% Financial Institutions/Banks/ Mutual Funds8.44% FII holdings

5.22% Bodies Corporate


Institutional Investor Holding

12.68%

17.85%

21.99%

0%

5%

10%

15%

20%

25%

31/03/05 31/03/06 31/03/07


Business Highlights


Blue Star Differentiators• Focused on corporate and commercial

customers• Differentiated products and value added

services• Technical, engineering and contracting

expertise• Employees and business partners tuned to

customer oriented specialist/expert culture• Delivering a world-class customer

experience• Value-driven work ethics


Achievements in FY07• Consolidation of leadership in central and

packaged airconditioning segment• Over 150 Blue Star screw chillers installed

and commissioned• Dominated the telecom shelter

airconditioning business with over 50% market share

• Volumes of split airconditioners grew 75%• Tie-up with ISA, Italy for supermarket

refrigeration equipment• Several new customer accounts in the cold

chain business


Business Segments

1. Central and Packaged Airconditioning Systems

2. Cooling Products

3. Professional Electronics and Applied Industrial

Systems


Central and Packaged Airconditioning Systems

• Design, manufacturing, installation, commissioning and maintenance of large central airconditioning plants

• Wide range of chillers, air handling units and fan coil units

• Comprehensive range of packaged airconditioning systems

• Energy efficiency as the technology platform; pioneers of products which save power


Central and Packaged Airconditioning Systems – Revenue

1124

821

651479

0

200

400

600

800

1000

1200

2003-04 2004-05 2005-06 2006-07

(Rs crores)

CAGR = 32.8%


Central and Packaged Airconditioning Systems – Segment Result

102.2

80.03

60.3246.29

0

20

40

60

80

100

120

2003-04 2004-05 2005-06 2006-07

(Rs crores)

CAGR = 30.2%


Opportunities from National Accounts

• 40% of central airconditioning revenues from National/Major Account customers

• All of them have significant growth potential

• Blue Star expected to garner a major portion of the HVAC requirement from these customers

Reliance Future

DLF Shoppers’ Stop

Infosys Satyam

Café Coffee Day Wipro

HCL ICICI

Hutch RMZ

HDFC Raymonds

HSBC PVR

Moser Baer Dr Reddy’s

Microsoft Bharati


Cooling Products• Comprises

– Room Airconditioners

– Commercial Refrigeration Products & Systems

• Wide range of window and split airconditioners

• Comprehensive range of commercial refrigeration equipment

– Cold Chain equipment– Deep Freezers– Water Coolers / Bottled Water Dispensers– Bottle/ Milk Coolers

• Contemporary products with power saving design


Cooling Products – Revenue

168210

271

372

050

100150200250300350400

2003-04 2004-05 2005-06 2006-07

(Rs crores)

CAGR = 30.3%


Cooling Products – Segment Result

4.31

13.17

23.46

-2.56-5

0

5

10

15

20

25

2003-04 2004-05 2005-06 2006-07

(Rs crores)


Service Business• Blue Star is India’s largest AC&R service

provider • Maintains over 1.5 million TR of equipment • 25,000 customers• Service Portfolio includes

• System maintenance• Spare Parts• Energy Management• Air Management• Water Management• Upgrades/Enhancements/Revamp/Retrofit• Remote Monitoring• Integrated Engineering Facilities Management

Services


Product Portfolio


Manufacturing

• Specialize in manufacturing a variety of highly engineered and custom-built products

• High level of product development capabilities

• Over 225 models manufactured across 25 product lines

• Lean manufacturing and world-class practices

• Globally competitive

• Capacity expansion underway in line with growth


Exports• Exporting water coolers for over five

decades• Window and split ACs for high ambient

temperature conditions have been well received in the Middle East and Iraq

• Customised ducted systems and heat pumps for the Middle East and Europe

• Central airconditioning products such as AHUs and FCUs also exported

• Opened office in Doha recently for project and product requirements from the region


Exports - Revenue

37.84

61.1868.16

89.99

0102030405060708090

100

2003-04 2004-05 2005-06 2006-07

(Rs crores)


Professional Electronics & Applied Industrial Systems• Import-Distribution of professional electronic

equipment from world-renowned manufacturers• Wide range of complex, hi-tech and large value

equipment in– Medical Electronics– Material Testing Equipment and Systems– Data Communication Products and Systems– Test and Measuring Instruments– Analytical Instruments– Industrial Products and Systems

• Catering to Healthcare, Manufacturing, R&D, Quality Control, Petrochemicals, Banking etc


Professional Electronics & Applied Industrial Systems – Revenue

5059

80

104

0

20

40

60

80

100

120

2003-04 2004-05 2005-06 2006-07

(Rs crores)

CAGR = 27.6%


Professional Electronics & Applied Industrial Systems – Segment Result

20.62

15.27

12.0111.19

0

5

10

15

20

25

2003-04 2004-05 2005-06 2006-07

(Rs crores)

CAGR = 22.6%


Construction boom


Trends

• Construction boom driven by IT/ITES, Retail and Infrastructure projects

• Major growth plans announced by several players in these segments

• Special Economic Zones (SEZs) are also expected to drive growth

• The above trends will translate into significant airconditioning and even refrigeration opportunities


IT/ITES

• IT/ITES services expected to grow in excess of 25% per annum over the next 3 years

• An estimated 1.4 million people will be added till FY10

• Office space of over 100 million sq ft will be needed

• Translates into airconditioning requirement of over Rs 1500 crores

• Blue Star enjoys a preferred partner status with Infosys, HP, Satyam, Wipro, HCL, Cognizant, Microsoft - major players driving growth


Retail, Malls & Multiplexes

• Based on plans announced by major players, 150 million sq feet of space will be added

• Translates into an airconditioning requirement of over Rs 2250 crores

• In addition, multiplexes expected to add 700 screens over the next 3 years

• Blue Star enjoys strong relationships with Reliance, Pantaloon, Shoppers’ Stop, Bharati, DLF, RPG, PVR, Adlabs and Vishal Megamart - main players driving growth


Opportunities from Telecom Segment

• Blue Star’s telecom business for airconditioning cell sites grew 185% in FY07

• Blue Star enjoys a dominant 50% market share

• Subscriber base expected to double over the next 3 years to 500 million necessitating 150,000 additional cell sites

• Translating into an airconditioning opportunity of Rs 1000 crores


Opportunities from Industrial Segment

• XI Fifth year plan includes addition of 48,000 MW of thermal power

• Blue Star has already executed major power plant projects for NTPC, NPCIL and Jindal

• Blue Star expects significant power plant project orders in the medium term

• Another fast-growing segment is pharma • Blue Star has strong credentials and

expertise in the pharma segment as well


Contracting Opportunities

• The construction boom will fuel growth in HVAC contracting business

• Currently, 15% of mega projects involve integrated mechanical, electrical and plumbing contracting

• Blue Star has developed capabilities in this area


Retail boom and cold chain


Retail Revolution: Where?

Home needsSuper market chains(Reliance/Hypercity etc.)

EateriesBranded/Formatted Chains (Café Coffee Day, McDonalds etc.)

Luxury GoodsMalls with multiple brand outlets &Stand alone chains


The Cold Chain

Production

Logistics

Retail Sales to Consumer

Bulk Usage by Eateries & Restaurants

Exports

Driver = Super Markets

Driver = Increasing eat-out culture

Driver = Entry of Corporates


Name of the Company

Planned Investment Likely foreign partner

Reliance Retail Rs.25,000 Cr. over 5 yrs

Direct

Bharti Retail Rs.20,000 Cr. over 5 yrs

Wal Mart

Aditya Birla Retail Rs.15,000 Cr. Over 5 yrs

Direct

Food World Rs. 1,000 Cr over 2 yrs

Already present in India

Spencer’s Rs. 1,000 Cr. Over 2 yrs

Direct

Vishal Mega Mart Rs.1,250 Cr. over 4 yrs

Direct

Hyper City Rs.1,200 Cr. over 4 yrs

Home Retail Group

Total (approx) Rs.60,000 Cr. +

Large-scale Super Market Investments Planned


Retail Format Airconditioning Refrigeration %

Investment Investment Format

Per Store Per Store

Hyper Market (100,000 sq.ft.) Rs.200 lakhs Rs.150 lakhs 4%

Super Market (20,000 sq.ft.) Rs. 32 lakhs Rs. 30 lakhs 16%

Convenience Store (2500sq.ft.) Rs. 4 lakhs Rs. 6 lakhs 80%

Distribution CentresOne for every 50 stores Rs.100 lakhs

Bulk StoragesMany

Transport Refrigeration UnitsMany

Supermarkets will drive cold chain…


Supermarkets Business Opportunities - Expectations(4 year period commencing April 2007)

Total

investment

Rs 60,000 Cr.

AC Potential

Rs 3000 Cr

Blue Star

Share

Rs.900 Cr

Front endRefrigeration

PotentialRs 1500 Cr.

Blue Star

Share

Rs.250 Cr

Back end

Refrigeration Potential

Rs 1500 Cr.

Blue Star

Share

Rs.500 Cr.


Outlook


Outlook

• The macro economic trends are favourable

• Blue Star in a strong position to leverage the opportunities available

• All three lines of business performing well• The Company is poised to outperform the

market growth


Thank You

analyst meet presentation by ashok m advani, chairman & managing director may 28, 2007

Documents

analyst meet presentation

blue star slide

power slide

dividend payment slide

shareholders funds slide

bodies corporate slide

cold chain business

share rs