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Notes to Accounts of Blue Star Ltd.

Mar 31, 2015

I The company can utilize these balances only toward settlement of the respective unpaid dividend.

The transfer of Professional Electronics and Industrial Systems (Refer note 23) is a non cash transaction and hence, has no impact on the Company''s cash flow for the year.

1. Corporate information

Blue Star Limited ("The Company") is into the business of central air conditioning and commercial refrigeration. The Company is also into distribution and maintenance of imported professional electronics and industrial systems.

2. Basis of preparation

The financial statements have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standard notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year except for change in accounting policy as explained below.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III of Companies Act, 2013.

Based on the nature of business and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities.

a) There is no movement in the shares outstanding at the beginning and at the end of the reporting period.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March, 2015 the amount of per share dividend proposed as distribution to the equity shareholders is Rs.5 (31 March, 2014 : Rs.4)

c) Details of shareholders holding more than 5% shares in the Company

# these shares are held in Trust for the Promoter group who are the beneficial owners

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares, except as disclosed.

d) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, refer note :36

Provision for warranties

A provision is recognised for standard warranty claims based on turnover during the year and extended warranty on the basis of turnover for preceding two years. The Company estimates the future cost of warranty based on historical experience of the level of repairs and returns. The estimates of such warranty cost are revised annually.

Loss order

A provision for expected loss on construction contract is recognised when it is probable that the contract cost will exceed the total contract revenue. For all other contracts, loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

a. Outstanding Loans carry an average interest rate of 10.26% p.a. (31 March 2014: 10.12% p.a.)

b. Outstanding Loans is secured by hypothecation of stock-in-trade and trade receivables.

c. Buyers'' Credit are availed for imports payables and are repayable within maximum tenure of 360 days from the date of shipment and carried an average interest @ Libor plus 0.95%

d. Commercial Papers carry average interest rate @ 8.75% p.a. for the current year (31 March 2014: 9.62% p.a.). These are repayable within 50 days to 90 days from the date of drawdown.

1 Figures in brackets represents amounts pertaining to previous years. 2. Depreciation and Amortization Expense

3 Plant & Machinery includes asset held for sale:

Gross Block Rs.1790.02 lakhs (Previous year: Rs.Nil lakhs), Depreciation Rs.83.73 lakhs (Previous year: Rs.Nil lakhs), Accumulated Depreciation Rs.1257.90 lakhs (Previous year: Rs.Nil lakhs), Net book value Rs.532.12 lakhs (Previous year: Rs.Nil lakhs)

Until the previous year, the Company had recognised the deferred tax asset only to the extent of deferred tax liability arising from timing differences as the Company had carry forward losses. During the current year, the carry forward losses have been completely set off and there is reasonable certainty of realisation of deferred tax assets. Accordingly, deferred tax asset has been recognised on timing differences prevailing at the beginning of the year to the extent not recognised in earlier years.

Margin Money Deposits given as security

Margin money deposits with a carrying amount of Rs.108.49 lakhs (31 March 2014: Rs.84.12 lakhs) are subject to a first charge to secure the Custom claim amounting to Rs.8.73 lakhs & Security deposit with customers amounting to Rs.99.76 lakhs.

* includes gratuity expense of Rs.69.70 lakhs

** In earlier years, the Company had made claims for additional costs incurred due to project delays and design changes for certain major projects. Based on negotiations and certification by the customers, the company revises estimated revenue, cost and project related provisions. The consequent charge of Rs.5,824.89 has been recorded and disclosed as an exceptional item.

4: DISCONTINUING OPERATIONS

The Board of Directors and shareholders had approved the transfer of the Company''s Professional Electronics and Industrial Systems business to Blue Star Engineering and Electronics Ltd. (BSEEL) (erstwhile Blue Star Electro-Mechanical Ltd.), a wholly owned subsidiary of the Company. Accordingly, the Company entered into a business purchase agreement on March 13, 2015 with BSEEL for sale of the said business together with all its net assets for a consideration of Rs.11,050 Lakhs. BSEEL has issued 2,84,50,052 equity shares of Rs.2 each towards discharge of the consideration on the basis of an independent valuation. In accordance with the agreement, the transaction has been effected on March 31, 2015 and a surplus of Rs.8,334.64 lakhs has been recognised in the Statement of Profit and Loss Account of the Company as an exceptional item.

* Includes reduction of Imminent loss of Rs.151.09 (31 March 2014: Rs.370.75)

** Includes Imminent loss impact (increase) of Rs.159.16 (31 March 2014: Rs.225.74)

2014-15 2013-14 Claims against the Company not acknowledged as debts 72.18 67.16

Sales Tax matters 12,048.84 6,809.45

Excise Duty matters 127.57 105.25

Service Tax matters 1,814.79 1,017.28

Income Tax matters 4,740.21 2,505.00

Corporate Guarantee given on behalf of Joint Ventures 7,625.00 5,605.03

Corporate Guarantee given on behalf of Subsidiary and others 4,753.00 5,797.50

Future cash outflows in respect of above matters are determinable only on receipt of judgments/decisions pending at various forums/authorities. The management does not expect these claims to succeed and accordingly, no provision for the contingent liability has been recognized in the financial statements.

The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on the financial statements.

5: Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs.513.81 lakhs (31 March 2014 : Rs.1,403.22 lakhs).

6a: Project costs and Commission on sales are net of Rs.Nil (31 March 2014: Rs.228.87 lakhs) and Rs.428.37 lakhs (31 March 2014: Rs.279.77 lakhs) respectively, on account of reversal of provision no longer required.

6b: Aggregation of expenses disclosed in Project cost, Other expenses and Finance Cost vide note 17, 20 and 21 in respect of specific items is as follows:

7: DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 "EMPLOYEE BENEFITS" i. Defined Contribution Plans:

Amount of Rs.1255.90 lakhs (31 March 2014: Rs.1262.16 lakhs) is recognized as an expense and included in "Employee Benefits expense" (refer note 19) in the statement of Profit and Loss.

b) The Company makes annual contribution to Blue Star Employees Gratuity Fund, which is a funded defined benefit plan for qualifying employees. The fund formed by the Company manages the investments of the Gratuity fund. Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year, Yield on portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities. The Company expects to contribute Rs.750 Lakhs to gratuity fund in 2015-16 (31 March 2014: Rs.170 Lakhs)

c) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

d) The guidance issued by the Accounting Standard Board (ASB) on implementing AS 15, Employee Benefits (revised 2005) states that provident fund set up by employers which require interest shortfall to be met by the employer, should be treated as a defined benefit plan. The actuary has provided a valuation and according thereto, there is no shortfall as at March 31,2015. The Company''s contribution to the Employee''s Provident fund aggregates to Rs.529.14 lakhs (31 March 2014: Rs.538.43 lakhs).

iii. General Description of significant defined plans:

1. Gratuity Plan

Gratuity is payable to all eligible employees on separation/retirement based on 15 days last drawn salary for each completed years of service after continuous service for five year

2 Additional Gratuity

Additional Gratuity is payable as per the specific rules of the Company i.e. Rs.5,000 for staff and Rs.10,000 for Managers subject to qualifying service of 15 years.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable for the period over which the obligation is to be settled.

8: SEGMENT INFORMATION

A. Primary Segment Reporting (by Business Segment)

The Company''s business segments are organised around product lines as under:

a. Electro Mechanical Projects and Packaged Air-conditioning Systems includes Central air-conditioning projects, Electrical Contracting business and Packaged air-conditioning businesses including manufacturing and after sales service.

b. Cooling Products includes cooling appliances, cold storage products, including manufacturing and after sales service.

c. Professional Electronics and Industrial Systems includes trading and services for testing machines, medical, analytical, test & measuring, data communications, industrial products and systems (divested as on March 31, 2015. Refer note 23)

B. Secondary segment information:

Secondary segmental reporting is based on the geographical location of customer. The geographical segments have been disclosed based on revenues within India (sales to customers in India) and revenues outside India (sales to customer located outside India.) (''in lakhs)

9: DISCLOSURE FOR RELATED PARTY AND INTEREST IN JOINT VENTURES

a) Related Party Disclosure Names of Related parties

Name of the Related parties where control exists irrespective of whether transactions have occurred or not. Subsidiary :

Blue Star Engineering and Electronics Limited (erstwhile Blue Star Electro Mechanical Limited).

Blue Star Design and Engineering Limited

Names of other related parties with whom transactions have taken place during the year Associate

Blue Star Infotech Limited

Joint Ventures

Blue Star Qatar- WLL

Blue Star M & E Engineering (Sdn) Bhd

Key Management Personnel

Mr Suneel M. Advani (upto 31.03.2014)

Mr Satish Jamdar Mr Vir Advani

Mr B Thiagarajan (w.e.f : 13.05.2013)

Relatives of Key Management Personnel

Ms Nargis Advani

Note: As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Directors are not included above.

The Company has given loans and corporate guarantees to subsidiaries and joint ventures in the ordinary course of business to meet the working capital requirements of subsidiaries and joint ventures.

Figures in italics are for previous year

Contingent Liabilities of the jointly controlled entity is disclosed in note 25 to the financial statements.

10: Leases

The Company has entered into operating lease agreements for its office premises, storage locations and residential premises for its employees. All leases are cancellable except one office premises. There are no exceptional/restrictive covenants in the lease agreements. Lease rental expense debited to statement of Profit and Loss is Rs.3,496.73 lakhs (31 March 2014: Rs.3,318.90 lakhs)

11: During previous years, the Company had entered into contracts, in the normal course of business, for services rendered and received for a value of Rs.41.79 lakhs with Private Limited Company in which a Director of the Company is a Director. Payment has been received and paid in accordance with the normal terms. The Company is in the process of filing necessary application for approval from the Central Government under Section 297 of the Companies Act, 1956 for the said transaction.

12: The Company provides share-based payment schemes to its employees. During the year ended 31 March 2015, an employee stock option plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below.:

On 18th January 2013, the board of directors approved the Equity Settled ESOP Scheme 2013 (ESOS 2013) for issue of stock options to the key employees and directors of the Company. The Scheme was also approved by the shareholders of the Company by a special resolution passed by postal ballet dated 7th March, 2013. According to the Scheme 2013, the employees selected by the remuneration committee from time to time will be entitled to options, subject to satisfaction of the prescribed vesting conditions. The contractual life (comprising the vesting period and the exercise period) of options granted is 5 years. The other relevant terms of the grant are as below:

b) Fair Valuation

The Fair Valuation of the options used to compute proforma net profit and earning per share have been done by an independent valuer on the date of grant using Black-Scholes Mertion Formula. The key assumptions and Fair Value are as under

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

The company measures the cost of ESOP using the intrinsic value method. Had the company used the fair value model to determine compensation, its profit after tax and earnings per share as reported would have changed to the amounts indicated below: (Rs.in lakhs)

13: The Company has revised the depreciation on certain assets as per the useful life specified in the Companies Act, 2013 or re-assssed by the Company. Accordingly, carrying amount of Rs.439.83 lakhs in respect of assets whose useful life is exhausted as on April 1, 2014 net of deferred tax of Rs.148.97 lakhs thereon have been adjusted to retained earnings.

14: PREVIOUS YEAR COMPARATIVES

Previous year''s figures have been regrouped where necessary to conform to this year''s classification.


Mar 31, 2014

1. Corporate information

Blue Star Limited ("The Company") is into the business of central air conditioning and commercial refrigeration. The Company is also into distribution and maintenance of imported professional electronics and industrial systems.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standard notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, read with General Circular 8/2014 dated April 4th 2014, issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

Based on the nature of business and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/non-current classification of assets and liabilities.

3: CONTINGENT LIABILITIES (Rs. in lakhs)

2013-14 2012-13

Claims against the Company not acknowledged as debts 67.16 70.76

Sales Tax matters 6,809.45 7,267.40

Excise Duty matters 105.25 105.25

Service Tax matters 1,017.28 672.44

Income Tax matters 2,505.00 1,763.29

Corporate Guarantee given on behalf of Joint Ventures 5,605.03 6,347.39

Corporate Guarantee given on behalf of Subsidiary and others 5,797.50 6,956.76

Future cash outflows in respect of above matters are determinable only on receipt of judgments/decisions pending at various forums/authorities. The management does not expect these claims to succeed and accordingly, no provision for the contingent liability has been recognized in the financial statements.

4 Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs.1403.22 lakhs (31 March 2013 : Rs.695.66 lakhs).

5 BSDEL is a Joint Venture of Blue Star Limited (The Company) and Synergy Realtors & Services Private Limited (SRSPL). During the year SRSPL (transferee) was amalgamated with BSDEL (transferor) pursuant to the scheme of amalgamation effective from April 1, 2012, approved by the respective honourable High Courts having jurisdiction over the Companies. In terms of the scheme, 180 fully paid up preference shares of Rs.100 each of BSDEL for every 1 fully paid up equity share of Rs.10 each of SRSPL were issued. The Investment of SRSPL in the equity share capital of BSDEL was cancelled. Consequently BSDEL has become a wholly owned subsidiary of the Company in the current year.

6 In accordance with a contract, the Company has made claims for additional costs incurred due to project delays and design changes on a customer in earlier years. Pending approval of the customer an amount of Rs.5600 lakhs (net of provisions) is included under Work in Progress - Projects, and revenue has not been recognised there against. The final certification, handing over process and negotiations with the customer are in progress and management is confident of recovery of these claims.

7 a Project costs and Commission on sales are net of Rs.228.87 lakhs (31 March 2013: Rs.217 lakhs) and Rs.626.4 lakhs (31 March 2013: 312.64 lakhs) respectively, on account of reversal of provision no longer required.

8: DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 "EMPLOYEE BENEFITS" i. Defined Contribution Plans:

Amount of Rs.723.73 lakhs (31 March 2013: Rs.719.11 lakhs) is recognized as an expense and included in "Employee Benefits expense" (refer note 19) in the statement of Profit and Loss.

b) The Company makes annual contribution to Blue Star Employees Gratuity Fund, which is a funded defined benefit plan for qualifying employees. The fund formed by the Company manages the investments of the Gratuity fund. Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities. The Company expects to contribute Rs.170 lakhs to gratuity fund in 2014-15 (31 March 2013: Rs.280 lakhs)

c) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

d) The guidance issued by the Accounting Standard Board (ASB) on implementing AS 15, Employee Benefits (revised 2005) states that provident fund set up by employers which require interest shortfall to be met by the employer, should be treated as a defined benefit plan. The actuary has provided a valuation and according thereto, there is no shortfall as at March 31, 2014. The Company''s contribution to the Employee''s Provident fund aggregates to Rs.538.43 lakhs (31 March 2013: Rs.531.20 lakhs).

iii. General Description of significant defined plans:

1. Gratuity Plan

Gratuity is payable to all eligible employees on separation/retirement based on 15 days last drawn salary for each completed years of service after continuous service for five years.

2. Additional Gratuity

Additional Gratuity is payable as per the specific rules of the Company i.e. Rs.5,000 for staff and Rs.10,000 for Managers subject to qualifying service of 15 years.

9: SEGMENT INFORMATION

A. Primary Segment Reporting (by Business Segment)

The Company''s business segments are organised around product lines as under:

a. Electro Mechanical Projects and Packaged Air-conditioning Systems includes Central air-conditioning projects, Electrical Contracting business and Packaged air-conditioning businesses including manufacturing and after sales service.

b. Cooling Products includes cooling appliances, cold storage products, including manufacturing and after sales service.

c. Professional Electronics and Industrial Systems includes trading and services for testing machines, medical, analytical, test & measuring, data communications, industrial products and systems.

10: DISCLOSURE FOR RELATED PARTY AND INTEREST IN JOINT VENTURES

a) Related Party Disclosure

Names of Related parties

Name of the Related parties where control exists irrespective of whether transactions have occurred or not.

Subsidiary :

Blue Star Electro Mechanical Limited

Blue Star Design and Engineering Limited ( w.e.f : 1.04.12 )

Names of other related parties with whom transactions have taken place during the year

Associate

Blue Star Infotech Limited

Joint Ventures

Blue Star Qatar- WLL

Blue Star M & E Engineering (Sdn) Bhd

Key Management Personnel

Mr Suneel M Advani

Mr Satish Jamdar

Mr Vir Advani

Mr B Thiagarajan ( w.e.f : 13.05.13 )

Relatives of Key Management Personnel

Ms Nargis Advani

11: LEASES

The Company has entered into operating lease agreements for its office premises, storage locations and residential premises for its employees. All leases are cancellable. There are no exceptional/restrictive covenants in the lease agreements. Lease rental expense debited to statement of Profit and Loss is Rs.3,318.90 lakhs (31 March 2013: Rs.3,014.76 lakhs)

12 During the year, the Company has entered into a contract, in the normal course of business, for services rendered and received for a value of Rs.12.43 lakhs (31 March 2013 Rs.29.36 lakhs) with four (31 March 2013: two) Private Limited Companies in which a Director of the Company is a Director. Payment has been received and paid in accordance with the normal terms. The Company is in the process of filing necessary application for approval from the Central Government under Section 297 of the Companies Act, 1956 for both the years.

13 The Company has long term investment in Blue Star Electro Mechanical Limited (BSEML), a wholly owned subsidiary. BSEML has incurred losses of Rs.1,328.44 lakhs during the year ended March 31, 2014 and its net worth has fully eroded. Considering it to be a long term strategic investment and having regard to the operating plans, management does not consider diminution in value (other than temporary) as at the year end.

14 The Company was involved in an arbitration with a Customer for unpaid amount and additional claim for extra work carried out. In an earlier year the arbitration was awarded in favour of the Company against which the customer filed an application before the District Court. Subsequent to the year end, the application filed by the customer was dismissed by the District Court and accordingly the Company has recognised an income of Rs.618 lakhs

15: PREVIOUS YEAR COMPARATIVES

Previous year''s figures have been regrouped where necessary to conform to this year''s classification.


Mar 31, 2013

1. Corporate information

Blue Star Limited ("The Company") is into the business of central air conditioning and commercial refrigeration. The Company is also into distribution and maintenance of imported professional electronics and industrial systems.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standard notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

Based on the nature of business and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.

3: CONTINGENT LIABILITIES

(Rs. in lakhs)

2012-13 2011-12

Claims against the Company not acknowledged as debts 70.76 71.76

Sales Tax matters 7,267.40 5,353.93

Excise Duty matters 105.25 105.25

Service Tax matters 672.44 483.43

Income Tax matters 1,763.29 2,837.04

Corporate Guarantee given on behalf of Joint Ventures 6,347.39 1,084.25

Corporate Guarantee given on behalf of Subsidiary and others 6,956.76 7,234.49

Future cash outflows in respect of above matters are determinable only on receipt of judgments/decisions pending at various forums/authorities. The management does not expect these claims to succeed and accordingly, no provision for the contingent liability has been recognized in the financial statements.

4 Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs.695.66 lakhs (31 March 2012 : Rs.616.47 lakhs).

5 a. During the year, the Company has acquired back 390,000 shares of Rs.10/- each equivalent to 20% of paid up capital of Blue Star Design and Engineering Ltd at no cost based on the stipulated conditions in the Shareholders'' Agreement with the JV partner.

5 b. The Company has an outstanding balance of loan to its Joint Venture, Blue Star Design Engineering Limited (BSDEL) amounting to Rs.649 lakhs and interest accrued thereon of Rs.213 lakhs as at March 31, 2013. The loan is repayable on demand and the Company has not called for repayment. BSDEL has filed a scheme of amalgamation with Synergy Realtors & Services Private Limited, with the High Courts having jurisdiction over the Companies and the proposed effective date is April 1, 2012. Subsequent to the approvals by the High Courts, BSDEL would become a wholly owned subsidiary of the Company and would have income from operations, which would be utilized to repay outstanding loan and interest to the Company.

6 During the previous year, the Company had paid/provided Rs.402.47 lakhs as managerial remuneration in excess of the limits prescribed under Schedule XIII of The Companies Act, 1956. Pursuant to the application made by the Company to the Central Government, the Company has received approval for Rs.202.47 lakhs. The Company has taken necessary steps for obtaining further approval for balance Rs.200 lakhs which has been paid during the current financial year. Pending receipt of such approval, the amounts are held in trust by the said Directors.

7 a. Project costs and Commission on sales are net of Rs.217 lakhs (31 March 2012: Rs.213 lakhs) and Rs.312.64 lakhs (31 March 2012: Nil) respectively, on account of reversal of provision no longer required.

8: DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 "EMPLOYEE BENEFITS"

i. Defined Contribution Plans:

Amount of Rs.719.11 lakhs (31 March 2012: Rs.882.06 lakhs) is recognized as an expense and included in "Employee Benefits expense" (refer note 19) in the statement of Profit and Loss.

b) The Company makes annual contribution to Blue Star Employees Gratuity Fund, which is a funded defined benefit plan for qualifying employees. The fund formed by the Company manages the investments of the Gratuity fund. Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year, Yield on portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities. The Company expects to contribute Rs.280 lakhs to gratuity fund in 2013-14 (31 March 2012: Rs.168 Lakhs)

c) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

d) The guidance issued by the Accounting Standard Board (ASB) on implementing AS 15, Employee Benefits (revised 2005) states that provident fund set up by employers which require interest shortfall to be met by the employer, should be treated as a defined benefit plan. The actuary has provided a valuation and according thereto, there is no shortfall as at March 31, 2013. The Company''s contribution to the Employee''s Provident fund aggregates to Rs.531.20 lakhs (31 March 2012: Rs.414.43 lakhs).

9: SEGMENT INFORMATION

A. Primary Segment Reporting (by Business Segment)

The Company''s business segments are organised around product lines as under:

a. Electro Mechanical Projects and Packaged Air-conditioning Systems includes central air-conditioning projects, Electrical Contracting business and Packaged air-conditioning businesses including manufacturing and after sales service.

b. Cooling Products includes cooling appliances, cold storage products, including manufacturing and after sales service.

c. Professional Electronics and Industrial Systems includes trading and services for testing machines, medical, analytical, test & measuring, data communications, industrial products and systems.

10: DISCLOSURE FOR RELATED PARTY AND INTEREST IN JOINT VENTURES

a) Related Party Disclosure Names of Related parties

Name of the Related parties where control exists irrespective of whether transactions have occurred or not. Subsidiary :

Blue Star Electro Mechanical Limited

Names of other related parties with whom transactions have taken place during the year Associate

Blue Star Infotech Limited

Joint Ventures

Blue Star Qatar- WLL

Blue Star M & E Engineering (Sdn) Bhd

Blue Star Design and Engineering Limited

Key Management Personnel

Mr Ashok M Advani Mr Suneel M Advani Mr Satish Jamdar Mr Vir Advani

Relatives of Key Management Personnel

Ms. Nargis Advani

11: LEASES

The Company has entered into operating lease agreements for its office premises, storage locations and residential premises for its employees. All leases are cancellable. There are no exceptional/restrictive covenants in the lease agreements. Lease rental expense debited to statement of Profit and Loss is Rs.3,014.76 lakhs (31 March 2012: Rs.3,043.82 lakhs)

12: During the year, the Company has entered into a contract, in the normal course of business, for sale of goods and services for a value of Rs.29.36 lakhs with two Private Limited Companies in which a Director of the Company is a Director. Payment has been received in accordance with the normal sales terms. The Company is in the process of filing necessary application for approval from the Central Government under Section 297 of the Companies Act, 1956.

13: The Company has long term investment in Blue Star Electro Mechanical Limited (BSEML), a wholly owned subsidiary. BSEML has incurred losses of Rs.1,594.90 lakhs during the year ended March 31, 2013 and its net worth has fully eroded. Considering it to be a long term strategic investment and having regard to the operating plans, management does not consider diminution in value (other than temporary) as at the year end.

14: The classification of current and non current debtors in previous year was done based on project specific operating cycle in case of project business. During the year ICAI issued a FAQ on revised Schedule VI. where it has been clarified that the operating cycle is to be identified for each of its businesses and not based on each of its customers. Accordingly, the Company has revised its operating cycle to twelve months for project business. Further the Company has reclassified previous year''s disclosure for debtors in line with current year''s classification.


Mar 31, 2012

1. Corporate information

Blue Star Limited ("The Company") is into the business of central air conditioning and commercial refrigeration. The Company is also into distribution and maintenance of imported professional electronics and industrial systems.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standard notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.

a) There is no movement in the shares outstanding at the beginning and at the end of the reporting period.

b) Terms/rights attached to equity shares

The company has only one class of equity shares having par value of Rs2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March, 2012 the amount of per share dividend proposed as distribution to the equity shareholders is Rs1 (31 March, 2011: Rs7)

c) Details of shareholders holding more than 5% shares in the Company

# these shares are held in Trust for the Promoter group who are the beneficial owners.

As per records of the company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

Provision for warranties

A provision is recognised for standard warranty claims based on turnover during the year and extended warranty on the basis of turnover for preceding two years. The company estimates the future cost of warranty based on historical experience.The estimates of such warranty cost are revised annually.

Loss order

A provision for expected loss on construction contract is recognised when it is probable that the contract cost will exceed the total contract revenue. For all other contracts, loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

Cash credit and Buyers Credit from banks is Secured by hypothecation of stock-in-trade and trade receivables. The cash credit carries average interest @ 10.0% p.a and Buyers' credit carries average interest @ Libor plus 1.25%. Cash credit are repayable on demand and Buyers' Credit are availed for imports payables and are repayable within maximum tenure of 360 days from the date of shipment.

Commercial Papers carry average interest rate @ 9.80% p.a. for the current year. These are repayable within 45 days to 365 days from the date of drawdown.

Foreign Currency Loan carry average interest @ 7% p.a. for the current year. The loan is repayable after one year from the date of its origination.

Indian Rupee loan carry average interest @ 9.75% p.a. The loan are repayable within maximum tenure of 60 days from the date of its origination.

4: CONTINGENT LIABILITIES (Rsin lakhs)

Year Ended March 31 2012 2011

Claims against the Company not acknowledged as debts 71.76 66.44

Sales Tax matters 5,353.93 5,279.88

Excise Duty matters 105.25 80.30

Service Tax matters 483.43 483.43

Income Tax matters 2,837.04 1,684.52

Corporate Guarantee given on behalf of Subsidiary, Associates and others 8,318.74 8,141.43

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities. The management does not expect these claims to succeed and accordingly, no provision for the contingent liability has been recognized in the financial statements.

5 Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs616.47 lakhs (31 March 2011: Rs1,381.21 lakhs).

6 During the year the Company has further invested a sum of Rs1,952 lakhs (March 31, 2011: Rs9,765 lakhs) in the share capital of its wholly owned subsidiary Blue Star Electro Mechanical Ltd (BSEML), for acquiring further 3,20,000 (March 31, 201 1:16,50,000) equity shares of Rs10/- each.

7 Employee benefit expenses (Note 19) include Rs594.47 lakhs paid/ provided during the year towards Director's remuneration of which Rs402.46 lakhs in excess of permissible remuneration determined under Schedule XIII of The Companies Act, 1956. The Company is seeking approval of the Central Government and the shareholders for the excess managerial remuneration paid to / provided for Directors' remuneration. Pending receipt of such approval, the amount of Rs202.47 lakhs paid to the Directors in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956 is held in trust by the said Directors.

8 a. Project costs and Legal & Professional fees are net of Rs213 lakhs (31 March 2011: Rs1,128.48 lakhs) and Nil (31 March 2011:

Rs81.33 lakhs) respectively, on account of reversal of provision no longer required.

9: DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 "EMPLOYEE BENEFITS" i. Defined Contribution Plans:

Amount of Rs882.06 lakhs (31 March 2011: Rs867.36 lakhs) is recognized as an expense and included in "Employee Benefits expense" (see note 19) in the Profit and Loss account.

b) The Company makes annual contribution to Blue Star Employees Gratuity Fund, which is a funded defined benefit plan for qualifying employees. The fund formed by the Company manages the investments of the Gratuity fund. Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year, Yield on portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities. The Company expects to contribute Rs168 lakhs to gratuity fund in 2012-13 (31 March 2011: Rs268 lakhs).

c) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

d) The guidance issued by the Accounting Standard Board (ASB) on implementing AS 15, Employee Benefits (revised 2005) states that provident fund set up by employers which require interest shortfall to be met by the employer, should be treated as a defined benefit plan. The Actuary Society of India has issued the final guidance for measurement of provident fund liabilities during the quarter ended December 31, 2011. The actuary has provided a valuation and according thereto, there is no shortfall as at March 31, 2012. The Company's contribution to the Employee's Provident fund aggregates to Rs414.43 lakhs (31 March 2011: Rs369.72 lakhs).

iii. General Description of significant defined plans:

1. Gratuity Plan

Gratuity is payable to all eligible employees on separation/retirement based on 15 days last drawn salary for each completed years of service after continuous service for five years.

2 Additional Gratuity

Additional Gratuity is payable as per the specific rules of the Company i.e. Rs5,000 for staff and Rs10,000 for Managers subject to qualifying service of 15 years.

10: SEGMENT INFORMATION

A. Primary Segment Reporting (by Business Segment)

The Company's business segments are organised around product lines as under:

a. Electro Mechanical Projects and Packaged Air-conditioning Systems includes central air-conditioning projects, Electrical Contracting business and Packaged air-conditioning businesses including manufacturing and after sales service.

b. Cooling Products includes cooling appliances, cold storage products, including manufacturing and after sales service.

c. Professional Electronics and Industrial Systems includes trading and services for testing machines, medical, analytical, test & measuring, data communications, industrial products and systems.

11: DISCLOSURE FOR RELATED PARTY AND INTEREST IN JOINT VENTURES

a) Related Party Disclosure Names of Related parties

Name of the Related parties where control exists irrespective of whether transactions have occurred or not. Subsidiary :

Blue Star Electro Mechanical Limited

Names of other related parties with whom transactions have taken place during the year Associate

Blue Star Infotech Limited

Joint Ventures

Blue Star Qatar- WLL

Blue Star M & E Engineering (Sdn) Bhd

Blue Star Design and Engineering Limited

Key Management Personnel

Mr Ashok M Advani

Mr Suneel M Advani

Mr Satish Jamdar

Mr Vir Advani (w.e.f. 01.07.2010)

Relatives of Key Management Personnel

Ms. Nargis Advani

Mr. Vir Advani (Upto 30.06.2010)

12: LEASES

The Company has entered into operating lease agreements for its office premises, storage locations and residential premises for its employees. All leases are cancellable. There are no exceptional / restrictive covenants in the lease agreements. Lease rental expense debited to Profit and Loss Account is Rs3,007.29 lakhs (31 March 2011: Rs2,373.10 lakhs)

13: PREVIOUS YEAR COMPARATIVES

Previous year's figures have been regrouped where necessary to conform to this year's classification.


Mar 31, 2010

I. Nature of Operations

Blue Star Limited (The Company") [s Indias leading central air conditioning and commercial refrigeration company, fulfilling the cooling requirements of large number of corporate and commercial customers. Another significant area of business interest for the Company is distribution and maintenance of imported professional electronics and Industrial systems.

2.Retirement and other Employee Benefits

a. Defined Contribution Plan

The Companys liability towards Employees Provident Fund and Superannuation scheme administered through theTrusts maintained by the Company, are considered as Defined Contribution Pfans.The Companys contributions paid/payable towards these defined contribution plans are recognised as expense In the Profit and Loss Account during the period in which the employee renders the related service.There are no other obligations other than the contributions payable to the Trusts.

b Defined Benefit Plan

In respect of certain employees covered by the Exempted Provident fund ,the contribution towards shortfall In interest rate payable as per statue and the earnings of the Provident Fund Trust is considered as Defined Benefit Plans,

Companys liabilities towards gratuity and leave encashment benefits are considered as Defined Benefit Plans, The p/esent value of the obligations towards Gratuity, leave encashment, sick leave and additional gratuity 3T& determined based on actuarial valuation using the projected unit credit method.The obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to market yields on Government securities at the balance Sheet date. Actuarial gains/losses are taken to profit and loss account and are not deferred. c. Voluntary Retirement Scheme

Payments made under the Voluntary Retirement Scheme are charged to the Profit and loss Account in the same year.

3. Excise Duty

Excise duty on direct sales by the manufacturing units is reduced from the sales, Excise Duty liability on closing stock of finished goods lying at the manufacturing units is accounted based on the estimated duty payable as at the close of the year.

4. Taxes on Income

Tax. expense comprises of current deferred and fringe benefit tax. Current income tax and fringe benefit tax Is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in indfa. Deferred Income taxes reflects the Impact of current year timing differences between taxable Income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date, Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets & liabilities ^k reviewed at each balance sheet date.

5. Segment Reporting Policies

a. identification of segments:

The Companys operating businesses a re organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets,

b. Allocation of common costs/ assets & liabilities :

Common allocable costs/assets and liabilites are consistently allocated amongst the segments on appropriate basis.

c. Unallocated items:

Includes general corporate income and expense items which are not allocated to any business segment.

d. Segment Policies :

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

6, Earning per share

Basic & Diluted earnings per share are calculated by dividing the net profit or loss for The period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

7, Provisions

A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the balance sheet date.These are reviewed at each balance sheet date and adjusted to reflect the current best estimates,

8, Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less,

9. The Company had acquired the electrical contracting business of Naseer Electrical* Private Limited (NEPL) under a Business Purchase Agreement on a slump sate basis for Rs, 4,309.77 lakhs (including Rs. 500 lakhs held In Escrow account till the conditions stipulated in the said agreement are fulfil led J with effect from January 24,2008, Consequent upon final settlement, a sum of Rs. 221 .S3 lakhs was received back from the amount held In the Escrow account and the same has been credited to the General Reserve of the Company.

Further, In accordance with the Scheme of Arrangement approved by the shareholders and the Horible High Court at Bombay In respect of the electrical contracting business acquired from NEPL the fees and bonus of Rs. 525.96 lakhs {Previous Year Rs.3 70 lakhs) paid to the consultants in terms of the Business Purchase Agreement and its Annexure thereof, entered into with NEPL for the said acquisition has been adjusted against the General Reserve of the Company.

In the previous year a sum of Rs.335.09 lakhs (net) was adjusted against General Reserve towards earn out bonus of Rs 270 lakhs and retalnershlp fees of Rs 100 lakhs paid as per the business purchase agreement with NEPL net of a write back of Rs34.91 lakhs eariier forming part of the goodwill,

10. Exceptional Item includes profit of Rs.1,396.49 lakhs on sale of 117,600 shares In Rolastar Private Limited and 61,440 shares in Ravistar India Private Limited. The Company has further commitment to sell the balance Investment of 15350 shares in Ravistar Private Limited as part of Share Purchase agreement not later than June 30r 2010. On April 23,2010, the Company has received the consideration of Rs,48 takhs stipulated in the agreement and transferred the balance shares In favour of the purchaser.

11. The Company has given an unsecured loan to its associate company Blue Star Design and Engineering Limited (BSDEU. Considering possible non-recovery, as a matter of prudence, a provision of fls.235 takhs has been made In respect of the amounts receivable from B5DEL

12. As per requirement of Section 22 of Micro, Small & Medium Enterprises Development Act 2006 {the ActT following information is disclosed:

13. a, Gratuity and other post-employment defined benefit plans:

The Company makes annual contribution to Blue Star Employees Gratuity Fund, which Is a funded defined benefit plan for qualifying employees. The scheme provides for payment of gratuity to employees on separation/ retirement based on 15 days last drawn salary for each completed years of service after continuous service for five years.

The Company provides certain additional employment benefits to employees such as leave encashment, additional gratuity and sick leave. These benefits are unfunded.

b. Defined Contribution plan:

An amount of Rs.l,065.54 lakhs (Previous Year Rs. 1,022.95 lakhs) is recognised as an expense and included in Schedule J - Contribution to Provident fund and Superannuation In the Profit and Loss Account.

14, Segment Information:

A. Primary Segment Reporting [by Business Segment)

Tire Companys business segments are organised around product lines as under:

a. Electro Mechanical Projects and Packaged Alr-condltloning Systems Includes central alr-condltlonlng projects and packaged alr-condttionfng businesses including manufacturing and after sates service and also includes the new!/ acquired Electrical Contracting business.

b. Cooiing Products includes cooling appliances, cofd storage products, including manufacturing and after sales service.

c. Professional Electronics and Industrial Systems Includes trading and services for testing machines, medical, analytical, test & measuring, data communications, industrial products and systems,

B. Secondary segment information:

Secondary segmental reporting Is based on the geographical location of customers. The geographical segments have been disclosed based on revenues within India (sales to customers In India) and revenues outside India (sales to customer located outside- India J

15. Leases:

The Company has entered [nto operating tease agreements for Its office premises, storage locations and residential premises for Its employees. The future lease rental payments are determined on the basis of monthly lease payment terms as per the agreements. At the expiry of non cancellable lease period the option of renewal rest with the Company. Lease rental expense debited to Profit and Loss Account Is Rs. 1,711.86 lakhs (Previous year Rs. 1,769.18 lakhs).

16. Previous Year Comparatives

The figures of previous year were audited by a firm of Chartered accountants other than 5 R Batlibol & Associates. Previous years figures have been regrouped where necessary to conform to this years classification.