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Directors Report of Blue Star Ltd.

Mar 31, 2023

The Directors are pleased to present the 75^th Annual Report, together with the audited financial statements for the financial year ended March 31,2023.

COMPANY OVERVIEW

Your Company offers one of India''s widest ranges of air conditioning and commercial refrigeration & air-conditioning products, as well as a comprehensive range of air purifiers, air coolers, water purifiers, cold chain equipment and specialty products. It fulfils the cooling, refrigeration & air-conditioning requirements of a large number of corporate, commercial as well as residential customers.

Leveraging on its project execution capabilities, your Company offers turnkey solutions in MEp (Mechanical, Electrical, plumbing and Fire-fighting) contracting for Buildings, Factories, data

Centres, Infrastructure, Heavy Industry and Water distribution projects.

the Company''s integrated business model of a Manufacturer, Contractor and after-sales service provider enables it to offer end-to-end solutions to its customers, a factor that has proved to be a significant differentiator in the marketplace.

FINANCIAL HIGHLIGHTS

the financial statements of the Company are prepared in accordance with the applicable provisions of the Companies act, 2013 (the ''act'') including accounting standards as specified in Section 133 of the act, read with the Companies (accounts) Rules, 2014, and amendments thereof. The consolidated and standalone financial highlights of the Company for the financial year ended March 31,2023, are summarised as follows:

(''in crores)
Particulars	Consolidated		Standalone
	For the year ended		For the year ended
	March 31, 2023	March 31, 2022	March 31, 2023	March 31, 2022
Revenue from operations	7,977.32	6,064.08	7,353.13	5,395.49
Total Income	8,008.19	6,099.80	7,382.96	5,431.59
Total Expenses	7,624.02	5,849.99	7,049.17	5,235.84
Profit before share of profit of Joint Venture	384.17	249.81	NA	NA
profit before tax	555.38	250.90	504.60	195.75
Income tax	154.69	82.90	138.02	68.01
Profit after tax	400.69	168.00	366.58	127.74

OPERATING RESULTS

after two consecutive years disrupted by the pandemic, the year under review witnessed complete restoration of normalcy and, demand for all our products and services surged. The sentiments in the Indian economy were positive despite the geo-political uncertainties, rising interest rates both globally and in India and a depreciating currency which made imports costlier. Capex investments by both the public and the private sectors continued to be encouraging. Consequently, all the sectors that the Company operates in witnessed healthy growth and enabled the Company to end the year on a positive note and a robust order book. Your Company continues to stay focused on its mission to grow faster than the market, profitability improvement and efficient utilization of capital, while continuing to invest in manufacturing capacities, R&D and expansion of international footprint.

On a consolidated basis, revenue from operations for the current financial year grew 31.6% to ? 7,977.32 crores as compared to ? 6,064.08 crores in the previous financial year. During the year

under review, the Company sold a freehold land parcel at Thane and earned a profit of ? 170.81 crores which has been reported as an exceptional item. Net profit for the current financial year including the profit earned on sale of the land parcel at Thane, grew 138.5% to ? 400.69 crores as compared to ? 168 crores in the last financial year. On a standalone basis, revenue from operations of the Company grew 36.3% to ? 7,353.13 crores as compared to ? 5,395.49 crores in the previous year. Your Company''s standalone Net Profit after Tax grew 187% to ? 366.58 crores as compared to ? 127.74 crores for the previous year. Likewise, the standalone profit includes the profit earned on sale of the land parcel at Thane.

Your Company''s consolidated Total Income in the financial year crossed ? 8,000 crores. ah segments performed exceedingly well and generated record revenue and profits.

Your Company and its subsidiaries (Group) operate in three business segments: (i) Electro-Mechanical projects and Commercial Air Conditioning Systems; (ii) Unitary Products; and

(iii) Professional Electronics and Industrial Systems. Performance of the Group in the above-mentioned segments during the year under review is as stated below:

I. Electro-Mechanical Projects and Commercial

Air Conditioning Systems

a. Electro-Mechanical Projects Business

With the onset of construction and capex cycle, order inflows from commercial building, factories, data centers and infrastructure sector such as metro, water distribution and railway electrification sectors picked up. Government''s commitment to augment social sector infrastructure such as airports, metro, railway network, water supply and hospitals continued to fuel growth opportunities resulting in inflow of tenders in the infrastructure sector. During the year under review, your Company booked its first order for railway electrification and received its largest ever order for an integrated data center project.

b. Commercial Air Conditioning Systems

during the year under review, a healthy flow of opportunities across all the segments that your Company operates in coupled with the revival of demand from the retail, manufacturing, healthcare, and entertainment segments enabled growth for the commercial air conditioning business. Your Company gained market share in all product categories and continued to maintain its market leadership in Conventional and Inverter ducted Air Conditioning systems as well as scroll Chillers and the second position in the VRFs and screw Chillers. demand from the government, industrial, healthcare and hospitality sectors coupled with continued focus on channel expansion across tier 2, 3 and 4 towns enabled growth in revenue during the year.

c. International Business

The Company witnessed growth across all segments with increasing demand for our products in the international markets in which it operates with a strong demand for our room air conditioners and VRFs and year under review saw a healthy order book.

revenue in this segment for the year grew by 25.3% to ? 4,015.63 crores as against ? 3,204.49 crores in the previous year. The segment result grew 42.1% to ? 276.78 crores as compared to ? 194.82 crores in the previous year.

During the year the Company set up subsidiaries in United States of America and Netherlands to serve American and European markets respectively.

II. Unitary Products

After two consecutive financial years in which the peak selling seasons were impacted by the pandemic, the room air conditioners business segment witnessed a strong demand with the new range of affordable mass-premium products being very well received by the market. Your Company strengthened its position as one of the preferred brands with first time buyers in Tier 3, 4 and 5 markets. Your Company offers a vast and comprehensive range of products that are priced competitively and at the same time deliver consistent performance and superior quality that is aligned with the Blue Star brand. The Company has diversified its product portfolio by positioning its products in premium, affordable premium and affordable segment. The Sri City plant of the subsidiary, Blue Star Climatech Limited commenced its commercial production of room air conditioners in January, 2023 which shall aid improvement in margins going forward.

In the commercial refrigeration business, your Company continued to maintain leadership position in deep freezers, storage water coolers and modular cold rooms. A new range of visi coolers with a wide capacity range to suit different customer needs was launched during the year. The new manufacturing facility at Wada commenced commercial production during the year with a new series of indigenously designed and manufactured hardtop and glass top deep freezers.

The overall pick-up in the demand, general improvement in consumer sentiments propelled a growth in revenue of this segment by 38.8% to ? 3,626.93 crores in the year under review as against ? 2,612.24 crores in the previous year. The segment''s results improved to ? 282.31 crores in the current year as compared to ? 155.86 crores achieved in the previous financial year.

III. Professional Electronics and Industrial Systems (PE&IS)

Opportunities created by the digitalization initiatives by the BFSI sector continued to drive revenue growth in your Company''s Data Security Solutions business. Additional investments in the Healthcare sector offered good opportunities for the growth of MedTech Solutions business. Testing Machines business also continued to witness growth with a revival of investments in the manufacturing sector. With a wide portfolio of products and solutions forming part of your Company''s offerings, the prospects for this business segment have been positive.

The segment revenue for the year grew by 35.3% to ? 334.76 crores as against ? 247.35 crores in the previous year. The segment result improved to ? 50.50 crores as compared to ? 42.49 crores in the previous year.

BONUS ISSUE

The Board at its meeting held on May 4, 2023, recommended issue of Equity Bonus shares in the proportion of 1:1 i.e. 1 (One) equity share of ? 2 each for every 1 (One) existing equity share of ? 2 each held by the shareholders of the Company as on record date subject to the approval of shareholders by way of Postal Ballot. The said issue of bonus shares shall be undertaken by capitalization of sums standing to the credit of the General reserves and/or Retained earnings and/or Securities premium account of the Company.

DIVIDEND

The Board at its meeting held on May 4, 2023, has recommended a final dividend of ? 12 per equity share of ? 2 each on pre-bonus share capital, for the financial year ended March 31,2023. Subject to the approval of the bonus issue by the shareholders, the dividend shall be adjusted proportionately i.e. ? 6 per equity share on the increased paid up share capital (i.e. post-bonus share capital). This dividend will be paid subject to the approval of the members at the Annual General Meeting to be held on August 3, 2023, to those members whose names appear in the register of members as on the record date, i.e. July 21,2023.

The Board has adopted the Dividend Distribution Policy for the Company which can be viewed on the website of the Company at: https://www.bluestarindia.com/media/104569/ dividend-distribution-policv.pdf

FINANCING

On a consolidated basis, finance cost for the year increased to ? 54.70 crores as compared to ? 46.40 crores in the previous year, due to higher cost of financing and an increase in average gross borrowings during the year.

The Company''s forex cost was ? 5.14 crores for the year as compared to ? 4.94 crores in the previous year. In spite of higher volatility caused by the geo-political factors and depreciating rupee, the cost was mitigated on account of dynamic forex risk management practices followed by your Company.

DEPOSITS

The Company has not accepted any deposits from the public, falling within the ambit of Section 73 of the Act, read with the Companies (Acceptance of Deposits) Rules, 2014.

CONSOLIDATED FINANCIAL STATEMENTS

As required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ''Listing Regulations''), and Section 129(3) of the Act, the consolidated financial statements prepared by

the Company as per the Indian Accounting Standards (Ind AS), form part of this Annual Report.

The Consolidated Financial Statements shall also be laid at the ensuing Annual General Meeting of the Company.

NON-CONVERTIBLE DEBENTURES

In the year 2020-21, the Company had issued 3,500 unsecured, listed, rated and redeemable Non-Convertible Debentures (NCDs) of ? 10,00,000 each aggregating to ? 350 crores on private placement basis in two series i.e Series I and Series II of 1,750 nos. each.

Pursuant to the embedded call option at the end of two years in the Information Memorandum dated May 29, 2020 with respect to Series II issuance, your Company exercised the said call option on May 31,2022 and redeemed Series II - 1,750 nos., 7.65% unsecured, listed, rated and redeemable Non-convertible Debentures of ? 10,00,000/- each aggregating to ? 175 crores.

There is no deviation or variation in the utilisation of proceeds of the NCDs by the Company.

SUBSIDIARIES AND JOINT VENTURE COMPANIES

I. Subsidiary Companies:

a) Blue Star Engineering & Electronics Limited

Blue Star Engineering & Electronics Limited is a wholly owned subsidiary of the Company. It is a material subsidiary as per the thresholds laid down under the Listing Regulations. The company provides advanced technology products to the BFSI and Healthcare sectors as well as turnkey engineering solutions that cater to the Industrial sector. It is the exclusive distributor in India for many globally renowned manufacturers of high-technology professional electronics equipment and solutions, as well as industrial products and systems.

Revenue from operations from Blue Star Engineering & Electronics Limited for the year ended March 31, 2023, was ? 349.92 crores, as against its previous year''s revenue of ? 265.94 crores. The subsidiary achieved a net profit of ? 40.27 crores for the year under review, as against last year''s net profit of ? 31.52 crores.

b) Blue Star Qatar WLL

Blue Star Qatar WLL is a joint venture between the Company and Al Malki Trading and Contracting WLL, wherein the Company holds 49% of the share capital and voting rights, and the balance is held by Al Malki Trading and Contracting WLL. The company is principally engaged in the business of MEP contracting and maintenance in Qatar for residential, commercial and industrial purposes.

It is a subsidiary of the Company under Section 2(87)(i) of the Act, as the Company controls the management of this company.

The total income of this company for the year ended March 31, 2023, was ? 150.71 crores as compared to ? 284.09 crores in the previous financial year. The total income of the company was impacted due to restriction on construction activities in the country in the run-up to the FIFA World Cup, 2022. Net profit after tax for the year ended March 31, 2023, was ? 4.57 crores as compared to ? 5.73 crores in the previous year.

c) Blue Star International FZCO

Blue Star International FZCO is a wholly owned subsidiary of the Company, operating in the Dubai Airport Freezone, UAE. It is responsible for the development and growth of the Company''s Global Products Sales business and Global Projects business.

This company primarily promotes the export of Blue Star''s air conditioning and commercial refrigeration products and systems and its Original Equipment Manufacturing (OEM)/Original Design Manufacturing (ODM) business.

The consolidated total income of this company for the year ended March 31,2023, was ? 386.78 crores as compared to ? 332.76 crores in the previous financial period. On a consolidated basis, the company has generated a profit of ? 4.75 crores for the year ended March 31, 2023, as compared to a net profit of ? 9.26 crores in the previous year.

d) Blue Star Systems and Solutions LLC

This company is a wholly owned subsidiary of Blue Star International FZCO and is engaged in the activities of directly selling central air conditioning equipment, executing mid-sized HVAC projects, and offers after-sales service in the mainland UAE.

The company''s total income for the year ended March 31,2023, was ? 47.52 crores as compared to last year''s revenue of ? 24.32 crores. The company incurred a loss of ? 7.69 crores for the year ended March 31,2023, as compared to a loss of ? 4.99 crores in the last year.

e) BSL AC&R (Singapore) Pte Ltd

This company was incorporated on August 29, 2020, in Singapore as a wholly owned subsidiary of Blue Star International FZCO to directly sell central air conditioning equipment, execute mid-sized HVAC projects and offer after-sales service. This company also owns a 49% stake in the joint venture, Blue Star M&E Engineering Sdn Bhd.

The company''s total income for year ended March 31,2023, was ? 2.50 crores as compared to last year''s revenue of ? 2.16 crores. The company incurred a profit of ? 0.07 crore for the year ended March 31,2023, as compared to a loss of ? 0.07 crore in the previous financial year.

f) Blue Star Climatech Limited

Blue Star Climatech Limited is as a wholly owned subsidiary of the Company to carry on the business as manufacturers and dealers in all kinds of air conditioners, commercial refrigeration equipment, cooling appliances and other related products.

This company has set up a state-of-the-art manufacturing facility at Sri City, and the commercial production commenced in January, 2023. This new automated and smart factory is equipped with the latest automation techniques and tools for its assembly line and material handling, amongst others, as well as has extensively deployed a slew of initiatives towards IoT and digitization.

This company lays strong emphasis on sustainability and hence has also rolled-out numerous initiatives on this front such as installing advanced affluent treatment plant, engaging in rain water harvesting, and installing solar power.

Revenue from operations of the company for the year ended March 31, 2023, was ? 139.38 crores. The subsidiary incurred a net loss of ? 6.87 crores for the year under review, as against last year''s net loss of ? 2.16 crores.

g) Blue Star North America Inc

Blue Star North America Inc was incorporated on September 22, 2022, as a wholly owned subsidiary of the Company as a part of your Company''s plans to expand its international footprint.

The company incurred a loss of ? 2.99 crores.

h) Blue Star Europe B.V.

Blue Star Europe B.V. was incorporated on November 28, 2022, as a wholly owned subsidiary of the Company, again as a part of your Company''s plans to expand its international footprint.

This company shall end its first financial period on March 31, 2024.

i) Blue Star Innovation Japan LLC

Blue Star Innovation Japan LLC was incorporated on February 10, 2023, in Japan as a wholly owned subsidiary of the Company for the purpose of research

and developments (R&D) of refrigeration cycles, control algorithms, and control boards for residential and commercial air conditioners and cold/hot water chillers. The setting up of the R & D centre in Japan will significantly accelerate, broaden and sustain investment in the technology and product development of the Company''s products, which shall not only be energy-efficient but also ozone friendly thereby contributing to the decarbonization mission of its stakeholders.

the Company is yet to infuse capital in this subsidiary. II. Joint Venture Companies:

a) Blue Star M & E Engineering Sdn Bhd

Blue star M & E Engineering sdn Bhd, a joint venture between BsL AC&R (singapore) pte Ltd and Amcorp properties Bhd, Malaysia, has been principally engaged in the business of HVAC contracting and maintenance in Malaysia. the operations of this joint venture continued to be impacted by slow-down in construction amidst weak macro-economic conditions.

this company''s total income for the year ended March 31, 2023, was ? 46.07 crores as compared to ? 43.12 crores in the previous financial year. Net profit after tax for the year ended March 31,2023, was ? 0.83 crores as compared to ? 2.23 crores in the previous year.

b) Blue Star Oman Electro-Mechanical Company LLC

A joint venture between W J Towell & Co LLC and the Company, Blue Star Oman Electro-Mechanical Company LLC was formed to principally engage in the business of MEP contracting and maintenance in Oman.

The Board of Directors of the Company had approved a proposal to exit this Joint Venture in FY19 due to the unattractive market potential for this business in Oman, subject to regulatory and other compliances as may be applicable. The Company has made an application to the Reserve Bank of India for its approval for a write-off of investment in this Joint Venture under the provisions of the Foreign Exchange Management Act.

As required under Section 136 of the Act, the audited annual accounts, including the consolidated financial statements of the Company and audited accounts of the subsidiary companies, are available on the website of the Company at www.bluestarindia.com.

A copy of these documents will be made available to the members, on their request in writing. The annual accounts will also be available for inspection by any member during business hours through electronic mode.

A statement containing the salient features of the financial statements of the subsidiaries and joint venture companies in Form AOC-1, as required under Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Consolidated Financial statement.

SIGNIFICANT DEVELOPMENTS

â¢ During the year, the Company commenced production at its new world-class manufacturing facility at Wada for production of deep freezers and water coolers. The said facility is fully equipped with the latest advanced manufacturing systems and imbibes global best practices in its operations. This facility is constructed on a built-up area of around 19,300 sq. meter and has the capacity to produce around 2,00,000 deep freezers and 1,00,000 storage water coolers per annum.

â¢ The Company''s wholly owned subsidiary, Blue Star Climatech Limited, a strong proponent of the Aatmanirbhar Bharat Abhiyaan, has set up a new state-of-the-art manufacturing facility at Sri City, in Chittoor District of Andhra Pradesh which commenced its commercial manufacturing of room air conditioners in January, 2023 with an initial manufacturing capacity of 3 lakh units with a plan to gradually scale up production to 1.2 million units thereafter. This new automated and smart factory is equipped with the latest automation techniques and tools for its assembly line and material handling, amongst others, as well as has extensively deployed a slew of initiatives towards loT and digitization. With a strong emphasis on sustainability, it has also rolled-out numerous initiatives on this front such as installing advanced affluent treatment plant, engaging in rain water harvesting, and installing solar power. Besides, the company being closely associated with the Green movement, has applied for the IGBC Gold Rating for this facility. The Sri City plant is strategically located closer to a couple of Southern Indian sea ports which will enable speedy and efficient logistics management. In April, 2023, Blue Star Climatech Limited has also taken on a long lease another land parcel of 39.06 acres at Sri City.

â¢ During the year under review, the Company sold a freehold land parcel at Thane to channelize cashflow into the growth and expansion of its business operations. Net profit of ? 170.81 crores was earned on the said sale and the same has been reported as an exceptional item.

â¢ In an extraordinary gesture, Ashok M Advani, Chairman Emeritus & promoter of the Company has announced a personal grant of ? 100 crores staggered over a period of 5 years to boost research & development activities of the Company. The purpose is to significantly accelerate,

broaden and sustain investment in the technology and product development of its air conditioning and refrigeration products to meet the rapidly changing needs of the Indian and international markets.

NEW INITIATIVES

During the year, the Company launched several new products. Complete range of 3-star and 5-star inverter split room air conditioners and window air conditioners were launched to meet the new energy-efficiency norms applicable from July, 2022. Hot and cold Inverter split air conditioners were also introduced for the north Indian market. In commercial air conditioning segment, Blue star was the first company to launch QCo compliant & IsI marked complete range of ducted split and packaged air conditioners. Hot and cold range of ceiling concealed inverter split units were also introduced to address hotel and premium residential applications. The Company launched indigenously developed and AHRI certified centrifugal chillers in the range of 500 TR to 1000 TR to address large infrastructure projects. Blue star was also the first company to introduce complete range of air-cooled and water-cooled scroll chillers meeting the BEE star labelling program. In commercial refrigeration segment, entire range of hard top & glass top deep freezers manufactured at Wada & Ahmedabad plants was QCo certified with IsI marking. the Company also launched a new series of energy-efficient inverter condensing units for modular cold room applications.

a state-of-the-art R&D Centre was also inaugurated in November, 2022 at Wada plant. the centre houses elaborate testing facilities for chillers and commercial refrigeration products. With AHRI certified laboratories for 440 TR air cooled chiller and 1000 TR water cooled chiller, the facility is the largest integrated chiller facility in India. The laboratories are also accredited by NABL as per Iso-17025. Laboratories of the Company located at Thane, Dadra were also accredited by NABL for testing room air conditioners and commercial air conditioners as per Indian and various international standards.

The Company has embarked upon several initiatives in the areas of technology-led digitalisation of some key business processes, employee engagement, and internet-enabled automation across its products and services.

The Company has always remained ahead of the curve in developing and launching products and solutions that are not only energy-efficient, but also ozone friendly apart from being designed for mitigating global warming, thus contributing to the decarbonization mission of its stakeholders.

AWARDS AND RECOGNITIONS

during the year under review, the Company was felicitated

with many prestigious awards for excellence in its areas of business, and an illustrative list is given below:

â¢ The prestigious''Golden peacock Award for Risk Management'' for 2022

â¢ ''Best Water R&D and Technological Breakthrough-domestic'' award at the 15^th edition of Water Digest Awards (2021-22)

â¢ ''Best Customer service Initiative of the Year 2022'' for enhancing customers'' trust through Digital Transformation in the Electronics Category at the CX Excellence Awards 2022

â¢ Blue star Innovation Centre, Thane, was awarded the platinum certification by Indian Green Building Council (IGBC) in August, 2022

â¢ ''MEP Contractor of the Year'' award by Construction Week India for the seventh time in a row for the MEP works at the OLA Future Factory, Tamil Nadu

â¢ Recognised for ''Design Innovation in Building''at Autodesk Imagine Awards

â¢ Wada Plant declared the first runner-up at the 10^th Edition of Manufacturing Today Conference & Awards

â¢ Platinum Rating Plaque, for Green Interiors for the Blue Innovation Centre at CII - IGBC Green Building Congress International Conference

â¢ Best stall awards at CII Agro Tech Export, Chandigarh

â¢ Wada Plant receives IGBC Platinum Certification under ''Green Factory Building'' category

â¢ First runner-up award under the category of ''Innovative Refrigeration Product, at the REFCOLD India Emerson Awards

â¢ Customer service Group won the Platinum award and the star Championship award in the Renovative Kaizen Category at the 44^th National Kaizen Championships organised by CII.

DIRECTORS

Retire by rotation

As required under the provisions of the Act, Rajiv R Lulla retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends his re-appointment at the ensuing Annual General Meeting.

A brief profile of Rajiv R Lulla is annexed to the notice convening Annual General Meeting.

Resignation and Appointment of Independent Director

Consequent to the resignation of Rumjhum Chatterjee with effect from April 25, 2022, Anita Ramachandran was appointed as an Independent Director of the Company with effect

from June 13, 2022, for a period of five consecutive years till June 12, 2027.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received the necessary declarations from each of the Independent Directors of the Company under Section 149(7) of the Act and Regulation 25 of the Listing Regulations, confirming that they meet with the criteria of independence as laid down in Section 149(6) of the Act, along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations.

There has been no change in the circumstances affecting their status as Independent Directors of the Company.

KEY MANAGERIAL PERSONNEL

As required under the provisions of Section 203 of the Act, the following personnel have been designated as the Key Managerial Personnel of the Company:

Name	Designation
Vir S Advani	Vice Chairman & Managing Director
B Thiagarajan	Managing Director
Neeraj Basur	Group Chief Financial Officer*
Nikhil Sohoni	Group Chief Financial Officer**
Rajesh parte	Company Secretary & Compliance Officer

*Neeraj Basur, Group Chief Financial Officer tendered his resignation

effective end of business hours on May 31,2022.

**Nikhil Sohoni was appointed as a Group Chief Financial Officer of the

Company with effect from July 1,2022.

DIRECTORS'' RESPONSIBILITY STATEMENT

Under the provisions contained in Section 134(5) of the Act, the

Directors, to the best of their knowledge and belief, confirm that:

â¢ In the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

â¢ They have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, to give a true and fair view of the state of affairs of the Company as at March 31,2023, and of the profit of the Company for the period April 1,2022 to March 31,2023;

â¢ They have taken proper and sufficient care of the maintenance of adequate accounting records, under the provisions of the Act for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

â¢ They have prepared the annual accounts for the year ended March 31,2023, on a going concern basis;

â¢ They have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and are operating effectively; and

â¢ They have devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems are adequate and operating effectively.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under review, 7 (seven) meetings of the Board of Directors were held. The intervening gap between these meetings was within the period prescribed under the Act and Listing Regulations. The details of the meetings and attendance of the Directors are provided in the Corporate Governance Report.

BOARD COMMITTEES

Your Company has in place all the Committees as mandated under the provisions of the Act and Listing Regulations. Currently, there are eight Committees of the Board, namely:

â¢ Audit Committee

â¢ Nomination and Remuneration Committee

â¢ Investor Grievance cum Stakeholders'' Relationship Committee

â¢ Risk Management Committee

â¢ Corporate Social Responsibility and Environmental, Social & Governance Committee*

â¢ Share Transfer Committee

â¢ Executive Management Committee

â¢ Debenture Committee

â¢ The Board at its Meeting held on January 31, 2023, amended the nomenclature of the Corporate Social Responsibility Committee to Corporate Social Responsibility and Environmental, Social & Governance Committee and modified its terms of reference thereby.

AUDIT COMMITTEE

The Audit Committee comprises Anil Harish (Chairman), Shailesh Haribhakti, Arvind K Singhal, and B Thiagarajan. The composition of the Committee is in compliance with the requirements of Section 177 of the Act and Regulation 18 of the Listing Regulations. The terms of reference of the Committee conform with the Act and the Listing Regulations as more particularly set out in the Corporate Governance Report, which forms a part of this Annual Report. During the year under review, there was no instance wherein the Board had not accepted any recommendation of the Audit Committee.

NOMINATION AND REMUNERATION COMMITTEE

Anita Ramachandran was inducted as a member of the

Nomination and Remuneration Committee with effect from June 13, 2022. Accordingly, the Committee comprises Sam Balsara (Chairman), Dinesh N Vaswani, shailesh Haribhakti and Anita Ramachandran.

The Committee is constituted in line with the requirements mandated by section 178 of the act and regulation 19 of the Listing regulations. the terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance report, which forms a part of this annual report.

INVESTOR GRIEVANCE CUM STAKEHOLDERS'' RELATIONSHIP COMMITTEE

the Investor Grievance Cum stakeholders'' relationship Committee comprises Arvind K singhal (Chairman), rajiv R Lulla, and sunaina Murthy. the Committee is constituted in line with the requirements mandated by section 178 of the act and regulation 20 of the Listing regulations. the terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance report, which forms a part of this annual report.

RISK MANAGEMENT COMMITTEE

the risk Management Committee comprises Vir s Advani (Chairman), Rajiv R Lulla, B thiagarajan, and anil Harish. the Company has adopted a formal risk Management policy. the Committee identifies, evaluates and assesses the risks, understands the exposure of risks, and accordingly prepares and oversees execution of appropriate risk mitigation plans and identification of possible opportunities. the Committee and the Board have identified elements of risks, which, according to them, are crucial to the Company. It has identified risk Management Units within the Company, the risk profiles of which are constantly monitored, and the severity of risk is tracked, based on a systematic risk rating methodology. details of these elements of risks have been covered in the Management discussion and analysis, and Integrated report, which form part of this annual report and in the standalone financial statement in Note 43.

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL, SOCIAL & GOVERNANCE (CSR & ESG) COMMITTEE

Rumjhum Chatterjee and sam Balsara ceased to be a member of the CsR & EsG Committee with effect from April 25, 2022 and June 13, 2022 respectively. Anita Ramachandran was inducted as a member of this Committee with effect from June 13, 2022. accordingly, the Committee comprises B thiagarajan (Chairman), anita ramachandran, and sunaina Murthy.

the Board of directors at its Meeting held on January 31, 2023, has changed the nomenclature of the Committee to ''Corporate social responsibility and environmental, social and Governance Committee'' and has further amended terms of reference thereof.

During the year under review, the Company was required to spend an amount of ? 300 lakhs towards activities as stipulated under schedule VII of the act. the Company has spent an amount of ? 332.85 lakhs towards various CsR initiatives. Based on the recommendation of CsR & EsG Committee, the Board of Directors have approved set-off of excess CsR spent of ? 32.85 lakhs towards CsR obligation of FY24.

a brief outline of the CsR Policy and the initiatives undertaken by the Company on CsR activities during the year are set out in Annexure 2 of this report as prescribed in the Companies (Corporate social Responsibility Policy) Rules, 2014, and amendments thereof. the CsR Policy is available on the website of the Company at: https://www.bluestarindia.com/ media/217799/blue-star-csr-policy.pdf

Details of the other Committees of the Board are provided in the Corporate Governance Report.

EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND OF DIRECTORS

the Nomination and Remuneration Committee vide Circular Resolution dated January 20, 2023, and the Board at its meeting held on January 31,2023, approved the criteria for evaluating the Chairman, Directors, the Board, and its Committees. Accordingly, the questionnaires were circulated seeking inputs of the Directors to evaluate governance standards based on various parameters including structure and composition of the Board and committees, quality of Board processes, Board culture and dynamics, effectiveness vis-a-vis stakeholders'' expectations in terms of strategic direction, and guidance to the leadership team.

the inputs received from the Directors were deliberated upon and reviewed by the Independent Directors at a separate meeting held on March 29, 2023. At this meeting, they evaluated the performance of the Non-Independent Directors, the Board as well as that of the Chairman, taking into account the views of the Executive and Non-Executive Directors. the Board of Directors carried out an annual evaluation of the performance of the Board as a whole, the Directors individually, and the working of the Committees of the Board. the outcome of the evaluation was noted by the Nomination and Remuneration Committee at its meeting held on April 26, 2023, and by the Board of Directors at its meeting held on May 4, 2023. Broadly, the Directors have expressed their satisfaction with the evaluation process and

the outcome. The Board also noted the key action points that emerged from the process for implementation. a detailed update on the Board Evaluation is provided in the relevant section of the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

the Nomination and remuneration policy provides broad guidelines on appointment, removal, retirement, qualifications, attributes, and structure of remuneration, of the Directors, Key Managerial personnel, and senior Management personnel. It is designed to foster a high-performance culture that enables the Company to attract, retain and motivate the employees to achieve results. the performance of the executive directors was

evaluated and reviewed by the Nomination and remuneration Committee at its meeting on april 26, 2023. the Nomination and remuneration policy is uploaded on the Company''s website at https://www.bluestarindia.com/media/217800/ blue-star-nrc-policy.pdf

MANAGERIAL REMUNERATION

details of the ratio of the remuneration of each director to the median employee''s remuneration and other details in terms of section 197(12) of the act, read with rule 5(1) of the Companies (appointment and remuneration of Managerial personnel) rules, 2014 and amendments thereof are provided below:

	I	II
Name of Director	The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year	The percentage increase in remuneration, if any, in the financial year
Non-Executive Directors#
shailesh Haribhakti	6.05x	30%
dinesh N Vaswani	2.85x	16%
rajiv R Lulla	3.10x	25%
sunaina Murthy	2.97x	17%
sam Balsara	3.10x	23%
anil Harish	3.51x	32%
anita ramachandran*	2.41x	-
arvind K singhal	3.61x	33%
rumjhum Chattterjee**	0.19x	-
Executive Directors
Vir s advani	82.47x	32.10%
B thiagarajan	82.47x	36.89%
Group Chief Financial Officer
Nikhil sohoni***	-	-
Company Secretary & Compliance Officer
rajesh parte&	-	4.5%
The remuneration of Non-Executive Directors covers sitting fees and commission. Appointed as an Independent Director of the Company with effect from June 13,2022. Ceased to be the Independent Director of the Company with effect from April25,2022. *Appointed as a Group Chief Financial Officer of the Company with effect from July 1,2022. &Appointed as Company Secretary and Compliance Officer with effect from October 29,2021.

III.	the percentage increase in the median remuneration of employees in the financial year		11.62%
IV.	the number of permanent employees on the rolls of Company		2,855
V.	average percentile increases already made in the salaries of employees, other than the managerial personnel in the last	average increase to employees other than Managerial personnel and justification thereof	14.21% To remain competitive in the market, to attract and retain talent
	financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there are any exceptional circumstances for increase in the managerial remuneration	average increase to Managerial personnel	34.45%
		exceptional circumstances for an increase to managerial remuneration	the average increase given in financial year 2022-23 was based on the outcome of compensation and benefits benchmarking to align remuneration of Wholetime directors to market median.
VI.	affirmation that the remuneration is as per the remuneration policy of the Company	the Company affirms that the remuneration is as per the Nomination and remuneration policy.

The Non-Executive Directors of the Company are paid sitting fees and commission as per the statutory provisions and within the limits approved by the members. the ratio of remuneration and percentage change for Non-executive directors'' remuneration is therefore not considered for the purposes above. the details of the remuneration of Non-executive directors are provided in the Corporate Governance Report.

CORPORATE GOVERNANCE

the Company is committed to maintaining the highest standards of corporate governance and continues to be compliant with the requirements of corporate governance as enshrined in the Listing regulations. the report on corporate governance together with a certificate from the statutory Auditors of the Company, confirming compliance with corporate governance norms as stipulated in the Listing regulations, forms a part of this annual report.

VIGIL MECHANISM

Your Company is committed to conducting its business with the highest standards of ethics, integrity, and transparency across its operations, in compliance with the applicable laws and regulations. In line with a strong commitment to governance and compliance, the Company has instituted a robust Vigil Mechanism framework encompassing various elements and components in an integrated manner.

the Vigil Mechanism structure at Blue star is based on the Coso 2017 ERM framework governing risk, compliance, and controls. embedded in the Vigil Mechanism structure are three lines of defence. the first line of defence comprises key

management controls, viz., financial controls, governance policies, and internal control measures at the process owner level. the second line of defence is addressed by an assurance from risk management and compliance procedures. the third line of defence is provided through the work done by the internal and the statutory auditors.

Governance policies, internal controls, stakeholders''engagement, enterprise risk management, compliance, and the internal and statutory audit, are key components of Blue star''s vigil mechanism. they are interwoven in the vigil mechanism system to enable constant interplays to drive home the assurance of best practices and creation of value for all the stakeholders of the Company.

As a part of its governance policies, the Company has in place a whistle blower policy to enable the directors, employees of the Company and its subsidiaries to report concerns of any unethical behaviour, unacceptable and improper practices, or suspected fraud. the policy has also been uploaded on its website. an ethics Committee has been constituted, comprising the Group Chief Financial officer, Chief Human resources officer, and Company secretary & Compliance officer (ethics officer) to administer this policy. the Company has also adopted a robust Governance, risk and Compliance Framework that enables a seamless integration of processes and components around the Company''s governance, risk and compliance objectives.

the Company was declared winner of the Golden peacock award for risk Management in 2022 thereby reaffirming external validation of the robustness of the risk management practices followed by it.

The Whistle blower Policy is uploaded on the Company''s website at: https://www.bluestarindia.com/media/271525/ whistle-blower-policy.pdf

the Audit Committee reviews on a quarterly basis, whistle blower and other complaints, if any, and oversees the implementation of corrective actions wherever necessary.

the Company has also adopted a Code of Conduct which is available on the website of the Company at: https://www.bluestarindia.com/media/271526/code-of-conduct.pdf

the Governance, Risk and Compliance Framework is uploaded on the Company''s website at:

https://www.bluestarindia.com/media/335126/governance-risk-compliance-framework website.pdf

INTERNAL CONTROL SYSTEMS

the Company has established an internal control system commensurate with the size, scale, and complexity of its operations.

to enhance the standards of controls and governance, the Company has adopted the Coso 2013 framework to ensure that robust internal financial controls exist concerning operations, financial reporting, and compliance.

significant features of the Company''s internal control system are:

â¢ an independent firm of Chartered accountants manages the Internal audit function in line with best-in-class governance practices. It reviews and reports to the audit Committee about compliance with internal controls, the efficiency and effectiveness of operations as well as key process risks.

â¢ the audit Committee periodically reviews internal audit plans, significant audit findings, and adequacy of internal controls.

â¢ systematic self-certification of adherence to key internal controls, as part of control self-assurance by process owners, monitors, and reviewers.

â¢ adherence with a comprehensive information security policy and continuous upgrades of the Company''s It systems for strengthening automated controls.

â¢ appropriate segregation of duties and usage of technology for continuous controls monitoring and enhanced controls assurance.

During the year, the internal controls were tested and found effective, as a part of the Management''s control testing initiative.

accordingly, the Board, with the concurrence of the audit Committee and the auditors believe that the Company''s Internal Financial Controls were adequate and operating effectively for the financial year ended March 31,2023.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the provisions of secretarial standards on Meetings of the Board of directors (ss-1) and on General Meetings (ss-2).

LOANS, GUARANTEES AND INVESTMENTS

details of loans, guarantees and investments covered under the provisions of section 186 of the act, as may be applicable, are given in the standalone financial statement as per Note 8 -10.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

ah the related party transactions are approved by the audit Committee. All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business.

there are no material transactions with any related party as defined under section 2(76) of the Act and regulation 2(zb) of the Listing regulations. Because of this, disclosure in Form AoC-2 has not been provided. The details of transactions with the related parties are provided in the standalone financial statement in Note 39.

A policy governing the related party transactions was amended by the Board at its meeting held on February 2, 2022, in line with amendments in the Listing regulations, and the same has been uploaded on the Company''s website at https://www.bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf

HUMAN RESOURCES

The Company made a concerted effort in acquiring the right talent in a timely manner across its businesses which was the pronounced need of the hour. opportunities for talent mobility ensured that employees are able to experience cross-functional roles with the expected growth avenues. Enhanced employee experience through upskilling, avenues for free-flowing exchange of ideas across departments and competency-based training of managers helped in more meaningful engagement of the staff in their respective roles, fueling innovation in some quarters. High potential employees were mapped for succession for aligned opportunities and application-based training in the right skill-sets, resulting in higher responsiveness to meet the pressing business challenges. skill-based training through a learning management system, iLearn as well as through the Academy of Technical & Functional excellence was a focus across management levels through the year under review. Business-aligned training initiatives with well-designed outcomes helped talent to rise to the occasion to meet business requisites in a highly challenging market environment.

Work profiles have been mapped to a methodical work plan in line with the environment in which maximum time required to be spent for optimal delivery of the work profile. These include Work from Establishment, Work from Field, Work from site and Work from Home; and work executed in this planned manner ensured meeting the deliverables well. thus, this resulted in enhanced employee productivity. there is more flexibility weaved in the work routine in the Company to meet better work-life integration and this was highly appreciated by employees. the Company stayed invested in employee listening which led to roll out of employee-friendly policies and processes, aided by the use of the right technology. More transparency, measurement, analytics, and reporting by HR was pursued during the year. Many employee engagement initiatives focused on holistic well being of employees, including a portal for mental well being- MindMatters- which is a medium to seek online support from trained mental health professionals anonymously as per one''s comfort and ease. the Company was certified as a Great place to Work for the second time with an enhanced trust Index. For the year under review, the ''Most preferred Manufacturing Workplace'' Award was received from team Marksmen, and also, as per Glassdoor review, the Company remained in the top position for the last two quarters in a row against competition. Gender diversity has been a subject of much prominence with avenues built in the organisation for professional training, development and systematic growth of deserving women professionals. HR professionals were put through a well crafted development programme to remain data driven, experience led, and business focused, further building their competencies in their crucial roles. All these systematic People initiatives helped the Company stay ahead of the curve despite the myriad of continuous, external market challenges.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are required to be annexed to the Board''s Report. the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining the said particulars may write to the Company Secretary of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

the Company has zero-tolerance for sexual harassment at the workplace and has adopted a policy on prevention, prohibition, and redressal of the same, in line with the provisions of the

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and the Rules thereunder.

All employees (permanent, contractual, temporary, and trainees) are covered under this Policy.

the Company has duly constituted Internal Complaints Committees in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to redress complaints received regarding sexual harassment. the Company organises workshops and awareness programs at regular intervals for sensitising the employees with the provisions of the said Act. the Company received 1 (one) complaint and disposed of 1 (one) complaint during the year 2022-23.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

the Company incurred a total expenditure of ? 73.89 crores on research and development for the year as against ? 67.21 crores in the previous year.

During the year, the Company recorded foreign exchange earnings from the export of its products, commission, and other income, aggregating to ? 280.07 crores as against ? 242.34 crores in the previous year.

the foreign exchange outflow stood at ? 1,599.99 crores as compared to ? 1,354.66 crores in the previous year.

the information on Energy Conservation, technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 1.

MANAGEMENT DISCUSSION AND ANALYSIS

the Management Discussion and Analysis for the year under review, as stipulated under Regulation 34 of Listing Regulations, forms a part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In compliance with Regulation 34 of the Listing Regulations, the Business Responsibility and Sustainability Report describing sustainability initiatives undertaken by the Company during the year under review is provided in a separate section forming part of this Annual Report.

INTEGRATED REPORTING

Your Company is amongst the top 500 listed companies in the country in terms of market capitalisation and has accordingly adopted Integrated Reporting describing initiatives undertaken

by the Company for enhancing stakeholders'' value in the long term. The report on Integrated Reporting is provided in a separate section forming part of this Annual Report.

STATUTORY AUDITORS

The Company''s existing Statutory Auditors, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed by the Members at the 70^th Annual General Meeting (AGM) of the Company, for a period of 5 years, to hold office until the conclusion of the 75^th AGM to be held for FY 2022-23. The period under review was the fifth year of the audit by M/s Deloitte Haskins & Sells LLP in the Company.

The Board of Directors at its meeting held on May 4, 2023, has recommended re-appointment of M/s Deloitte Haskins & Sells LLP as Statutory Auditors of the Company for a second term of five consecutive years from conclusion of the 75^th AGM until the conclusion of the 80^th AGM of the Company to be held for FY 2027-28.

AUDITOR''S REPORT

The Board has duly reviewed the Statutory Auditor''s Report on the financial statements. There is no qualification, reservation, or adverse remark given by the Auditors in their report.

COST AUDITORS

In terms of the provisions of Section 148 of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors had, on the recommendation of the Audit Committee, appointed M/s Narasimha Murthy & Co, Cost Accountants, Hyderabad, as the Cost Auditors, to conduct the cost audit for the financial year ended March 31,2023.

As required under the Act, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members'' ratification for the remuneration payable to Cost Auditors, forms part of the Notice convening the Annual General Meeting.

SECRETARIAL AUDITORS

The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries, has been provided in Annexure 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark. Further, as

required under Regulation 24A of the Listing Regulations, the Secretarial Audit Report of Blue Star Engineering & Electronics Limited, the material unlisted Subsidiary, is also provided in Annexure 3A to this Report.

INTERNAL AUDITORS

In terms of the provisions of Section 138 of the Act read with Companies (Account) Rules, 2014, the Company has appointed M/s Grant Thornton Bharat LLP, Chartered Accountants, as the internal auditors.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, none of the auditors, viz., statutory auditors, cost auditors, and secretarial auditors, have reported to the Audit Committee, under Section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

ANNUAL RETURN

The annual return of the Company has been uploaded on the Company''s website at: https://www.bluestarindia.com/ media/335106/fy23-mgt-7-annual-return.pdf

RESERVES

During the financial year, there was no amount proposed to be transferred to the reserves.

PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

There are no proceedings, either filed by the Company or against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before the National Company Law Tribunal or other Courts as on March 31,2023.

OTHER DISCLOSURES

â¢ The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India, relating to Meetings of the Board, Committees, and General Meetings which have mandatory application.

â¢ Except as provided in the Report, no material changes, and commitments affecting the financial position of the Company, have occurred between the end of the financial year under review and the date of this report.

â¢ The Company has prepared and maintained the cost accounts and records as specified by the Central Government under Section 148(1) of the Act.

â¢ There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern

status of your Company and its operations in the future.

â¢ Your Company has not issued any Employee Stock Options.

â¢ Your Company has listed its Commercial paper on National stock exchange of India Ltd.

â¢ Your Company has not issued any sweat equity shares.

â¢ There has been no change in the nature of business of your Company.

â¢ the Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions, and hence the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

â¢ there was no revision of financial statements and Board''s Report of the Company during the year under review.

ACKNOWLEDGEMENTS

the Directors place on record their sincere appreciation for the assistance, guidance, and co-operation provided by the Government of India and other regulatory authorities. the directors thank the financial institutions and banks associated with the Company for their support as well. the employees are instrumental for the Company scaling new heights year after year, and their commitment and contribution are deeply acknowledged. shareholders'' involvement is greatly valued. the directors look forward to your continuing support.

Mar 31, 2022

The Directors are pleased to present the 74^th Annual Report, together with the audited financial statements for the financial year ended March 31,2022.

COMPANY OVERVIEW

Your Company offers one of India''s widest ranges of air conditioning and commercial refrigeration products, as well as a comprehensive range of air purifiers, air coolers, water purifiers, cold chain equipment and specialty products. It fulfils the cooling and refrigeration requirements of a large number of corporate and commercial as well as residential customers.

Leveraging on its project execution capabilities, your Company offers turnkey solutions in MEP (Mechanical, Electrical, Plumbing and Fire-fighting) contracting for Buildings & Factories,

Infrastructure, Heavy Industry and Water Distribution projects. The Company''s integrated business model of a Manufacturer, Contractor and After-sales service provider enables it to offer end-to-end solutions to its customers, a factor that has proved to be a significant differentiator in the marketplace.

FINANCIAL HIGHLIGHTS

The financial statements of the Company are prepared in accordance with the applicable provisions of the Companies Act, 2013 (the ''Act'') including Accounting Standards as specified in Section 133 of the Act, read with the Companies (Accounts) Rules, 2014, and amendments thereof. The consolidated and standalone financial highlights of the Company for the financial year ended March 31,2022, are summarised as follows:

	Consolidated		Standalone
Particulars	For the year ended		For the year ended
	March 31, 2022	March 31, 2021	March 31, 2022	March 31, 2021
Revenue from operations	6,045.58	4,263.59	5,376.99	3,842.23
Total revenue	6,081.30	4,325.94	5,413.09	3,904.40
Total expenses	5,831.49	4,180.79	5,217.34	3,806.05
Profit before share of profit of Joint Venture	249.81	145.15	NA	NA
Profit before tax	250.90	147.75	195.75	98.35
Income tax	82.90	47.09	68.01	32.42
Profit after tax	168.00	100.66	127.74	65.93

OPERATING RESULTS

The current financial year commenced on the backdrop of a pick-up in business activities and an improvement in general sentiment witnessed in the second half of the last financial year. However, the growth momentum was interrupted due to the resurgence of the second wave of COVID-19 pandemic in the middle of April and the consequent lockdown-like restrictions imposed in various states. The second wave of the Pandemic impacted the health and wellbeing of several of our stakeholders and their families more profoundly and contributed to operating disruptions during the first quarter. This impacted revenue for the Unitary Products segment during its peak selling season and also disrupted operations at project sites, for the second year in a row.

With the ebbing of the second wave of the COVID-19 pandemic and the revival of business and economic activities from the second quarter onwards, your Company witnessed healthy demand and robust volume growth across its operating segments. Demand for room air conditioners and refrigeration products, Commercial, Manufacturing and other Institutional

segments also revived. The consolidated revenue from operations and revenue from each of the segments surpassed revenue achieved in the pre-pandemic period in the third quarter and the robust growth momentum continued into the fourth quarter as well. Driven by early onset of summer in several parts of the country, strong revival in the capex cycle from both the private and public sectors and improvement in consumer sentiment, the year ended on a high note with your Company posting its highest ever Revenue from Operations. Headwinds caused by escalation in commodity prices, logistics costs and depreciation of the Rupee however continued to exert pressure on the margins throughout the year, which was partially offset by price increases, cost reduction initiatives and improvement in operational efficiencies.

On a consolidated basis, revenue from operations for the current financial year grew by 41.8% to ''6,045.58 crores as compared to ''4,263.59 crores in the previous financial year. Net profit for the current financial year grew by 66.9% to ''168 crores as compared to ''100.66 crores in the last financial year. On a

standalone basis, revenue from operations of the Company grew by 39.9% to ''5,376.99 crores as compared to ''3,842.23 crores in the previous year. Your Company''s standalone Net Profit after Tax grew by 93.75% to ''127.74 crores as compared to ''65.93 crores for the previous year.

Your Company demonstrated impressive resilience during the year and posted a healthy growth, generated strong operating cash flows and profits despite navigating the business disruptions caused by the Pandemic.

Your Company operates in three business segments: (i) Electro-Mechanical Projects and Commercial Air Conditioning Systems; (ii) Unitary Products; and (iii) Professional Electronics and Industrial Systems. Performance of the Company in the above-mentioned segments during the year under review is as stated below:

I. Electro-Mechanical Projects and Commercial

Air Conditioning Systems

a. Electro-Mechanical Projects Business

The pace of execution of projects was slower at the beginning of the year due to the phased lockdowns across multiple States. Your Company continued to focus on opportunities in the infrastructure sector such as metro railways, electrical substations and water distribution and sharpened business development across new sectors such as factories, data centres and warehousing. Driven by fresh capex commitments and the Government''s policy to promote ''Atmanirbhar Bharat'', coupled with the PLI schemes availed by the private sector, order inflows from factories and light industrial sector was encouraging. Rapid expansion of the e-commerce footprint and growing digitalisation requirements across several sectors further contributed to an encouraging order flow from warehousing and data centre operators. Government''s commitment to augment social sector infrastructure such as airports, metro railway network, water supply and hospitals continued to fuel growth opportunities. Enquiries and order inflows from the commercial buildings sector too picked up during the year.

b. Commercial Air Conditioning Systems

Continued traction in the Healthcare, Pharma, Industrial and Government customer segments enabled a good growth for the commercial air conditioning business during the year. A competitive and comprehensive product portfolio offered by your Company enabled differentiated solutions to be designed and offered to our customers. Traditional customer sectors such as Builders & Developers, Marriage Halls, Auditoriums,

Hotels and Restaurants, that were impacted by the Pandemic at the beginning of the year saw revival from the third quarter of the year contributing to the overall growth of this business.

c. International Business

Your Company was focused on the expansion of the Blue Star product range and building brand awareness across its international markets. It also increased marketing efforts across digital media platforms, to build awareness and brand visibility across the major markets it serves. As a result, there was an improved demand for the Company''s cooling products in the Middle East, SAARC and Africa markets.

Major events such as Dubai Expo 2020, IPL and the T20 Cricket World Cup offered good opportunities during the year in the UAE.

The joint venture in Qatar continued to do well with a pick-up in order inflows and execution of projects. The operations in Malaysia continued to be impacted owing to the Pandemic and the political instability in the country.

Revenue in this segment for the year grew by 43.98% to ''3,194.46 crores as against ''2,218.72 crores in the previous year. The segment result grew by 82.95% to ''194.82 crores as compared to ''106.49 crores in the previous year.

II. Unitary Products

In the Room Air Conditioners business segment, your Company''s mass premium product portfolio resonated well with both distributors and customers. Your Company offers a vast and comprehensive range of products that are priced competitively and at the same time deliver consistent performance and superior quality that is aligned with the Blue Star brand. This approach, targeted to penetrate the belly of the market, coupled with the expansion of the distribution footprint and increase in the share of business from e-commerce portals, drove revenue growth during the year. Your Company continued to grow faster than the market and further consolidated its market share.

Construction of the new factory for the manufacture of room air conditioners at Sri City by Blue Star Climatech Limited, a newly incorporated wholly owned subsidiary of your Company, is progressing as planned and is expected to be commissioned in the third quarter of the financial year 2022-23. Your Company''s application for benefits under the PLI scheme of the Central Government has been approved for manufacture of sheet metal components and heat exchangers at the upcoming Sri City Plant.

Improvement in the demand for modular cold rooms from the pharma, healthcare, e-commerce and food & beverages segments, coupled with a revival in demand for kitchen refrigeration equipment along with the opening up of Hotels and Restaurants post the second wave of the Pandemic, enabled growth in revenue for the Commercial Refrigeration business. Your Company has also augmented its production capacity of deep freezers with the setting up of a world-class manufacturing facility at Wada. Apart from greater production efficiencies, the new state-of-the-art deep freezer manufacturing facility at Wada will contribute to a higher share of own manufactured products in this category, which will reduce import dependency as well.

The overall pick-up in the demand from the second quarter onwards and general improvement in consumer sentiments propelled a growth in revenue of this segment by 39.38% to ''2,603.77 crores in the year under review as against ''1,868.28 crores in the previous year in this segment. The segment''s results improved to ''155.86 crores in the current year as compared to ''108.82 crores achieved in the previous financial year.

Despite multiple rounds of price increases during the year, this segment''s margin was impacted due to operating disruptions caused by the Pandemic in the early part of the year coupled with significant escalations in commodity prices, increase in logistics costs and continued international supply chain disruptions.

III. Professional Electronics and Industrial Systems (PE&IS)

Opportunities created by the digitalisation initiatives by the BFSI sector continued to drive revenue growth in your Company''s Data Security Solutions business. Additional investments in the healthcare sector offered good opportunities for the growth of Medical Diagnostic Equipment Distribution business. Testing Machines business also continued to witness growth with a revival of investments in the manufacturing sector. With a wide portfolio of products and solutions forming part of your Company''s offerings, the prospects for this business segment have been positive.

The segment revenue for the yea r grew by 40.07% to ''247.35 crores as against ''176.59 crores in the previous year. The segment result improved to ''42.49 crores as compared to ''33.81 crores in the previous year.

DIVIDEND

The Board, at its meeting held on May 5, 2022, recommended

a dividend of ''10 per equity share of ''2 each for the financial

year ended March 31,2022. This dividend will be paid subject

to the approval of the members at the Annual General Meeting

to be held on August 4, 2022, to those members whose names appeared in the register of members as on the record date, i.e. July 22, 2022.

FINANCING

On a consolidated basis, finance cost for the year reduced to ''46.40 crores as compared to ''64.72 crores in the previous year, due to reduction in cost of financing along with a reduction in the gross borrowings during the year driven by healthy cash flow from operations.

The Company''s forex cost was ''4.94 crores for the year as compared to ''4.18 crores in the previous year. In spite of higher volatility caused by the second wave of the Pandemic and the geo-political factors, the increase was in line with the business growth on account of dynamic forex risk management practices followed by your Company.

DEPOSITS

The Company has not accepted any deposits from the public, falling within the ambit of Section 73 of the Act, and the Companies (Acceptance of Deposits) Rules, 2014.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements shall also be laid at the ensuing Annual General Meeting of the Company.

NON-CONVERTIBLE DEBENTURES

In the year 2020-21, the Company had issued 3500 unsecured, listed, rated and redeemable Non-Convertible Debentures of ''10,00,000 each aggregating to ''350 crores on private placement basis in two series, i.e., Series I and Series II of 1750 nos. each.

Pursuant to the embedded call option at the end of two years in the Information Memorandum dated May 29, 2020, with respect to Series II, your Company has decided to exercise the said call option on May 31,2022, and redeem Series II - 1,750 nos., 7.65% unsecured, listed, rated and redeemable Non-Convertible Debentures of ''10,00,000 each aggregating to ''175 crores.

There is no deviation or variation in the utilisation of proceeds of the NCDs by the Company.

SUBSIDIARIES AND JOINT VENTURE COMPANIES

I. Subsidiary Companies:

a) Blue Star Engineering & Electronics Limited

Blue Star Engineering & Electronics Limited is a wholly-owned subsidiary of the Company. It is a material subsidiary as per the thresholds laid down under the Listing Regulations. The company provides advanced technology products to the BFSI and Healthcare sectors as well as turnkey engineering solutions that cater to the Industrial sector. It is the exclusive distributor in India for many globally renowned manufacturers of high-technology professional electronics equipment and solutions, as well as industrial products and systems.

Revenue from operations from Blue Star Engineering & Electronics Limited for the year ended March 31, 2022, was ''265.94 crores, as against its previous year''s revenue of ''181.74 crores. The subsidiary achieved a net profit of ''31.52 crores for the year under review, as against last year''s net profit of ''23.00 crores.

b) Blue Star Qatar WLL

It is a subsidiary of the Company under Section 2(87)(i) of the Act, as the Company controls the management of this company.

The total income of this company for the year ended March 31,2022, was ''284.09 crores as compared to ''142.78 crores in the previous financial year. Net profit after tax for the year ended March 31,2022, was ''5.73 crores as compared to ''6.12 crores in the previous year.

c) Blue Star International FZCO

Blue Star International FZCO is a wholly-owned subsidiary of the Company, operating in the Dubai Airport Freezone, UAE. It is responsible for the development and growth of the Company''s Global Products Sales business and Global Projects business.

The consolidated total income of this company for the year ended March 31, 2022, was ''332.76 crores as compared

to ''236.11 crores in the previous financial period. On a consolidated basis, the company has generated a profit of ''9.26 crores for the year ended March 31,2022, as compared to a net profit of ''6.50 crores in the previous period

d) Blue Star Systems and Solutions LLC

This company was incorporated in the mainland UAE as a subsidiary of Blue Star International FZCO to directly sell central air conditioning equipment, execute mid-sized HVAC projects, and offer after-sales service in the UAE region.

The company''s total income for the year ended March 31, 2022, was ''24.32 crores as compared to last year''s revenue of ''12.38 crores. The company incurred a loss of ''4.99 crores for the year ended March 31,2022, as compared to a loss of ''3.68 crores in the last year.

e) BSL AC&R (Singapore) Pte. Ltd.

This company was incorporated on August 29, 2020, in Singapore as a wholly-owned subsidiary of Blue Star International FZCO to directly sell central air conditioning equipment, execute mid-sized HVAC projects and offer after-sales service. This company also owns a 49% stake in the joint venture, Blue Star M&E Engineering Sdn Bhd.

This company commenced its operation during the year. The company''s total income for year ended March 31,2022, was ''2.17 crores. The company incurred a loss of ''0.07 crore.

f) Blue Star Climatech Limited

Blue Star Climatech Limited was incorporated on May 17,

2021, as a wholly-owned subsidiary of the Company to carry on the business as manufacturer and dealer in all kinds of air conditioners, commercial refrigeration equipment, cooling appliances and other related products.

This company is expected to commence its operations during the upcoming financial year.

II. Joint Venture Companies:

a) Blue Star M & E Engineering Sdn Bhd

Blue Star M & E Engineering Sdn Bhd, a joint venture between BSL AC&R (Singapore) Pte Ltd and Amcorp Properties Bhd, Malaysia, has been principally engaged in the business of HVAC contracting and maintenance in Malaysia.

This company''s total income for the year ended March 31,

2022, was ''43.12 crores as compared to ''84.73 crores in the previous financial year. Net profit after tax for the year ended March 31, 2022, was ''2.23 crores as compared to ''5.31 crores in the previous year.

b) Blue Star Oman Electro-Mechanical Company LLC

A joint venture between W J Towell & Co. LLC and the Company, Blue Star Oman Electro-Mechanical Company LLC was formed to principally engage in the business of MEP contracting and maintenance in Oman.

As required under Section 136 of the Act, the audited annual accounts, including the consolidated financial statement of the Company and audited accounts of the subsidiary companies, are available on the website of the Company at www.bluestarindia.com.

SIGNIFICANT DEVELOPMENTS

During the year, the Company substantially completed installation work on a new world-class manufacturing facility at Wada which would cater to the production of the Company''s Commercial Refrigeration products and solutions, in particular deep freezers and water coolers. The said facility is fully equipped with the latest advanced manufacturing systems and imbibes global best practices in its operations. Commercial operations of this new manufacturing plant is expected to commence in early FY23.

The Company''s wholly owned subsidiary, Blue Star Climatech Limited, is setting up a new state-of-the-art manufacturing facility at Sri City, in Chittoor District of Andhra Pradesh which shall primarily manufacture room air conditioners. The plant is strategically located closer to a couple of Southern Indian sea ports which will enable speedy and efficient logistics management.

NEW INITIATIVES

AWARDS AND RECOGNITIONS

During the year under review, the Company was felicitated with many prestigious awards for excellence in its areas of business, and an illustrative list is given below:

â¢ The prestigious ''Golden Peacock Award for Excellence in Corporate Governance'' for the third year in a row and ''Golden Peacock Award for Risk Management'' for 2020

â¢ ''Excellence in HR through Technology Award'' under category ''Maharashtra Best Employer Brand Awards,'' organised by World HRD Congress

â¢ ''Excellence in Quality'' award by Max Estates

â¢ ''Diversity Marketing Campaign of the Year'' award at the 3^rd edition of D&I Summit and Awards 2021, organised by Transformance Forums

â¢ Dadra plant declared winner at the 11^th edition of the CII National 3M competition 2021

â¢ ''MEP Contractor of the Year'' award by Construction Week India for the sixth time

â¢ ''Best Product Quality Subcontractor'' award from Larsen & Toubro

â¢ ''Best Quality Conscious Subcontractor'' award from Tata Projects

â¢ Platinum and Gold awards won by Wada Plant Team at CII National Poka-yoke competition held virtually.

DIRECTORS

Retire by rotation

As required under the provisions of the Act, Dinesh N Vaswani retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends his re-appointment at the ensuing Annual General Meeting.

A brief profile of Dinesh N Vaswani is annexed to the notice convening Annual General Meeting.

Re-appointment of Independent Director

The Board of Directors, based on performance evaluation and as per the recommendation of the Nomination and Remuneration Committee recommended the re-appointment of Sam Balsara, as an Independent Director of the Company for a second consecutive term commencing from June 20, 2022, to January 31,2026, for the approval of the members by way of Postal Ballot. The results of the voting will be announced on or before Tuesday, June 7, 2022.

Resignation of Independent Director Rumjhum Chatterjee has tendered her resignation from the office of Independent Director of the Company with effect from April 25, 2022, due to personal reasons and to reduce her professional commitments. The Board places on record its

deep sense of appreciation towards the valuable contribution by Rumjhum Chatterjee during her tenure with the Company.

DECLARATION BY INDEPENDENT DIRECTORS

There has been no change in the circumstances affecting their status as Independent Directors of the Company.

KEY MANAGERIAL PERSONNEL

As required under the provisions of Section 203 of the Act, the following personnel have been designated as the Key Managerial Personnel of the Company:

Name	Designation
Vir S Advani	Vice Chairman & Managing Director
B Thiagarajan	Managing Director
Neeraj Basur	Group Chief Financial Officer**
Rajesh Parte	Company Secretary & Compliance Officer*

**Neeraj Basur, Group Chief Financial Officer, has tendered his resignation effective May31,2022.

*Neeraj Basur, Group Chief Financial Officer, was appointed by the Board of Directors to assume additional charge as the Company Secretary & Compliance Officer effective June 5,2021, after the resignation of Vijay Devadiga, Company Secretary & Compliance Officer, effective June 4,2021. On appointment of Rajesh Parte as Company Secretary & Compliance Officer effective October29,2021, Neeraj Basur relinquished his position of Company Secretary & Compliance Officer and was re-designated as Group Chief Financial Officer of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Under the provisions contained in Section 134(5) of the Act, the Directors, to the best of their knowledge and belief, confirm that:

â¢ In the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

â¢ They have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, to give a true and fair view of the state of affairs of the Company as at March 31, 2022, and of the profit of the Company for that period;

â¢ They have prepared the annual accounts for the year ended March 31,2022, on a going concern basis;

â¢ They have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and are operating effectively; and

â¢ They have devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems are adequate and operating effectively.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under review, 4 (four) meetings of the Board of Directors were held. The intervening gap between these meetings was within the period prescribed under the Act and Listing Regulations. The details of the meetings and attendance of the Directors are provided in the Corporate Governance Report.

BOARD COMMITTEES

Your Company has in place all the Committees as mandated under the provisions of the Act and Listing Regulations. Currently, there are eight Committees of the Board, namely:

â¢ Audit Committee

â¢ Nomination and Remuneration Committee

â¢ Investor Grievance cum Stakeholders'' Relationship Committee

â¢ Risk Management Committee

â¢ Corporate Social Responsibility Committee

â¢ Share Transfer Committee

â¢ Executive Management Committee

â¢ Debenture Committee

AUDIT COMMITTEE

NOMINATION AND REMUNERATION COMMITTEE

Sunaina Murthy and Rumjhum Chatterjee ceased to be members of the Nomination and Remuneration Committee with effect from October 28, 2021, and April 25, 2022, respectively. Shailesh Haribhakti was inducted as member of this Committee with

effect from October 28, 2021. Accordingly, the Committee comprises Sam Balsara (Chairman), Dinesh N Vaswani and Shailesh Haribhakti.

The Committee is constituted in line with the requirements mandated by Section 178 of the Act and Regulation 19 of the Listing Regulations. The terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance Report, which forms a part of this Annual Report.

INVESTOR GRIEVANCE CUM STAKEHOLDERS'' RELATIONSHIP COMMITTEE

Anil Harish and B Thiagarajan ceased to be members of the Investor Grievance cum Stakeholders'' Relationship Committee with effect from October 28, 2021. Arvind K Singhal and Sunaina Murthy were inducted as members of this Committee with effect from October 28, 2021. Accordingly, the Committee comprises Arvind K Singhal (Chairman), Rajiv R Lulla and Sunaina Murthy.

The Committee is constituted in line with the requirements mandated by Section 178 of the Act and Regulation 20 of the Listing Regulations. The terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance Report, which forms a part of this Annual Report.

RISK MANAGEMENT COMMITTEE

The Risk Management Committee was reconstituted to bring in line with the amendment to the Listing Regulations. Neeraj Basur ceased to be a member of the Risk Management Committee with effect from August 4, 2021. Anil Harish was inducted as member of this Committee with effect from August 4, 2021. Accordingly, the Committee comprises Vir S Advani (Chairman), Rajiv R Lulla, B Thiagarajan and Anil Harish. The Company has adopted a formal Risk Management Policy. In accordance with the amendment to the Listing Regulations, the Board of Directors at its meeting held on August 4, 2021, based on the recommendation of the Risk Management Committee, has amended the Risk Management Policy. An Enterprise Risk Management (ERM) framework prescribed under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2017 framework has been adopted for implementation by the Committee. The Committee identifies, evaluates and assesses the risks, understands the exposure of risks, and accordingly prepares and oversees execution of appropriate risk mitigation plans and identification of possible opportunities. The Committee and the Board have identified elements of risks, which, according to them, are crucial to the

Company. It has identified Risk Management Units within the Company, the risk profiles of which are constantly monitored, and the severity of risk is tracked, based on a systematic risk rating methodology. Details of these elements of risks have been covered in the Management Discussion and Analysis, and Integrated Report, which form part of this Annual Report and in the standalone financial statement in Note 42.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

Rumjhum Chatterjee ceased to be a member of the CSR Committee with effect from April 25, 2022. Sam Balsara was inducted as member of this Committee with effect from April 26, 2022. Accordingly, the Committee comprises B Thiagarajan (Chairman), Sam Balsara, and Sunaina Murthy.

During the year under review, the Company was required to spend an amount of ''2.91 crores towards activities as stipulated under Schedule VII of the Act. The Company has spent an amount of ''3.19 crores towards various CSR initiatives. Based on the recommendation of CSR Committee, the Board of Directors have approved set-off of excess CSR spent of ''0.28 crore towards CSR obligation of FY23.

The Board of Directors at its meeting held on May 6, 2021, based on the recommendation of the CSR Committee, has amended the CSR Policy to incorporate the amendments in the Act and rules made thereunder. A brief outline of the CSR Policy and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 2 of this report as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, and amendments thereof. The Policy is also available on the website of the Company at: https://www.bluestarindia.com/media/217799/blue-star-csr-policy.pdf

Details of the other Committees of the Board are provided in the Corporate Governance Report.

EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND DIRECTORS

The Nomination and Remuneration Committee at its meeting held on January 27, 2022, and the Board at its meeting held on February 2, 2022, approved the criteria for evaluating the Chairman, Directors, the Board, and its Committees. Accordingly, the questionnaires were circulated seeking inputs of the Directors to evaluate governance standards based on various parameters including structure and composition of the Board and committees, quality of Board processes, Board culture and dynamics, effectiveness vis-a-vis stakeholders'' expectations in terms of strategic direction, and guidance to the leadership team.

The inputs received from the Directors were deliberated upon and reviewed by the Independent Directors at a separate meeting held on March 31, 2022. At this meeting, they evaluated the performance of the Non-Independent Directors, the Board as well as that of the Chairman, taking into account the views of the Executive and Non-Executive Directors. The Board of Directors carried out an annual evaluation of the performance of the Board as a whole, the Directors individually, and the working of the Committees of the Board. The outcome of the evaluation was noted by the Nomination and Remuneration Committee at its adjourned meeting held on April 26, 2022, and by the Board of Directors at its meeting held on May 5, 2022. Broadly, the Directors have expressed their satisfaction with the evaluation process and the outcome. The Board also noted the key action points that emerged from the process for implementation.

A detailed update on the Board Evaluation is provided in the relevant section of the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

The Board of Directors at its meeting held on February 2, 2022, based on the recommendation of the Nomination and Remuneration Committee, has amended the Nomination and Remuneration Policy. The Policy provides broad guidelines on appointment, removal, retirement, qualifications, attributes, and structure of remuneration, of the Directors, Key Managerial Personnel, and Senior Management Personnel. It is designed to foster a high-performance culture that enables the Company to attract, retain and motivate the employees to achieve results. The performance of the Executive Directors was evaluated and reviewed by the Nomination and Remuneration Committee at its adjourned meeting held on April 26, 2022. The Nomination and Remuneration Policy is uploaded on the Company''s website at: https://www.bluestarindia.com/media/217800/blue-star-nrc-policv.pdf

MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each Director to the median employee''s remuneration and other details in terms of Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereof are provided below:

		I	II
Name of Director		The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year	The percentage increase in remuneration, if any, in the financial year
Non-Executive Directors#
Shailesh Haribhakti		5.21x	80.4%
Dinesh N Vaswani		2.75x	49.2%
Rajiv R Lulla		2.78x	55.6%
Sunaina Murthy		2.83x	44.9%
Sam Balsara		2.80x	54.7%
Anil Harish		2.97x	52.2%
Rumjhum Chatterjee		2.92x	45.1%
Arvind Singhal		3.03x	52.9%
Executive Directors
Vir S Advani		69.58x	22.8%
B Thiagarajan		67.15x	17.6%
Group Chief Financial Officer
Neeraj Basur		-	46.1%
Company Secretary & Compliance Officer
Rajesh Parte*		-	-
#The remuneration of Non-Executive Directors covers sitting fees and commission. *Rajesh Parte was appointed as the Company Secretary & Compliance Officer of the Company effective October29,2021.
iii.	The percentage increase in the median Remuneration of employees in the financial year		5.79%
IV.	The number of permanent employees on the rolls of Company		2,533

V.	Average percentile increases already made in the salaries of employees, other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there are any exceptional circumstances for increase in the managerial remuneration	Average increase to employees other than Managerial Personnel and justification thereof	9% To remain competitive in the market, to attract and retain talent
		Average increase to Managerial Personnel	20.17%
		Exceptional circumstances for an increase to managerial remuneration	The average increase given in financial year 2021-22 was based on the outcome of compensation and benefits benchmarking to align remuneration of Whole-time Directors to market median.
VI.	Affirmation that the remuneration is as per the remuneration policy of the Company	The Company affirms that the remuneration is as per the Nomination and Remuneration Policy.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of corporate governance and continues to be compliant with the requirements of corporate governance as enshrined in the Listing Regulations. The report on corporate governance together with a certificate from the Statutory Auditors of the Company, confirming compliance with corporate governance norms as stipulated in the Listing Regulations, forms a part of this Annual Report.

The Company was declared as the winner of the Golden Peacock Award for Excellence in Corporate Governance for the year 2021, after being conferred this award in the year 2019 and 2020 as well. Golden Peacock Awards were instituted by the Institute of Directors (IOD), India, in 1991, and over time they have become a hallmark of excellence, both in India and globally.

VIGIL MECHANISM

The Vigil Mechanism structure at Blue Star is based on the COSO 2017 ERM framework governing risk, compliance, and controls. Embedded in the Vigil Mechanism structure are three lines of defence. The first line of defence comprises key management controls, viz, financial controls, governance policies, and internal control measures at the process owner level. The second line of defence is addressed by an assurance from risk management and compliance procedures. The third

line of defence is provided through the work done by internal and external auditors.

Governance policies, internal controls, stakeholders'' engagement, enterprise risk management, compliance, and the internal and statutory audit, are key components of Blue Star''s vigil mechanism. They are interwoven in the vigil mechanism system to enable constant interplays to drive home the assurance of best practices and creation of value for all the stakeholders of the Company.

As a part of its governance policies, the Company has in place a whistle blower policy to enable the Directors, employees of the Company, its subsidiaries, affiliate/joint venture companies and business partners to report concerns of any unethical behaviour, unacceptable and improper practices, or suspected fraud. The policy has also been uploaded on its website. An Ethics Committee has been constituted, comprising the Group Chief Financial Officer, Chief Human Resources Officer, and Company Secretary & Compliance Officer (Ethics Officer) to administer this Policy. The Company has also adopted a robust Governance, Risk and Compliance Framework that enables a seamless integration of processes and components around the Company''s governance, risk and compliance objectives.

The Whistle Blower Policy is uploaded on the Company''s website at: https://www.bluestarindia.com/media/271525/whistle-blower-policy.pdf

The Audit Committee reviews on a quarterly basis, whistle blower and other complaints, if any, and oversees the implementation of corrective actions wherever necessary.

The Company has also adopted a Code of Conduct which is available on the website of the Company at: https://www.bluestarindia.com/media/271526/code-of-conduct.pdf

The Governance, Risk and Compliance Framework is uploaded on the Company''s website at:

https://www.bluestarindia.com/media/335126/governance-risk-compliance-framework website.pdf

INTERNAL CONTROL SYSTEMS

The Company has established an internal control system commensurate with the size, scale, and complexity of its operations.

To enhance the standards of controls and governance, the Company has adopted the COSO 2013 framework to ensure that robust internal financial controls exist concerning operations, financial reporting, and compliance.

Significant features of the Company''s internal control system are:

â¢ A well-established, independent, Internal Audit team operates in line with best-in-class governance practices. It reviews and reports to the Audit Committee about compliance with internal controls, the efficiency and effectiveness of operations as well as key process risks.

â¢ The Audit Committee periodically reviews internal audit plans, significant audit findings, and adequacy of internal controls.

â¢ Systematic self-certification of adherence to key internal controls, as part of control self-assurance by process owners, monitors, and reviewers.

â¢ Adherence with a comprehensive information security policy and continuous upgrades of the Company''s IT systems for strengthening automated controls.

â¢ Appropriate segregation of duties and usage of technology for continuous controls monitoring and enhanced controls assurance.

During the year, the internal controls were tested and found effective, as a part of the Management''s control testing initiative. Accordingly, the Board, with the concurrence of the Audit Committee and the Auditors, believes that the Company''s Internal Financial Controls were adequate and operating effectively for the financial year ended March 31,2022.

LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, as may be applicable, are given in the standalone financial statement as per Note 8-10.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions are approved by the Audit Committee. All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business.

There are no material transactions with any related party as defined under Section 2(76) of the Act and Regulation 2(zb) of the Listing Regulations. Because of this, disclosure in Form AOC-2 has not been provided. The details of transactions with the related parties are provided in the standalone financial statement in Note 38.

A policy governing the related party transactions was amended by the Board at its meeting held on February 2, 2022, in line with amendments in the Listing Regulations, and the same has been uploaded on the Company''s website at: https://www.bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf

HUMAN RESOURCES

Employee wellbeing while ensuring business continuity continued to be an ongoing priority focus of your Company through the year under review. In the face of the second and third waves of the COVID-19 pandemic across the country, strict adherence to COVID-appropriate behaviour was implemented which effectively aided in containing spread of infection in the Blue Star ecosystem. Also, agile support in medical crisis situations helped save many lives of our employees, their family members and that of various stakeholders of the Company. A holistic approach to physical and mental wellness including swift medical and counselling support through a virtual platform, offering the option of flexible work schedules aimed at optimising work-life balance, and de-stressing sessions by experts, was well received by the employees. A comprehensive rewards and recognition (R&R) Policy was instituted across employee groups to keep the employees motivated and engaged. The award winner''s stories was showcased at Life @ Blue Star, the Company''s LinkedIn page which received good traction amongst staff and their networks.

Rapid increase in adoption of technology involving people processes resulted in enhanced employee experience, provided reports, dashboards and analytics for informed, real-time business insights. A Diversity, Equality & Inclusion (DEI) Policy aligned to your Company''s diversity agenda was rolled out. The talent management team clocked 95,000 learning hours through internal learning platforms. This helped upskill the workforce with the right training and knowledge needed to meet challenging job requisites and creating a culture of continuous learning and growth. Performance review processes were further enhanced through individual development plans and related robust review mechanisms with respect to grade-linked professional competencies. Employee-friendly policies relevant in the post pandemic environment were rolled out. Overall, your Company is committed to being a listening organisation which is swift

in taking proactive steps towards employee engagement and collaboration, with solutions that balance employee productivity and wellness for happy and satisfied teams.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are required to be annexed to the Board''s Report. The Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining the said particulars may write to the Company Secretary & Compliance Officer of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero-tolerance for sexual harassment at the workplace and has adopted a policy on prevention, prohibition, and redressal of the same, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and the Rules thereunder.

All employees (permanent, contractual, temporary, and trainees) are covered under this Policy.

The Company has duly constituted Internal Complaints Committees in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to redress complaints received regarding sexual harassment. The Company organises workshops and awareness programs at regular intervals for sensitising employees with the provisions of the said Act. During the year under review, no complaints with allegations of sexual harassment were filed with the Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company incurred a total expenditure of ''67.21 crores on research and development for the year as against ''59.10 crores in the previous year.

During the year, the Company recorded foreign exchange earnings from the export of its products, commission, and other income, aggregating to ''242.34 crores as against ''165.71 crores in the previous year.

The foreign exchange outflow stood at ''1,354.66 crores as compared to ''954.04 crores in the previous year.

The information on Energy Conservation, Technology Absorption

and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 1.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis for the year under review, as stipulated under Regulation 34 of Listing Regulations, forms a part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

In compliance with Regulation 34 of the Listing Regulations, the Business Responsibility Report describing sustainability initiatives undertaken by the Company during the year under review is provided in a separate section forming part of this Annual Report.

INTEGRATED REPORTING

Your Company is amongst the top 500 listed companies in the country in terms of market capitalisation and has accordingly adopted Integrated Reporting describing initiatives undertaken by the Company for enhancing stakeholders'' value in the long term. The report on Integrated Reporting is provided in a separate section forming part of this Annual Report.

STATUTORY AUDITORS

The Company''s existing Statutory Auditors, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed by the Members at the 70th Annual General Meeting (AGM) of the Company, for a period of 5 years, to hold office until the conclusion of the 75th AGM to be held for FY 2022-23. The period under review was the fourth year of the audit by M/s Deloitte Haskins & Sells LLP in the Company.

AUDITORS'' REPORT

The Board has duly reviewed the Statutory Auditors'' Report on the financial statements. There is no qualification, reservation, or adverse remark given by the Auditors in their report.

COST AUDITORS

As required under the Act, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members''ratification for the remuneration payable to Cost Auditors, forms part of the Notice convening the Annual General Meeting.

SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s N L Bhatia & Associates, Practicing Company Secretaries, as the Secretarial Auditor of the Company for conducting the secretarial audit of your Company for the financial year ended March 31,2022. The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries, has been provided in Annexure 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark. Further, as required under Regulation 24A of the Listing Regulations, the Secretarial Audit Report of Blue Star Engineering & Electronics Limited, the material unlisted Subsidiary, is also provided in Annexure 3A to this Report.

INTERNAL AUDITORS

In terms of the provisions of Section 138 of the Act read with Companies (Accounts) Rules, 2014, the Company has appointed M/s Grant Thornton Bharat LLP, Chartered Accountants, as the internal auditors effective April 1,2021.

REPORTING OF FRAUDS BY AUDITORS

ANNUAL RETURN

The annual return of the Company has been uploaded on the Company''s website at:

https://www.bluestarindia.com/media/335106/fv22-mgt-7-

annual-return.pdf

RESERVES

During the financial year, there was no amount proposed to be transferred to the reserves.

OTHER DISCLOSURES

â¢ The Company has prepared and maintained the cost accounts and records as specified by the Central Government under Section 148(1) of the Act.

â¢ There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in the future.

â¢ Your Company has not issued any shares with differential voting rights.

â¢ Your Company has listed its Commercial Paper on National Stock Exchange of India Ltd.

â¢ Your Company has not issued any sweat equity shares.

â¢ There was no revision in the financial statements.

ACKNOWLEDGEMENTS

The Directors place on record their sincere appreciation for the assistance, guidance, and co-operation provided by the Government of India and other regulatory authorities. The Directors thank the financial institutions and banks associated with the Company for their support as well. The employees are instrumental for the Company scaling new heights year after year, and their commitment and contribution are deeply acknowledged. Shareholders'' involvement is greatly valued. The Directors look forward to your continuing support.

Mar 31, 2018

To The Members

The Directors are pleased to present the 70^th Annual Report, together with the audited financial statements for the financial year ended March 31, 2018.

COMPANY OVERVIEW

Your Company offers one of Indiaâs widest range of air conditioning and commercial refrigeration products, as well as a comprehensive range of air purifiers, water purifiers, air coolers and other specialty products. It fulfills cooling and refrigeration requirements of a large number of corporate, commercial as well as residential customers.

Leveraging on its project execution capabilities, the Company offers turnkey solutions in MEP (Mechanical, Electrical, Plumbing and Fire-fighting) contracting for buildings, factories, infrastructure and heavy industry projects. The Companyâs integrated business model of a manufacturer, contractor and after-sales service provider enables it to offer an end-to-end solution to its customers, which has proved to be a significant differentiator in the market place.

FINANCIAL RESULTS

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The standalone and consolidated financial highlights of the Company for the financial year ended March 31, 2018 are summarized as follows:

(Rs. in crores)

	Standalone		Consolidated
Particulars	For the year ended March 31, 2018	For the year ended March 31,2017	For the year ended March 31,2018	For the year ended March 31,2017
Revenue from operations	4425.15	4146.60	4749.99	4422.23
Total Revenue	4441.29	4180.98	4766.94	4456.81
Total Expenses	4263.39	4032.70	4566.21	4298.18
Profit before exceptional items and tax	177.90	148.28	200.73	158.63
Profit after exceptional items and before tax	195.75	148.28	206.00	158.63
Income tax	53.82	36.31	54.56	36.67
Profit for the Year	141.93	111.97	149.25	123.05

Prior to GST becoming effective on July 1,2017, revenue for previous periods included excise duty. For comparability, revenue from operations for the prior period is also stated net of excise in the subsequent paragraph. There is no impact on Profit before Tax or Profit after Tax.

Comparable revenue from operations is as follows:

(Rs.in crores)

	Standalone		Consolidated
Particulars	For the year ended March 31, 2018	For the year ended March 31,2017	For the year ended March 31, 2018	For the year ended March 31, 2017
Revenue from operations	4318.42	3855.14	4643.26	4130.77

COMPARABLE OPERATING RESULTS

On a standalone basis, revenue from operations of the Company was ?4318.42 crores as compared to ?3855.14 crores (excluding excise component) in the previous year, registering a growth of over 12.01%. The Company registered Net Profit after Tax of ?141.93 crores as compared to ?111.97 crores for the financial year ended March 31, 2017.

On a consolidated basis, the revenue from operations of the Company was Rs.4643.26 crores as compared to Rs.4130.77 crores (excluding excise component) in the previous year, registering a growth of over 12.41%. The Company registered Net Profit after Tax of Rs.149.25 crores as compared to Rs.123.05 crores for the financial year ended March 31, 2017.

Your Company operates in three key segments (i) Electro-Mechanical Projects and Packaged Air Conditioning Systems (ii) Unitary Products, and (iii) Professional Electronics and Industrial Systems. Performance of the Company in the above mentioned segments during the year under review is as stated below:

(a) Electro-Mechanical Projects and Packaged Air Conditioning Systems

Your Company continued to maintain its leadership position in the electro-mechanical space in India. Market growth continued to remain muted and Corporates continued to stay cautious on fresh investments. Investments in infrastructure project were largely driven by Government in various infrastructure projects like metro and healthcare.

Your Company continues to invest in engineering capabilities, modern construction practices and technology in line with its value proposition of superior project delivery.

On a consolidated basis, comparable revenue of this segment grew by 9.67% to Rs.2350.68 crores from Rs.2143.35 crores (excluding excise component). Segment results registered an increase of 51.56% from Rs.90.67 crores in the previous year on a comparable basis to Rs.137.42 crores in the year under review.

(b) Unitary Products

The performance of the room air conditioning segment was driven by improved product penetration among the existing dealers/retailers, a better product range, attractive sales promotions and strengthening distribution. Your Company continued to perform better in the high energy-efficient products such as 5 star and inverter ACs.

On the Commercial Refrigeration business front, growth was seen across categories of deep freezers, storage water coolers, bottled water dispensers and modular cold rooms. Our new lines of business, kitchen refrigeration and medical refrigeration, witnessed reasonable growth in the market with increase in secondary sales.

On a consolidated basis, Unitary Products comparable revenue in the year grew by 17.21% to Rs.2105.36 crores as against previous yearâs revenue of Rs.1796.25 crores (excluding excise component). Segment results have risen by 15.04% from Rs.167.88 crores in the previous year to Rs.193.13 crores in the year under review.

(c) Professional Electronics and Industrial Systems (PE&IS)

The PE&IS segment is operated by Blue Star Engineering & Electronics Limited, a wholly owned subsidiary of the Company. At a consolidated level, the comparable revenue generated by this business segment during the year under review was Rs.187.22 crores as compared to Rs.191.48 crores of the previous year (excluding excise component). The results stood at Rs.19.58 crores as compared to Rs.32.48 crores in the previous year.

Revenue of this segment was impacted due to continued softness in industrial capital expenditure and slow pace of execution across various projects. The sluggish demand for the products under this segment has impacted the profitability of the Company.

DIVIDEND

The Board, at its meeting held on May 14, 2018, recommended a dividend of Rs.8.50 per equity share of Rs.2 each for the financial year ended March 31, 2018. In addition, to commemorate the Companyâs Platinum Jubilee in 2018, the Board recommended a special dividend of Rs.1.50 per equity share of Rs.2 each. Accordingly, an aggregate dividend of Rs.10 per equity share of Rs.2 each has been proposed. This dividend is payable to those shareholders whose names appear in the Register of Members as on the Book Closure Date. This proposal is subject to the approval of members at the ensuing Annual General Meeting. The Board has adopted the Dividend Distribution Policy for the Company which can be viewed on the website of the Company under the link: https://www.bluestarindia.com/media/104569/dividend-distribution-policy.pdf.

FINANCING

On a consolidated basis, borrowing cost for the year was Rs.28.74 crores which was lower as compared to Rs.37.78 crores in the previous year, due to reduced borrowing levels led by effective working capital management and ability to source the funds at a lower cost. In addition, disciplined and systematic hedging decisions based on accurate information of forex exposure resulted in net gain of Rs.0.73 crores, as compared to a net gain of Rs.1.50 crores in the previous year.

The Company secured short term rating of A1 (highest safety) from CRISIL, top credit rating agency, for its commercial papers. The Company already enjoys A1 rating from CARE.

DEPOSITS

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 (the âActâ), and the Companies (Acceptance of Deposits) Rules, 2014.

CHANGES IN SHARE CAPITAL

During the year under review, the Company allotted 4,29,400 equity shares of Rs.2 each, fully paid up, to the option grantees pursuant to the exercise of stock options by the eligible employees under the Blue Star Limited Employee Stock Option Scheme, 2013.

Consequent to the above, the issued, subscribed and paid up share capital of your Company as on March 31, 2018 stood at Rs.19,19,99,576 comprising 9,59,99,788 equity shares of Rs.2 each.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with Regulation 34 of the Listing Regulations and Section 129(3) of the Act, the consolidated financial statement has been prepared by the Company, as per the Indian Accounting Standards (Ind AS), and forms a part of this Annual Report.

The consolidated financial statement shall also be laid at the ensuing Annual General Meeting of the Company.

SUBSIDIARIES AND JOINT VENTURE COMPANIES

Subsidiary Companies:

a) Blue Star Engineering & Electronics Limited

Blue Star Engineering & Electronics Limited is a wholly owned subsidiary of Blue Star Limited. It offers advanced technology products, surveillance solutions as well as electronic systems and product testing solutions.

Total comparable revenue of Blue Star Engineering & Electronics Limited for the year ended March 31, 2018 was Rs.191.90 crores, as against its previous yearâs revenue of Rs.181.49 crores. The subsidiary achieved a net profit of Rs.19.66 crores for the year under review, as against last yearâs net profit of Rs.4.92 crores.

b) Blue Star Qatar WLL

Blue Star Qatar WLL is a joint venture between Blue Star Limited and Al Malki Trading and Contracting Company WLL, wherein Blue Star Limited holds 49% of the share capital and voting rights, and the balance is held by Al Malki Trading and Contracting Company WLL. The company is principally engaged in the business of MEP contracting and maintenance in Qatar.

This company is a subsidiary of Blue Star Limited by virtue of Section 2(87)(i) of the Companies Act 2013, as Blue Star controls the composition of the companyâs Board.

Total income of this company for the year ended March 31, 2018 was Rs.111.64 crores as compared to Rs.110.77 crores in the previous financial year. Net profit after tax for the year ended March 31, 2018 was Rs.5.43 crores as compared to Rs.3.63 crores in the previous year.

c) Blue Star International FZCO

Blue Star International FZCO, incorporated on April 18, 2017, is a wholly owned subsidiary of Blue Star Limited, operating in the Dubai Airport Freezone, a free trade zone in the UAE.

Being the maiden year, the company clocked a total income of Rs.53.45 crores and reported a net loss of Rs.6.28 crores for the period ended March 31, 2018.

Joint Venture/Associate Companies:

a) Blue Star M & E Engineering Sdn Bhd

Blue Star M & E Engineering Sdn Bhd, a joint venture with Amcorp Properties Bhd, Malaysia, is principally engaged in the business of HVAC & MEP contracting and maintenance in Malaysia.

During the year, as a part of the restructuring of the international business, entire shares held by the Company in Blue Star M & E Engineering Sdn Bhd were transferred to Blue Star International FZCO on December 22, 2017. This company continues to be associate of your Company. In order to develop further business opportunities in the region strategically, Blue Star International FZCO subscribed to 49 redeemable convertible preference shares of RM 40,000 each in Blue Star M & E Engineering Sdn Bhd on March 29, 2018, amounting to Rs.3.48 crores.

This companyâs total income for the year ended March 31, 2018 was Rs.94.56 crores as compared to Rs.108.44 crores in the previous financial year. Net profit after tax for the year ended March 31, 2018 was Rs.7.17 crores as compared to Rs.5.14 crores in the previous year.

b) Blue Star Oman Electro-Mechanical Company LLC

A joint venture between W J Towell & Co LLC and Blue Star Limited, Blue Star Oman Electro-Mechanical Company LLC is principally engaged in the business of MEP contracting and maintenance in Oman. Its income for the year ended March 31, 2018 was Rs.97.46 crores as compared to Rs.112.28 crores in the previous year. For the year ended March 31, 2018, the venture had a net loss of Rs.10.86 crores as compared to a profit of Rs.0.70 crores in the previous year.

In accordance with Section 136 of the Act, the audited financial statement of the Company, including the consolidated financial statement, and audited financial statements of the subsidiary companies, are available on the corporate website: www.bluestarindia.com.

A copy of these documents will be available to the members, on their request in writing. It will also be available for inspection by any member during business hours at the registered office of the Company.

A statement containing the salient features of the financial statements of the subsidiaries, associates and joint venture companies in Form AOC-1, as required under Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the consolidated financial statement.

SIGNIFICANT DEVELOPMENTS

a) In 2016, your Company had acquired land from J&K State Industrial Development Corporation, for setting up a manufacturing facility at Samba in Jammu. Due to non-availability of certain fiscal incentives envisaged earlier as a consequence of the introduction of GST, this proposed manufacturing facility project in Jammu became economically non-viable and therefore, the Company decided not to go ahead with this project.

b) The Board approved the proposal to incorporate a step down subsidiary in mainland UAE, under Blue Star International FZCO, with an initial investment of AED 300,000. This will enable our UAE operations to improve their competitive position in the central air conditioning, mid-sized HVAC projects and service business, through a direct presence in mainland UAE.

c) In January 2018, BSE shifted Blue Star shares to Group A from Group B comprising top 200 companies based on several factors like market capitalization, trading volumes and numbers, track records, profits, dividends, shareholding patterns, and qualitative aspects including governance.

NEW INITIATIVES

The Company successfully completed seamless transition to GST during the year. The Company has embarked upon several initiatives in the areas of technology led digitalisation of some key business processes, employee engagement and internet enabled automation across its products and services.

AWARDS AND RECOGNITIONS

During the year under review, the Company was felicitated with many prestigious awards for excellence in its areas of business, and an illustrative list is given below:

- Blue Star was recognised as the MEP Contractor of the Year at the âConstruction Week India Awards 2017â

- Blue Star received a commendation, âStrong Commitment to Excelâ at âCII-EXIM Bank Awards for Business Excellence, 2017â.

- Blue Star won the IDC Insight Awards for Operational Excellence 2017 for its mobile-based Preventive Maintenance Service app.

- Blue Star won an award for its mobile field service app at the Rs.12^th Annual CIO 100 Symposium and Awards ceremony 2017â and at the âManufacturing IT Summit 2017â.

DIRECTORS

In accordance with provisions of the Companies Act, 2013, Suneel M Advani retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. Pradeep Mallick retired as an Independent Director of the Company on attaining the age of 75 years as per the Companyâs retirement policy, with effect from November 30, 2017. Board placed on record its sincere appreciation for the valuable contribution made by Pradeep Mallick during his tenure as a Director.

Further, based on the recommendation of the Nomination and Remuneration Committee, the Board had appointed Anil Harish (DIN: 00001685) as the additional Independent Director of the Company, with effect from November 22, 2017 for a period of 5 years.

As per the provisions of the Act, Anil Harish holds office up to the date of the ensuing Annual General Meeting of the Company.

Your Company has received notice under Section 160 of the Act, from a member proposing appointment of Anil Harish as an Independent Director on the Board of your Company. Accordingly, the necessary resolution seeking approval of the members for appointment of Anil Harish has been incorporated in the Notice of the ensuing Annual General Meeting.

Brief profiles of the Directors proposed to be appointed/re-appointed at the ensuing Annual General Meeting are annexed to the Notice convening Annual General Meeting.

The Board recommends their appointment at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each of the Independent Directors of the Company under Section 149(7) of the Act, confirming that they meet with the criteria of independence as laid down in Section 149(6) of the Act, read with Regulation 25 of the Listing Regulations.

KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 203 of the Act, the following personnel have been designated as the Key Managerial Personnel of the Company:

Name	Designation
Vir S Advani	Managing Director
B Thiagarajan	Joint Managing Director
Neeraj Basur	Chief Financial Officer
Vijay Devadiga	Company Secretary

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 of the Act, the Directors, to the best of their knowledge and belief, confirm that:

- In the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

- The Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018, and of the profit of the Company for that period;

- The Directors have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

- The Directors have prepared the annual accounts for the year ended March 31, 2018, on a going concern basis;

- The Directors have laid down internal financial controls to be followed by the Company, and that such internal financial controls are adequate and are operating effectively; and

- The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems are adequate and operating effectively.

MEETINGS OF BOARD OF DIRECTORS

During the year under review, 5 (five) meetings of the Board of Directors were held on May 9, 2017; August 11, 2017; October 31, 2017; February 6, 2018; and March 7, 2018. The intervening gap between these meetings was within the period prescribed under the Act and Listing Regulations. The details of the meetings and attendance of the Directors are provided in the Corporate Governance Report.

BOARD COMMITTEES

Your Company has in place, all the Committee(s) as mandated under the provisions of the Act and Listing Regulations.

Currently, there are seven Committees of the Board, namely:

- Audit Committee

- Nomination and Remuneration Committee

- Investor Grievance cum Stakeholdersâ Relationship Committee

- Risk Management Committee

- Corporate Social Responsibility Committee

- Share Transfer Committee

- Executive Management Committee

AUDIT COMMITTEE

The Audit Committee of the Company comprises Shailesh Haribhakti, Gurdeep Singh, Anil Harish and B Thiagarajan. Shailesh Haribhakti is the Chairman of the Committee. Gurdeep Singh and Anil Harish were appointed as the members of the Audit Committee with effect from August 11, 2017 and November 22, 2017, respectively.

The composition of the Committee is in compliance with the requirements of Section 177 of the Act and Regulation 18 of the Listing Regulations. The charter of the Committee is in conformity with the Act and the Listing Regulations as more particularly set out in the Corporate Governance Report, which forms a part of this report.

During the year under review, there was no instance wherein the Board had not accepted any recommendation of the Audit Committee.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises Gurdeep Singh, Suneel M Advani, Sam Balsara and Dinesh N Vaswani. Gurdeep Singh is the Chairman of this Committee. Sam Balsara was inducted as a member of this Committee, with effect from August 11, 2017. Pradeep Mallick ceased to be the member of the Committee with effect from November 30, 2017.

The Committee is constituted in line with the requirements mandated by the Act and of the Listing Regulations. The terms of reference of the Committee are in conformity with the said requirements, as more particularly set out in the Corporate Governance Report, which forms a part of this report.

RISK MANAGEMENT COMMITTEE

The Risk Management Committee has been formed to assist the Board in fulfilling its responsibilities relating to evaluation and mitigation of various risks exposures that potentially impact the Company. An Enterprise Risk Management (ERM) framework prescribed under the Committee of Sponsoring Organisations of the Treadway Commission (COSO) 2013 framework was adopted for implementation by the Committee.

The Risk Management Committee comprises Suneel M Advani, Vir S Advani, B Thiagarajan and Neeraj Basur. Vir S Advani is the Chairman of this Committee.

During the year, the Committee reviewed the Companyâs risk management processes on a quarterly basis to oversee mitigation effectiveness of various risk categories across all Risk Management Units.

The Company maintains risk registers to ensure that the effectiveness of the mitigation action plan gets assessed independently. These registers were presented to and reviewed by the Risk Management Committee and Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The CSR Committee comprises Suneel M Advani, B Thiagarajan and Shobana Kamineni. Suneel M Advani is the Chairman of this Committee.

During the year under review, the Company was required to spend an amount of Rs.211 lakhs towards activities as stipulated under Schedule VII of the Act. The Company has spent an amount of Rs.220 lakhs towards various CSR initiatives.

A brief outline of the CSR Policy and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 2 of this report as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The Policy is also available on the website of the Company.

Details of the other committees of the Board are provided in the Corporate Governance Report.

EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND OF DIRECTORS

The Nomination and Remuneration Committee at its meeting held on February 5, 2018 approved the process in which the evaluation of Chairman, Directors, Board and its committees were to be conducted. Accordingly, the questionnaires were circulated seeking inputs of the Directors to evaluate governance standards based on various parameters including structure and composition of Board and committees, quality of Board processes, Board culture and dynamics, effectiveness vis-a-vis stakeholdersâ expectations in terms of strategic direction and guidance to leadership team.

The inputs received from the Directors were deliberated and reviewed by the Independent Directors at a separate meeting held on March 14, 2018. At this meeting, they evaluated the performance of the Non-Independent Directors, the Board as well as that of the Chairman, taking into account the views of the Executive and Non-Executive Directors. The Board of Directors carried out an annual evaluation of the performance of the Board as a whole, the Directors individually, and the working of the committees of the Board. The outcome of the evaluation was noted by the Nomination and Remuneration Committee at its meeting held on April 26, 2018, and by the Board of Directors at its meeting held on May 14, 2018. While the Directors have expressed their satisfaction with the evaluation process and the outcome, the Board also noted the key action points emerged from the process for implementation.

NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration Policy of the Company was adopted by the Board based on the recommendation of the Nomination and Remuneration Committee. The Policy provides broad guidelines on appointment, removal, retirement, qualifications, attributes, structure of remuneration and independence of the Directors, KMPs and Senior Management. It is designed to foster a high-performance culture enabling the Company to attract, retain and motivate employees to achieve results. The performance of the Managing Director and Joint Managing Director were evaluated and reviewed by the Nomination and Remuneration Committee at its meeting held on April 26, 2018. The Nomination and Remuneration Policy is uploaded on the Companyâs website under the weblink: https://www.bluestarindia.com/media/137066/blue-star-nomination-and-remuneration-policy.pdf

MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each Director to the median employeeâs remuneration and other details, in terms of Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enumerated further.

i.	The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year	Vir S Advani	103x
i.		B Thiagarajan	66x
ii.	The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year	Vir S Advani	45.15%
		B Thiagarajan	22.63%
		Neeraj Basur	11.31%
		Vijay Devadiga	12.42%
iii.	The percentage increase in the median remuneration of employees in the financial year	10.58%
iv.	The number of permanent employees on the rolls of Company	2602

v.	Average percentile increase already made in the salaries of employees, other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there are any exceptional circumstances for increase in the managerial remuneration	Average increase to employees other than Managerial Personnel and justification thereof	13.91% To remain competitive in the market, to attract and retain talent.
		Average increase to Managerial Personnel	Please refer to (ii) of this table.
		Exceptional circumstances forincreasetomanagerial remuneration	Theaverageincreasegiven inFY 2017-18 wasbased on theoutcomeofcompensation andbenefitsbenchmarking toalign remuneration of Whole-time Directors to market median.
vi.	Affirmation that the remuneration is as per the remuneration policy of the Company	It is hereby affirmed that the remuneration paid is as per the Nomination and Remuneration Policy of the Company.

The Non-Executive Directors of the Company are paid sitting fees and commission as per the statutory provisions and within the limits approved by the members. The ratio of remuneration and percentage increase in Non-Executive Directorsâ remuneration are therefore not considered for the purposes above. The details of remuneration of Non-Executive Directors are provided in the Corporate Governance Report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of corporate governance and continues to be compliant with the requirements of the corporate governance as enshrined in the Listing Regulations. The report on Corporate Governance, as stipulated under Regulation 27 of the Listing Regulations, forms part of the Annual Report. The certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance, as stipulated under Regulation 27 of the Listing Regulations, has been annexed with the said report.

VIGIL MECHANISM

Your Company is committed to conduct its business with highest standards of ethical standards, integrity and transparency across its operations, in compliance with the applicable laws and regulations. In line with a strong commitment to governance and compliance, the Company has instituted a robust vigil mechanism framework encompassing various elements and components in an integrated manner.

Vigil Mechanism structure at Blue Star is based on Committee of Sponsoring Organisations of the Treadway Commission (COSO) 2013 framework governing risk, compliance and controls. Embedded in the Vigil Mechanism structure are three lines of defence principles. The first line of defence comprises of key management controls, financial controls, governance policies and internal control measures. The second line of defence is addressed by assurance from risk management and compliance procedures. The third line of defence is provided through the work done by internal and external auditors.

Governance policies, internal controls, stakeholdersâ engagement, enterprise risk management, compliance, internal and statutory audit are key components of Blue Starâs Vigil Mechanism. They are interwoven in the vigil mechanism system to enable constant interplays to drive home the assurance of best practices and creation of value for all the stakeholders of the Company.

As a part of its governance policies, the Company has laid down a whistle blower policy to enable the Directors and employees of the Company to report concerns of any unethical behaviour, unacceptable and improper practices or suspected fraud. The policy has also been uploaded on its website. An Ethics Committee has been constituted, comprising the Chief Financial Officer, HR Head and Company Secretary (Ethics Officer) to administer this Policy.

The Whistle Blower Policy is uploaded on the Companyâs website under the weblink: https://www.bluestarindia.com/media/6011/whistle-blower-policy.pdf

The Company has also adopted a Code of Conduct which is available on the website of the Company under the weblink: https://www.bluestarindia.com/media/6010/code-of-conduct.pdf

The Audit Committee reviews on a quarterly basis, complaints, if any, and implements corrective actions, whenever necessary.

INTERNAL CONTROL SYSTEMS

The Company has established an internal control system, commensurate with the size, scale and complexity of its operations. In order to enhance the standards of controls and governance, the Company has adopted COSO 2013 framework to ensure that robust internal financial controls exist in relation to operations, financial reporting and compliance.

Significant features of the Companyâs internal control system are:

- A well-established, independent, Internal Audit team operates in line with best-in-class governance practices. It reviews and reports to the Audit Committee about compliance with internal controls, the efficiency and effectiveness of operations as well as key process risks.

- The Audit Committee periodically reviews internal audit plans, significant audit findings and adequacy of internal controls.

- Systematic self-certification of adherence to key internal controls, as part of control self-assurance by process owners, monitors and reviewers.

- Adherence with a comprehensive information security policy and continuous upgrades of the Companyâs IT systems for strengthening automated controls.

During the year, the internal controls were tested and found effective, as a part of the Managementâs control testing initiative.

Accordingly, the Board, with the concurrence of the Audit Committee and the Auditors is of the opinion that the Companyâs Internal Financial Controls were adequate and operating effectively for the financial year ended March 31, 2018.

LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, as may be applicable, are given in the standalone financial statement as per Note 6.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on an armâs length basis and in the ordinary course of business. All related party transactions are approved by the Audit Committee.

There are no material transactions with any related party as defined under Section 188 of the Act, read with the Companies (Meetings of Board and its Powers) Rules, 2014. The details of transactions with the related parties are provided in the standalone financial statement as per Note 36.

A policy governing the related party transactions has been adopted and the same has been uploaded on the Companyâs website under the weblink: https://www.bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf

HUMAN RESOURCES

The Human Resources philosophy of your Company is to attract and retain the best talent in the industry. Your Company considers its employees as partners in success. Your Company constantly endeavours in adopting the best policies to keep its employees motivated, engaged and aligned to the interests of the Company. Your Company undertakes various employee engagement programmes and also fosters a culture of continuous learning and development and creating future leaders. Your Company constantly explores various possibilities to make Blue Star a better place to work.

EMPLOYEE STOCK OPTIONS

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employeesâ Stock Option Scheme of the Company, in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014. Details of the shares issued under Employee Stock Option Scheme (ESOS), as also the disclosures, in compliance with Section 62 of the Act, and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014, and the SEBI (Share Based Employee Benefits) Regulations, 2014 is available on our website: www.bluestarindia.com.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are required to be annexed to the Boardâs Report. In accordance with the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace, and has adopted a policy on prevention, prohibition and redressal of the same, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. All employees (permanent, contractual, temporary and trainees) are covered under this Policy.

The Company has set up Internal Complaints Committees to redress complaints received regarding sexual harassment. The Company organises workshops and awareness programmes at regular intervals for sensitising the employees with the provisions of the said Act. During the year under review, one complaint with allegations of sexual harassment was filed with the Company, and the same was investigated and resolved as per the provisions of the aforesaid Act.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company incurred a total expenditure of Rs.55.36 crores on research and development for the year as against Rs.53.67 crores in the previous year.

During the year, the Company recorded foreign exchange earnings from export of its products, commission and other income, aggregating to Rs.263.68 crores as against Rs.256.63 crores in the previous year.

There was a corresponding increase in foreign exchange outflow, which stood at Rs.1252.13 crores as compared to Rs.1037.85 crores in the previous year.

The information on Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 1.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis for the year under review, as stipulated under Regulation 34 of the Listing Regulations, is annexed to this report.

BUSINESS RESPONSIBILITY REPORT

INTEGRATED REPORTING

In line with SEBI circular dated February 6, 2017, your Company has adopted Integrated Reporting describing initiatives undertaken by the Company for enhancing stakeholders value in the long term. The Integrated Report is provided in a separate section forming part of this Annual Report.

STATUTORY AUDITORS

The Companyâs existing Statutory Auditors, M/s S R B C & Co LLP, Chartered Accountants, were appointed at the 66^th Annual General Meeting of the Company, for a period of 5 years, to hold office until the conclusion of the 71^st Annual General Meeting to be held for FY 2018-19, subject to ratification of their appointment at every Annual General Meeting.

Your Company and M/s S R B C & Co LLP, mutually agreed to advance their rotation as the Statutory Auditors at the ensuing Annual General Meeting to enable smooth transition for the incoming statutory auditors. Accordingly, M/s S R B C & Co LLP, Chartered Accountants, the existing statutory auditors have resigned effective from the conclusion of the ensuing Annual General Meeting on August 8, 2018. It is proposed to appoint M/s Deloitte Haskins & Sells LLP, Chartered Accountants as the new Statutory Auditors in their place. As per the recommendation of the Board, M/s Deloitte Haskins & Sells LLP would be appointed for a term of 5 consecutive years, to hold office from conclusion of the ensuing Annual General Meeting upto the conclusion of 75^th Annual General Meeting to be held for FY 2022-23, subject to approval by the shareholders at the ensuing Annual General Meeting. Necessary resolution seeking approval of members of the Company for appointment of M/s Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors in place of M/s S R B C & Co LLP, existing Statutory Auditors has been incorporated in the Notice of Annual General Meeting.

The Company has received a letter from M/s Deloitte Haskins & Sells LLP, Chartered Accountants to the effect that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013.

AUDITORSâ REPORT

The Board has duly reviewed the Statutory Auditorsâ Report on the financial statements. There are no qualification, reservation, adverse remark given by the Auditors in their report.

COST AUDITORS

In terms of the provisions of Section 148 of the Act, read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors had, on the recommendation of the Audit Committee, appointed M/s Narasimha Murthy & Co, Hyderabad, Cost Accountants, as the Cost Auditors, to conduct cost audit for the financial year ended March 31, 2018.

As required under the Act, remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking membersâ ratification for the remuneration payable to Cost Auditors, forms part of the Notice convening the Annual General Meeting.

SECRETARIAL AUDITOR

The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries has been provided as per Annexure 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT-9 has been provided as per Annexure 4 to this report.

OTHER DISCLOSURES

- There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year under review and the date of this report.

- There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in the future.

- Your Company has not issued any shares with differential voting.

- Your Company has not issued any sweat equity shares.

- There was no revision in the financial statements.

- No fraud has been reported by the Auditors to the Audit Committee or the Board.

ACKNOWLEDGEMENTS

The Directors place on record, their sincere appreciation for the assistance, guidance and co-operation provided by the Government of India and other regulatory authorities. The Directors thank the financial institutions and banks associated with the Company for their support as well. The employees of the Company play a pivotal role in enabling the Company to scale new heights year after year, and their commitment and contribution is deeply acknowledged. Shareholdersâ involvements are greatly valued. The Directors look forward to your continuing support.

For and on behalf of the Board of Directors

Date : May 14, 2018 Suneel M Advani

Place : Mumbai Chairman

Mar 31, 2017

Board''s Report

The Directors are pleased to present the 69^th Annual Report, together with the Audited Financial Statements for the year ended March 31, 2017.

COMPANY OVERVIEW

Your Company is India''s leading air conditioning and commercial refrigeration company with close to 75 years of experience in providing expert cooling solutions, and has a network of 35 offices, 5 modern manufacturing facilities, 2200 dealers and 600 retailers. It fulfills the cooling requirements of a large number of corporate, commercial as well as residential customers. It also offers expertise in allied contracting activities such as mechanical, electrical, plumbing and fire-fighting services, in order to offer turnkey solutions, apart from execution of specialized industrial projects. The Company''s integrated business model of a manufacturer, contractor and after-sales service provider enables it to offer an end-to-end solution to its customers, which has proved to be a significant differentiator in the market place. It has also recently forayed into the business of residential water purifiers as well as air purifiers and air coolers.

^{FINANCIAL RESULTS} (Rs. in crores)

	Standalone		Consolidated
Particulars	For the year ended March 31, 2017	For the year ended March 31, 2016	For the year ended March 31, 2017	For the year ended March 31, 2016
Total Revenue	4183.47	3585.77	4459.30	3859.42
Total Expenses	4035.19	3462.73	4300.67	3715.06
Profit before exceptional items and tax	148.28	123.04	158.63	144.36
Profit after exceptional items and before tax	148.28	153.12	158.63	132.47
Income tax	36.31	26.22	36.67	27.70
Profit for the Year	111.97	126.90	123.05	104.78

OPERATING PERFORMANCE

Your Company posted another year of splendid performance. On a standalone basis, the Total Revenue of the Company increased by over 17% to Rs.4183.47 crores during the year under review as compared to Rs.3585.77 crores in the previous year. Further, the Net Profit after Tax of your Company was Rs.111.97 crores as compared to Rs.126.90 crores for the financial year ended March 31, 2016.

On a consolidated basis, your Company clocked a revenue of Rs.4459.30 crores, a growth of 16% over the previous year. Further, the Net Profit after Tax of your Company was Rs.123.05 crores, registering a growth of over 17%.

Your Company operates in three key segments (i) Electro-Mechanical Projects and Packaged Air Conditioning Systems (ii) Unitary Products, and (iii) Professional Electronics and Industrial Systems. The performance of the Company in the above mentioned segments during the year under review is as stated below:

(a) Electro-Mechanical Projects and Packaged Air Conditioning Systems

The revenue of the Electro-Mechanical Projects and Packaged Air Conditioning Systems business increased by 18% to Rs.2122.54 crores from Rs.1797.48 crores. This segment witnessed adverse impact due to slowdown of the real estate sector post demonetisation. However, the market witnessed modest growth propelled by Government-funded infrastructure projects.

Segment Results registered an increase of 26% from Rs.75.79 crores in the previous year to Rs.95.26 crores in the year under review. The increase is mainly owing to higher billings of projects with healthy margins and improved control on costs.

(b) Unitary Products

Unitary Products'' revenue in the year grew by 27% to Rs.2003.92 crores as against previous year''s revenue of Rs.1582.82 crores due to an early onset of summer in 2017. The performance of the room air conditioner business was impressively driven by the wide range of star-rated inverter split air conditioners. With a rise in preference for inverter ACs, the Company continued to perform better in the category of energy-efficient products. Further, commercial refrigeration products such as water coolers, bottled water dispensers and glass top freezers witnessed significant demand. Enhanced product penetration amongst the existing channels, coupled with a comprehensive range of products and aggressive promotional activities contributed to the growth and profitability in this segment. The market continued to witness an increased demand for display freezers. Sales of bottled water dispensers grew well as the Company engaged with more retailers while storage water cooler sales also increased with enhanced demand from the educational, Government and manufacturing segments.

The Company extended its product range by introducing water purifiers, air purifiers and air coolers.

The results of this segment grew by 26% from Rs.165.13 crores in the previous year to Rs.208.09 crores in the year under review.

(c) Professional Electronics and Industrial Systems

The Company had earlier transferred the business of Professional Electronics and Industrial Systems to its subsidiary, Blue Star Engineering & Electronics Limited. However, due to customer and contractual requirements, certain contracts of this business needed to be executed by the Company. The revenue generated by these contracts during the year under review was Rs.22.63 crores.

DIVIDEND

The Board, at its meeting held on May 9, 2017, recommended a dividend of Rs.7.50 per equity share of Rs.2 each for the financial year ended March 31, 2017. This proposal is subject to the approval of members at the ensuing Annual General Meeting.

DIVIDEND DISTRIBUTION POLICY

In accordance with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the ''Listing Regulations''), the Board has adopted the Dividend Distribution Policy for the Company. The Policy inter-alia specifies the parameters and internal/external factors to be considered for declaration of dividend. The policy can be viewed online at https://www.bluestarindia.com/media/104569/dividend-distribution-policy.pdf.

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs.10.80 crores to the General Reserve for the financial year ended March 31, 2017.

FINANCING

Borrowing cost for the year was Rs.30.61 crores which was lower as compared to Rs.36.13 crores in the previous year, due to reduced borrowing levels led by effective working capital management, and ability to source the funds at a lower cost. In addition, disciplined and systematic hedging decisions based on accurate information of forex exposure resulted in net gain of Rs.1.91 crores, as compared to loss of Rs.0.79 crore in the previous year.

DEPOSITS

The Company has not accepted any deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 (hereinafter referred to as the ''Act''), and the Companies (Acceptance of Deposits) Rules, 2014.

CHANGES IN SHARE CAPITAL

During the year, the Company allotted 2,27,900 equity shares of ''2 each, fully paid up to the option grantees pursuant to the exercise of stock options by the eligible employees under the Blue Star Limited Employee Stock Option Scheme.

Further, during the year under review, the Company allotted 53,91,383, fully paid up equity shares of Rs.2 each, to the shareholders of Blue Star Infotech Limited, pursuant to the Composite Scheme of Amalgamation of Blue Star Infotech Limited and Blue Star Infotech Business Intelligence & Analytics Private Limited with the Company.

Consequent to the above, the issued, subscribed and paid up share capital of your Company as on March 31, 2017 stood at Rs.19,11,40,776 comprising 9,55,70,388 equity shares of Rs.2 each.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with Regulation 34 of the Listing Regulations and Section 129(3) of the Act, the Consolidated Financial Statement has been prepared by the Company, as per the Indian Accounting Standards (Ind AS), and forms a part of this Annual Report.

The Consolidated Financial Statement shall also be laid at the ensuing Annual General Meeting of the Company.

SUBSIDIARIES AND JOINT VENTURE COMPANIES

Subsidiary Companies:

a) Blue Star Engineering & Electronics Limited

Total revenue of Blue Star Engineering & Electronics Limited for the year ended March 31, 2017 was Rs.181.49 crores, as against its previous year''s revenue of Rs.133.35 crores. The subsidiary achieved a net profit of Rs.4.92 crores for the year under review, as against last year''s net profit of Rs.5.25 crores.

b) Blue Star Qatar WLL

Blue Star Qatar WLL is led by Blue Star Limited and Al Malki Trading and Contracting WLL, wherein Blue Star Limited holds 49% of the share capital and voting rights, and the balance is held by Al Malki Trading and Contracting WLL.

This company is a subsidiary of Blue Star Limited by virtue of Section 2(87)(i) of the Companies Act 2013, as Blue Star controls the composition of the company''s Board. The company is principally engaged in the business of designing, engineering, installation, maintenance, mechanical, electrical and plumbing contracts, and all works relating to heating, ventilation and air conditioning systems in the Middle East for residential, commercial and industrial purposes.

Total income of this company for the year ended March 31, 2017 was Rs.110.77 crores as compared to Rs.71.36 crores in the previous financial year. Net profit after tax for the year ended March 31, 2017 was Rs.3.63 crores as compared to Rs.1.34 crores in the previous year.

c) Blue Star International FZCO

Subsequent to the financial year, the Company has set up a wholly owned subsidiary, Blue Star International FZCO, in Dubai Airport Freezone, a free trade zone in UAE to consolidate its international business ownership. The Company made an initial investment of Rs.5 crores in the share capital of this subsidiary, which will carry on the products business outside India.

Joint Venture Companies:

a) Blue Star M & E Engineering Sdn Bhd

A joint venture between Arab-Malaysian Development Bhd and Blue Star Limited, Blue Star M & E Engineering Sdn Bhd carries on the business of mechanical, electrical and plumbing contracting, which includes operation and maintenance of heating, ventilation and air conditioning systems. There have been no significant changes in the nature of its activities during the financial year.

This company''s total income for the year ended March 31, 2017 was Rs.108.44 crores as compared to Rs.102.97 crores in the previous financial year. Net profit after tax for the year ended March 31, 2017 was Rs.5.14 crores as compared to Rs.4.97 crores in the previous year.

b) Blue Star Oman Electro-Mechanical Company LLC

A joint venture between W J Towell & Co LLC and Blue Star Limited, Blue Star Oman Electro-Mechanical Company LLC is engaged in mechanical, electrical and plumbing contracting services in Oman. Its income for the year ended March 31, 2017 was Rs.112.28 crores as compared to Rs.17.90 crores in the previous year. Net profit after tax of this venture for the year ended March 31, 2017 was Rs.0.70 crores as compared to Rs.0.47 crores in the previous year.

In accordance with Section 136 of the Act, the audited annual accounts, including the consolidated financial statement of the Company and audited accounts of the subsidiary companies, are available on the corporate website at www.bluestarindia.com. A copy of these documents will be available to the members, on their request in writing. The annual accounts will also be available for inspection by any member during business hours at the registered office of the Company.

A statement containing the salient features of the financial statements of the subsidiaries and joint venture companies in Form AOC-1, as required under Rule 5 of the Companies (Accounts) Rules, 2014 forms part of the Consolidated Financial Statement.

SIGNIFICANT DEVELOPMENTS

(a) International Business

The International Business Group comprises Global Projects and Global Product Sales. International business footprint expansion continues to remain a high focus area for the Company. During the year, Blue Star added its presence in 5 countries: Kenya, Sudan, Vietnam, Iran and Tanzania.

The Company continued its focus on expansion of its products export business. It participated in multiple major trade shows such as Climate Abu Dhabi Expo, UAE and Big 5 Exhibition in Dubai, UAE with the largest-ever display stall. It participated in Hotel Asia Exhibition 2016, which was one of the largest trade exhibitions of its kind in Maldives.

The Company introduced room air conditioners with the eco-friendly refrigerant R410A and anti-corrosive green fin technology for the Maldives market.

(b) Expansion

The Company has embarked upon an ambitious growth plan, and in this context, Blue Star acquired land in Jammu and Sri City for setting up manufacturing plants in these locations, in due course. The Company also expanded its product portfolio by entering into product adjacencies and product extensions such as water purifiers, air purifiers and air coolers.

NEW INITIATIVES

Implementation of Goods and Service Tax

While presenting the Union Budget 2017-18, the Central Government of India reaffirmed the Goods and Service Tax (GST) roll-out. To ensure seamless migration into the GST regime, a core team has been entrusted with earmarked work streams to drive and accomplish implementation within defined timelines. The Company is registered on the GST portal.

AWARDS AND RECOGNITIONS

In 2016-2017, the Company was conferred multiple awards and recognitions, both international and national, few of which are listed as follows:

- Blue Star was recognized as the ''MEP Company of the Year'' at the Annual Metro Rail India Summit 2017.

- Blue Star Oman Electro-Mechanical Company LLC has won the ''Most Promising MEP Contractor'' at the Dossier Construction''s Infrastructure Awards & Summit 2016.

- Blue Star received the Brand Excellence Award in FMCG sector (Consumer Durables) in 2016.

- Blue Star chillers were certified by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) for achieving a 100% success rate in the performance testing of the air cooled as well as water cooled chillers in 2016.

â¢ The Company won the Water Digest Awards 2017 for the ''Best Domestic RO UV Purifier'' in the country.

DIRECTORS

During the year under review, Ashok M Advani retired as the Chairman of the Company, with effect from November 30, 2016. The Board took on record the exemplary contribution towards the growth of the Company made by the Chairman during his 47 years of service and association with Blue Star. Ashok M Advani was appointed as the Chairman Emeritus of the Company, with effect from December 1, 2016. Suneel M Advani was appointed as the Chairman of the Board effective December 1, 2016. Further, M K Sharma, Independent Director, resigned with effect from June 12, 2017. The Board appreciated his valuable guidance and contribution during his tenure.

Vir S Advani, retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.

Further, based on the recommendation of the Nomination and Remuneration Committee, the Board had appointed Rajiv R Lulla (DIN: 06384402) and Dinesh N Vaswani (DIN: 00306990) as the additional Non-Executive Directors of the Company, with effect from December 1, 2016. In compliance with the Act and Listing Regulations, Sam Balsara (DIN: 00076942) has been appointed as an additional Independent Director with effect from June 20, 2017 for a period of 5 years.

As per the provisions of the Act, they hold office up to the date of the ensuing Annual General Meeting of the Company.

Your Company has received notices under Section 160 of the Act, together with requisite deposit from the members proposing appointment of Rajiv R Lulla, Dinesh N Vaswani and Sam Balsara as Director(s) on the Board of your Company. Accordingly, the necessary resolution(s) seeking approval of the members for appointment of Rajiv R Lulla, Dinesh N Vaswani and Sam Balsara have been incorporated in the Notice of the ensuing Annual General Meeting.

Brief profiles of the Directors proposed to be appointed/re-appointed are annexed to the Notice convening Annual General Meeting.

The Board recommends their appointment at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act, confirming that they meet with the criteria of independence as laid down in Section 149(6) of the Act, read with Regulation 25 of the Listing Regulations.

KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 203 of the Act, the following personnel have been designated as the Key Managerial Personnel of the Company:

Name	Designation
Vir S Advani	Managing Director
B Thiagarajan	Joint Managing Director
Neeraj Basur	Chief Financial Officer
Vijay Devadiga	Company Secretary

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 of the Act, the Directors, to the best of their knowledge and belief, confirm that:

- in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

- the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017, and of the profit of the Company for that period;

- the Directors have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

- the Directors have prepared the annual accounts for the year ended March 31, 2017, on a going concern basis;

- the Directors have laid down internal financial controls to be followed by the Company, and that such internal financial controls are adequate and are operating effectively; and

- the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems are adequate and operating effectively.

MEETINGS OF BOARD OF DIRECTORS

During the year under review, 5 (five) meetings of the Board of Directors were held on May 30, 2016; August 1, 2016; November 10, 2016; January 25, 2017; and March 6, 2017. The intervening gap between these meetings was within the period prescribed under the Act and Listing Regulations. The details of the meetings and attendance of the Directors are provided in the Corporate Governance Report.

BOARD COMMITTEES

Your Company has in place, all the Committee(s) as mandated under the provisions of the Act and Listing Regulations. Currently, there are seven Committees of the Board, namely:

- Audit Committee

- Nomination and Remuneration Committee

- Investor Grievance and Stakeholders'' Relationship Committee

- Risk Management Committee

- Corporate Social Responsibility Committee

- Share Transfer Committee

- Executive Management Committee

AUDIT COMMITTEE

The Audit Committee of the Company comprises Shailesh Haribhakti, Pradeep Mallick and B Thiagarajan. Shailesh Haribhakti is the Chairman of the Committee. B Thiagarajan was appointed as a member of the Audit Committee with effect from November 10, 2016. M K Sharma ceased to be member of the Committee with effect from June 12, 2017.

During the year under review, there was no instance wherein the Board had not accepted any recommendation of the Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Committee comprises Suneel M Advani, B Thiagarajan and Shobana Kamineni. Suneel M Advani is the Chairman of this Committee.

During the year under review, the Company was required to spend an amount of Rs.167.64 lakhs towards activities as stipulated under Schedule VII of the Act. The Company has spent an amount of Rs.172.55 lakhs towards various CSR initiatives. The brief outline of the CSR Policy and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 2 of this Report in the format as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The Policy is also available on the website of the Company.

BOARD EVALUATION & FAMILIARISATION PROGRAMME

Pursuant to the provisions of the Act and Regulation 17 of the Listing Regulations, the Board of Directors has carried out an annual evaluation of the performance of the Board as a whole, the Directors individually and the working of the committees of the Board. In a separate meeting of the Independent Directors held on April 11, 2017, the performance of the Non-Independent Directors, the Board as well as that of the Chairman were evaluated, taking into account the views of the Executive and Non-Executive Directors.

The details of the familiarization programme for the Independent Directors of the Company are available on the website of the Company at https://www.bluestarindia.com/media/56472/familiarization-programme-for-independent-directors.pdf.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and continues to be compliant with the requirements of the Corporate Governance as enshrined in the Listing Regulations. The Report on Corporate Governance, as stipulated under Regulation 27 of the Listing Regulations, forms part of the Annual Report. The certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance, as stipulated under Regulation 27 of the Listing Regulations, has been annexed with the said report.

VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Pursuant to the provisions of sub-sections 9 and 10 of Section 177 of the Act and as per the Listing Regulations, the Company has established a vigil mechanism to enable the Directors and employees of the Company to report concerns of any unethical behaviour, unacceptable and improper practices or suspected fraud. The Company has a Whistle Blower Policy in place, which has also been uploaded on its website. An Ethics Committee has been constituted, comprising the Chief Financial Officer, HR Head and Company Secretary (Ethics Officer) to administer this Policy.

The Whistle Blower Policy is uploaded on the Company''s website under the weblink at: https://www.bluestarindia.com/media/6011/whistle-blower-policy.pdf.

The Company has also adopted a Code of Conduct which is available on the website of the Company under the weblink of https://www.bluestarindia.com/media/6010/code-of-conduct.pdf.

The Audit Committee reviews on a quarterly basis, complaints, if any, and implements corrective actions, whenever necessary.

INTERNAL CONTROL SYSTEMS

Significant features of the Company''s internal control system are:

- The Audit Committee periodically reviews internal audit plans, significant audit findings and adequacy of internal controls.

- Systematic self-certification of adherence to key internal controls, as part of control self-assurance by process owners, monitors and reviewers.

- Adherence with a comprehensive information security policy and continuous upgrades of the Company''s IT systems for strengthening automated controls.

During the year, the internal controls were tested and found effective, as a part of the Management''s control testing initiative. Accordingly, the Board, with the concurrence of the Audit Committee and the Auditors is of the opinion that the Company''s Internal Financial Controls were adequate and operating effectively for the financial year ended March 31, 2017.

LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, as may be applicable, are given in the standalone financial statement as per Note 6.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. All related party transactions are approved by the Audit Committee.

A policy governing the related party transactions has been adopted and the same has been uploaded on the Company''s website under the weblink of https://www.bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf.

RISK MANAGEMENT

The Risk Management Committee has been formed to assist the Board in fulfilling its responsibilities relating to evaluation and mitigating various risks exposures that potentially impact the Company. An Enterprise Risk Management (ERM) framework prescribed under the Committee of Sponsoring Organizations (COSO) was adopted for implementation by the Committee.

The Risk Management Committee comprises Suneel M Advani, Vir S Advani, B Thiagarajan and Neeraj Basur. Vir S Advani is the Chairman of this Committee.

During the year, the Committee reviewed the Company''s risk management processes on a quarterly basis to mitigate various risk categories, including technological obsolescence, repudiation of claims by the customers, cost overrun in projects, accidents, safety/health hazards, dependence on channel partners, domestic and international competition, regulatory shifts, customer/supplier/geographical concentration, and others.

The Committee has adopted a formal Risk Management Policy. The Committee identifies, evaluates and assesses the risks, understands the exposure of risks and accordingly prepares the risk mitigation plan. It has identified the Risk Management Units which are constantly monitored, and the severity of risk is tracked, based on risk rating methodology. The Company maintains risk registers to ensure that the effectiveness of the mitigation action plan gets assessed independently. This register was reviewed by the Risk Management Committee, the Audit Committee and the Board.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises Gurdeep Singh, Suneel M Advani, Pradeep Mallick and Dinesh N Vaswani. Gurdeep Singh is the Chairman of this Committee. Dinesh N Vaswani joined as a member of this Committee, with effect from January 25, 2017.

MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each Director to the median employee''s remuneration and other details, in terms of Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enumerated further.

i.	The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year	Vir S Advani*		78x
		B Thiagarajan		50x
ii.	The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year	Vir S Advani*		149.15%
		B Thiagarajan		52.21%
		Neeraj Basur		12.50%
		Vijay Devadiga		10.00%
iii.	The percentage increase in the median remuneration of employees in the financial year	0.18%
iv.	The number of permanent employees on the rolls of Company	2498
v.	The explanation on the relationship between average increase in remuneration and Company performance	Increments are based on the individual employee performance, market benchmarking of salary, and net profit of the Company.
vi.	Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company	Total remuneration paid to the Key Managerial Personnel constituted 9.94% of the net profit of the Company for FY 2016-17.
vii.	Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company, in comparison to the rate at which the Company came out with the last public offer		2016-17		2015-16
		Market Capitalization (Rs. in crores)	6617.29		3510.79
		PE ratio	59.03		30.30
		In the recent past, the Company has not made any public offer.
viii.	Average percentile increase already made in the salaries of employees, other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there are any exceptional circumstances for increase in the managerial remuneration	Average increase to employees other than Managerial Personnel and justification thereof	12.49% To remain competitive in the market, to attract and retain talent.
		Average increase to Managerial Personnel	Please refer to (ii) of this table.
		Exceptional circumstances for increase to managerial remuneration*	The average increase given in FY 2016-17 was based on the outcome of compensation and benefits benchmarking survey to align remuneration of Whole-time Directors to market median.
ix.	Comparison of the remuneration of each Key Managerial Personnel against the performance of the Company	Vir S Advani*	4.76%
		B Thiagarajan	3.02%
		Neeraj Basur	1.68%
		Vijay Devadiga	0.48%
x.	The key parameters for any variable component of remuneration availed by the Directors	The Nomination and Remuneration Committee evaluates the performance of the Directors against the key result areas determined by it and recommends payment of commission to the Directors.

xi.	The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year	NA
xii.	Affirmation that the remuneration is as per the Remuneration Policy of the Company	Affirmed

* Remuneration of Vir S Advani includes additional performance linked incentives (PLI) of 199.09 lakhs for the financial year 2016-17 pursuant to the approval of the shareholders at the previous Annual General Meeting held on August 1,2016. As the PLI has been paid to Vir S Advani effective financial year 2016-17, his remuneration for financial year 2016-17 is not comparable with that of the previous financial year.

The Non-Executive Directors of the Company are paid sitting fees and commission as per the statutory provisions and within the limits approved by the members. The ratio of remuneration and percentage increase for Non-Executive Directors'' Remuneration is therefore not considered for the purposes above. The details of remuneration of Non-Executive Directors are provided in the Corporate Governance Report.

HUMAN RESOURCES

EMPLOYEE STOCK OPTIONS

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees'' Stock Option Scheme of the Company, in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014. Details of the shares issued under Employee Stock Option Scheme (ESOS), as also the disclosures, in compliance with Section 62 of the Act, and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014, and SEBI (Share Based Employee Benefits) Regulations, 2014 is available on our website at www.bluestarindia.com.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are required to be annexed to the Board''s Report. In accordance with the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company incurred a total expenditure of Rs.53.67 crores on research and development for the year as against Rs.49.81 crores in the previous year.

During the year, the Company recorded foreign exchange earnings from export of its products, commission and other income, aggregating to Rs.256.63 crores as against Rs.349.09 crores in the previous year. The previous year''s earnings included Rs.104.39 crores pertaining to earnings made by erstwhile Blue Star Infotech Limited, that merged with the Company with effect from the Appointed Date of April 1, 2015.

There was a corresponding increase in foreign exchange outflow, which stood at Rs.1037.85 crores as compared to Rs.925.46 crores in the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis for the year under review, as stipulated under the Regulation 34 of Listing Regulations, is annexed to this report.

BUSINESS RESPONSIBILITY REPORT

STATUTORY AUDITORS

M/s S R B C & CO LLP, Chartered Accountants (Regn No. 324982E/E300003) were appointed as the Statutory Auditors of the Company at the Annual General Meeting held on July 28, 2014 to hold office for a term of five years, i.e. till the conclusion of the Annual General Meeting to be held for the financial year 2018-19, subject to ratification of their appointment at every Annual General Meeting during the said term. The Board of Directors of the Company, at its meeting held on May 9, 2017, has recommended ratification of appointment of M/s S R B C & CO LLP as the Statutory Auditors of the Company for financial year 2017-18 by the members at the ensuing Annual General Meeting.

The Company has received a letter from M/s S R B C & CO LLP, Chartered Accountants, to the effect that ratification of their appointment, if made, would be in accordance with the relevant provisions of Section 139 and 141 of the Act, read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014.

AUDITORS'' REPORT

The Board has duly reviewed the Statutory Auditors'' Report on the Financial Statements. There are no qualification, reservation, adverse remark given by the Auditors in their Report.

COST AUDITORS

As required under the Act, remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members'' ratification for the remuneration payable to Cost Auditors, forms part of the Notice convening the Annual General Meeting.

SECRETARIAL AUDITOR

The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries has been provided as per Annexure 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT-9 has been provided as per Annexure 4 to this Report.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace, and has adopted a Policy on prevention, prohibition and redressal of the same, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under for prevention and redressal of complaints of sexual harassment at workplace. All employees (permanent, contractual, temporary and trainees) are covered under this Policy.

The Company has set up Internal Complaints Committees to redress complaints received regarding sexual harassment. The Company organizes workshops and awareness programmes at regular intervals for sensitizing the employees with the provisions of the Act. During the year under review, 2 complaints with allegations of sexual harassment were filed with the Company, and the same were investigated and resolved as per the provisions of the aforesaid Act.

OTHER DISCLOSURES

- There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year under review and the date of this report.

- There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in the future.

- Your Company has not issued any shares with differential voting.

- Your Company has not issued any sweat equity shares.

- There was no revision in the financial statements.

ACKNOWLEDGEMENTS

The Directors place on record, their sincere appreciation for the assistance, guidance and co-operation provided by the Government of India and other regulatory authorities. The Directors thank the financial institutions and banks associated with the Company for their support as well. The employees of Blue Star Limited are instrumental in the Company scaling new heights year after year, and their commitment and contribution is deeply acknowledged. Shareholders'' involvements are greatly valued. The Directors look forward to your continuing support.

For and on behalf of the Board of Directors

Suneel M Advani

Mumbai: June 20, 2017 Chairman

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 67th Annual Report and the Audited Financial Statement for the year ended March 31, 2015, together with the Auditors'' Report thereon.

FINANCIAL SUMMARY (STANDALONE) (Rsin crores) April 2014 April 2013 March 2015 March 2014

Total Income 3090.94 2815.93

Profit before Interest, Depreciation, Amortisation, Taxation and Exceptional Items 183.73 2815.93

Financing costs 43.47 177.09

Depreciation and Amortisation 39.34 49.64

Profit before tax and exceptional items 100.92 34.69

Exceptional income/(expenses) 41.90 92.76

Profit after exceptional items before tax 142.82 (16.86)

Taxes (benefit) (9.71) 75.90

Profit after tax 152.53 75.90

Add: Balance brought forward 222.46 194.84

Less: Adjustment to WDV of assets fully depreciated pursuant to Sch II of Companies Act, 2013 2.91 270.74

Total available for appropriation 372.08 7.60

Less: Transfer to General Reserve 15.25 35.97

Proposed Dividend 44.97 4.71

Corporate Dividend Tax 9.16 -

Balance carried forward 302.70 222.46

DIVIDEND

Your Directors recommend a dividend of Rs.5 per equity share of Rs.2 each for the year ended March 31, 2015. The Company proposes to transfer an amount of Rs.15.25 crores to General Reserve. The Dividend payout would aggregate to Rs.54.13 crores, including Corporate Dividend Tax.

OPERATING PERFORMANCE

Total Revenue of the Company increased by 10% to Rs.3090.94 crores during the year under review. Better control of input costs and expenses enabled Profit from operations before Other Income, Financing Costs and Exceptional Items to go up by 16% to Rs.134.25 crores from Rs.115.99 crores in the previous year.

Segment-wise performance showed a mixed picture. Revenue from Electro Mechanical Projects and Packaged Airconditioning Systems remained virtually stagnant at Rs.1602.41 crores due to prolonged sluggishness in the projects business. This led to a decline in the Segment Result to Rs.64.71 crores.

The decline was more than made up by 24% growth in revenue in Cooling Products from Rs.1076.81 crores to Rs.1331.72 crores. Cooling Products'' results climbed by 55% from Rs.94.77 crores to Rs.146.83 crores, which is a significant achievement.

Professional Electronics and Industrial Systems'' revenues grew by 18% from Rs.124.04 crores to Rs.146.66 crores, while results increased from Rs.21.75 crores to Rs.31.20 crores, a growth of 43%.

FINANCING COSTS

Financing costs for the year were Rs.43.47 crores as compared to Rs.49.64 crores due to lower borrowings, led by better operating performance and efficient cash flow management.

PERFORMANCE/FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES

Subsidiary companies:

As on March 31, 2015, Blue Star Limited has two wholly owned subsidiaries; namely, Blue Star Engineering & Electronics Limited (formerly known as Blue Star Electro-Mechanical Limited) and Blue Star Design & Engineering Limited.

a) Blue Star Engineering & Electronics Limited (formerly known as Blue Star Electro-Mechanical Limited)

During the year under review, as a part of the corporate restructuring exercise, the name of this subsidiary was changed from Blue Star Electro-Mechanical Limited to Blue Star Engineering & Electronics Limited, pursuant to approval granted by the Ministry of Corporate Affairs, vide fresh certificate of incorporation dated February 27, 2015.

Total revenue of this subsidiary was Rs.36.02 crores as against its previous year''s revenue of Rs.69.20 crores. It has incurred a net loss of Rs.18.48 crores for the year under review as against the net loss of Rs.13.27 crores in the previous year.

b) Blue Star Design & Engineering Limited

Total revenue of this subsidiary was Rs.6.06 crores as against previous year''s revenue of Rs.24.92 crores. It has suffered a loss of Rs.3.53 crores for the year under review as against a net profit of Rs.15.95 crores in the previous year.

The Company shall provide a copy of the annual accounts of these subsidiary companies to the members on their request in writing. The annual accounts of these subsidiary companies will also be kept open for inspection by any members at the registered office of the Company and also at the registered offices of the respective subsidiary companies during business hours.

Joint Venture Companies:

a) Blue Star M & E Engineering (Sdn) Bhd

This company is principally engaged in the field of mechanical, electrical and plumbing contracting, which include operation and maintenance of heating, ventilation and airconditioning systems. There have been no significant changes in the nature of its activities during the financial year.

The income for the year ended March 31, 2015 was Rs. 52.59 crores as compared to Rs. 80.35 crores in the previous financial year. Net profit after tax for the year ended March 31, 2015 was Rs.2.99 crores as compared to Rs.3.83 crores in the previous year.

b) Blue Star Qatar (WLL)

This company is principally engaged in the business of designing, engineering, installation, maintenance and trading of mechanical, electrical and plumbing contracts, and all works relating to heating, ventilation and airconditioning systems.

The income for the year ended March 31,2015 was Rs.87.62 crores as compared to Rs.79.63 crores in the previous financial year. Net profit after tax for the year ended March 31,2015 was Rs.3.90 crores as compared to Rs.3.62 crores in the previous year.

Associate Company:

Blue Star Infotech Limited

During the year ended March 31, 2015, the total revenue of Blue Star Infotech Ltd was Rs.270.64 crores, as against previous year''s revenue of Rs.276.57 crores. Profit for the year under review was Rs.18.16 crores as against profit of Rs.14.87 crores in the previous year.

CORPORATE RESTRUCTURING

Transfer of Professional Electronics and Industrial Systems Undertaking to Blue Star Engineering & Electronics Limited (formerly known as Blue Star Electro-Mechanical Limited)

The Company obtained approval of the members by way of a postal ballot on March 11, 2015 for the sale and transfer of its Professional Electronics and Industrial Systems undertaking to its wholly owned subsidiary, Blue Star Engineering & Electronics Limited at a fair price of Rs.110.50 crores, against consideration of issue and allotment of its equity shares by Blue Star Engineering & Electronics Limited to the Company. Subsequently, a Business Purchase Agreement dated March 13, 2015 was duly executed in this regard, in terms of which the transfer of the said undertaking was consummated on

March 31, 2015, upon issue and allotment of 2,84,50,052 fully paid up equity shares of Rs.2 each at a premium of Rs.36.84 per share by Blue Star Engineering & Electronics Limited to the Company.

Scheme of Amalgamation of Blue Star Design & Engineering Limited with Blue Star Engineering & Electronics Limited (formerly known as Blue Star Electro-Mechanical Limited)

On March 5, 2015, Blue Star Engineering & Electronics Limited filed a Scheme with the Hon''ble Bombay High Court, for amalgamation of Blue Star Design & Engineering Limited with itself. The Appointed Date of the said Scheme is February 1, 2015 and would become effective from the date on which Blue Star Engineering & Electronics Limited files the order of the Hon''ble Bombay High Court, approving the said Scheme with the Ministry of Corporate Affairs. This amalgamation will consolidate and simplify the Company''s investment structure and strengthen the financial position of the subsidiaries. It is also expected to provide an optimum integration of operations and generate operational synergies.

CONSOLIDATED RESULTS

As required under Clause 32 of the Listing Agreement and Section 129 of the Companies Act, 2013 (''hereinafter referred to as the Act''), the Consolidated Financial Statement has been prepared by the Company in accordance with the applicable Accounting Standards, which forms part of this Annual Report. A statement containing the salient features of the Financial Statement of the subsidiaries, joint ventures and associate companies in Form AOC-1, as required under Rule 5 of the Companies (Accounts) Rules, 2014, also forms part of the Consolidated Financial Statement.

The Consolidated Financial Statement for the year reflects a total income of Rs.3,190.43 crores as compared to Rs.2,952.13 crores for the previous year. The Company has clocked a consolidated net profit of Rs.54.18 crores as compared to Rs.77.54 crores in the previous year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company incurred a total expenditure of Rs.40.74 crores on research and development for the year as against Rs.32.21 crores in the previous year.

During the year, the Company clocked an increase in its foreign exchange earnings from export of its products, commission and other income, aggregating to Rs.197.15 crores as against Rs.181.43 crores in the previous year. There was a corresponding increase in foreign exchange outflow, which stood at Rs.861.14 crores as compared to Rs.737.26 crores in the previous year.

The information on Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 1.

DIRECTORS

a) Directors and Key Managerial Personnel (KMP):

In accordance with the provisions of Section 203 of the Act, the following have been designated as KMP of the Company:

Name of KMP Designation

Mr Satish Jamdar Managing Director

Mr Vir S Advani Executive Director

Mr B Thiagarajan Executive Director

Mr Manek Kalyaniwala (April 1, 2014 till July 31, 2014) Chief Financial Officer

Mr Neeraj Basur (w.e.f. August 1, 2014) Chief Financial Officer

Mr Sangameshwar Iyer (up to May 31, 2015) Company Secretary

Mr Ashok M Advani, Director of the Company, who is retiring by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board at its meeting held on May 29, 2015, re-appointed Mr Vir S Advani as a Wholetime Director, designated as Executive Director of the Company for a period of 5 years w.e.f. July 1, 2015, subject to approval of the members of the Company. The terms and conditions of his re-appointment and remuneration have been provided in the Notice convening the 67th Annual General Meeting.

b) Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act that they meet with the criteria of their independence laid down in Section 149(6) of the Act read with Clause 49 of the Listing Agreement.

c) Formal Annual Evaluation

Pursuant to the provisions of Section 178 of the Act, read with Clause 49 of the Listing Agreement, the Board of Directors has carried out an annual evaluation of the performance of the Board as a whole, the Directors individually and the working of the committees of the Board. The performance evaluation of the Chairman and other Non-Independent Non-Executive Directors was carried out by obtaining feedback on them from the entire Board. This was later finalised at the meeting of the Independent Directors held on March 17, 2015.

MEETINGS OF BOARD OF DIRECTORS

There were 8 meetings of Board of Directors during the year under review; i.e. on April 28, 2014; May 30, 2014; July 28, 2014; July 29, 2014; October 9, 2014; October 21, 2014; January 21, 2015 and February 13, 2015. The gap between these meetings was within the period prescribed under the Act and Clause 49 of the Listing Agreement.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to clause (c) of sub-Section (3) of Section 134 of the Act, the Directors would like to state that:

(a) in the preparation of the annual accounts for financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts for the year ended March 31, 2015, on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

STATUTORY AUDITORS

M/s S R B C & Co LLP, Chartered Accountants (Regn. No. 324982E) were appointed as the Statutory Auditors of the Company at the last Annual General Meeting held on July 28, 2014 to hold office for a term of five years, i.e. till the conclusion of the Annual General Meeting to be held for the financial year 2018-19, subject to ratification of their appointment at every Annual General Meeting during the said term. The Board of Directors of the Company at its meeting held on May 29, 2015 has recommended ratification of appointment of M/s S R B C & Co LLP as the Statutory Auditors of the Company for financial year 2015-2016 by the members at the ensuing Annual General Meeting.

The Company has received a letter from M/s S R B C & Co LLP, Chartered Accountants, to the effect that ratification of their appointment, if made, would be in accordance with the relevant provisions of Chapter X of the Act, read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014.

AUDIT COMMITTEE

The Audit Committee of the Company comprises Mr Shailesh Haribhakti, Mr Pradeep Mallick, Mr M K Sharma and Mr Vir S Advani. Mr Shailesh Haribhakti is the Chairman of the Committee.

The composition of the Audit Committee is in compliance with the requirements of Section 177 of the Act and Clause 49 of the Listing Agreement. The charter of the committee is in conformity with the Act and the Listing Agreement as more particularly set out in the Corporate Governance Report, which forms a part of this report.

During the year under review, there was no instance wherein the Board had not accepted any recommendation of the Audit Committee.

VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Pursuant to the provisions of sub-sections 9 and 10 of Section 177 of the Act and as per Clause 49 of the Listing Agreement, the Company has established a Vigil Mechanism to enable the Directors and employees of the Company to report concerns of any unethical behaviour, violation of law or regulations, or suspected fraud. In this regard, the Company has formulated a Whistle Blower Policy, which is uploaded on the website of the Company. An Ethics Committee has been constituted comprising the Chief Financial Officer, HR head and Company Secretary (Ethics Officer) to administer this Policy. This Policy has adequate safeguards against victimisation of the whistle blower and ensures protection of the whistle blower''s identity. In addition, as part of the vigil mechanism framework, an independent internal audit mechanism has also been put in place to review and report instances of non compliances with laws, regulations and policies to the Audit Committee. The Company has adopted a Code of Conduct which is uploaded on the website of the Company.

INTERNAL FINANCIAL CONTROLS

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. In order to enhance controls and governance standards, the Company has adopted COSO 2013 framework to ensure that robust internal financial controls exist in relation to operations, financial reporting and compliance. In addition, the Internal Audit function monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations. Periodical reports on the same are also presented to the Audit Committee.

LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, as may be applicable, are given in the Financial Statement.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. All the related party transactions are pre-approved by the Audit Committee. In view of this, disclosure in form AOC-2 has not been provided as the same is not applicable to the Company. A policy governing the related party transactions has been adopted and the same has been uploaded on the Company''s website.

RISK MANAGEMENT

As required under Clause 49 of the Listing Agreement, the Company has constituted a Risk Committee comprising Mr Satish Jamdar, Mr Vir S Advani, Mr B Thiagarajan and Mr Neeraj Basur. Mr Satish Jamdar is the Chairman of this Committee.

The Committee has adopted a formal charter outlining its terms of reference. The Committee also oversees and monitors effectiveness of the implementation of various elements of the risk management framework across the Company.

The Company has also set up a core risk management team comprising its senior management. As a part of the enterprise-wide risk management initiative, a process and framework has been established that involves identification of key risks significant to the Company, assigning appropriate risk rating, formulating adequate mitigation plans and institutionalising implementation of these action plans to manage and mitigate all the identified risks.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board of Directors has constituted a CSR Committee comprising Mr Suneel M Advani, Mr Satish Jamdar, Mr B Thiagarajan and Ms Shobana Kamineni. Mr Suneel M Advani is the Chairman of this Committee.

The Company intends to undertake projects in accordance with Schedule VII of the Act, as a part of its initiatives under CSR. In this regard, the Board has approved a CSR policy for implementation by the Committee.

The Company was required to spend a sum of Rs.26 lakhs by March 31,2015 towards activities as stipulated under Schedule VII of the Act. As the Committee is in the process of identifying appropriate NGO partners for execution of identified projects, the Company did not incur the said expenditure during the financial year ended March 31, 2015.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises Mr Gurdeep Singh, Mr Ashok M Advani, Mr Suneel M Advani and Mr Pradeep Mallick. Mr Gurdeep Singh is the Chairman of this Committee.

The Committee is constituted in line with the regulatory requirements mandated by the Act and Clause 49 of the Listing Agreement. The terms of reference thereof are in conformity with the said requirements, as more particularly set out in the Corporate Governance Report, which forms a part of this report.

MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each Director to the median employee''s remuneration and other details in terms of Section 197 (12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given below:

i. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year

Mr Satish Jamdar 41x

Mr Vir S Advani 25x

Mr B Thiagarajan 27x

Mr Satish Jamdar No increase

Mr Vir S Advani No increase

Mr B Thiagarajan 3.44%

Mr Manek Kalyaniwala # 5.36% (retired w.e.f. July 2014)

Mr Sangameshwar Iyer 9.50%

ii. The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year

iii. The percentage increase in the median remuneration of employees in the financial year :

9.23%

iv. The number of permanent employees on the rolls of the Company :

2508

v. The explanation on the relationship between average increase in remuneration and Company performance

Increments are based on the individual employee performance, market benchmarking of salary and net profit of the Company.

vi. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company

Total remuneration paid to the Key Managerial Personnel constituted 5% of the net profit of the Company for the financial year 2014-15.

vii. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company, in comparison to the rate at which the Company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the Company as at the close of the current financial year and previous financial year 2014-15 2013-14

Market 2768.23 1810.41 Capitalisation (Rsin crores)

PE ratio 18.15 23.85

In the recent past, the Company has not made any public offer.

viii. Average percentile increase already made in the salaries of employees, other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there are any exceptional circumstances for increase in the managerial remuneration

Average increase to employees other than managerial personnel and justification thereof

11.39% (Adjusted for headcount changes) The average increase given in FY 2014-15 was based on the outcome of the compensation and benefits benchmarking survey initiated by the Company, to remain competitive in the market, to attract and retain talent.

Average increase to managerial personnel :

Please refer to (ii) of this table.

Exceptional circumstance for increase to manageria personnel ;

NA

ix. Comparison of the remuneration of each Key Managerial Personnel against the performance of the Company

Mr Satish Jamdar 1.71% of net profit

Mr Vir S Advani 1.03% of net profit

Mr B Thiagarajan 1.14% of net profit

Mr Manek Kalyaniwala 0.29% of net profit (from April to July 2014)

Mr Neeraj Basur 0.60% of net profit (appointed w.e.f.August2014)

Mr Sangameshwar Iyer 0.23% of net profit

x. The key parameters for any variable component of remuneration availed by the Directors

The Nomination and Remuneration Committee evaluates the performance of the Directors against the key result areas determined by it and recommends payment of commission to the Directors.

xi. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year :

NA

xii. Affirmation that the remuneration is as per the Remuneration Policy of the Company :

Affirmed

#Since Mr Manek Kalyaniwala retired w.e.f. July 2014, the increment given to him was a special increment.

*Mr Manek Kalyaniwala retired on July 31, 2014. The amount paid to him is inclusive of his retirement benefits.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are required to be annexed to the Directors'' Report. In accordance with the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

EMPLOYEE STOCK OPTIONS

The Board has an ESOP Compensation Committee comprising the following members; Mr Gurdeep Singh, Mr Shailesh Haribhakti and Mr Vir S Advani. Mr Gurdeep Singh is the Chairman of this Committee.

The Committee granted 14,95,000 options on June 6, 2014 and 42,000 options on February 13, 2015 during the financial year under review.

The details as required as per Rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014 and as per SEBI requirements have been provided as per Annexure 2 to this Report.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act, read with the Rules therein, the Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries has been provided as per Annexure 3 to this Report.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92(3) and Section 134 (3)(a) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT-9 has been provided as per Annexure 4 to this Report.

DEPOSITS

The Company has not accepted any deposit from the public falling within the ambit of Section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, is annexed to this Report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the disclosure norms as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 has been annexed with this report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year under review and the date of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There have been no significant and material orders passed by any regulators or courts or tribunals, impacting the going concern status of the Company and its future operations.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy, in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has set up an Internal Complaints Committee to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Company organises workshops and awareness programmes at regular intervals for sensitising the employees with the provisions of the Act.

During the year under review, the Company did not receive any complaint.

ACKNOWLEDGMENTS

The Directors take this opportunity to express their deep and sincere gratitude to the customers of the Company for their confidence and patronage, as well as to the Government of India and other regulatory authorities for their co-operation, support and guidance. The Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Company in its continued robust performance on all fronts.

Mumbai, May 29, 2015

For and on behalf of the Board of Directors Ashok M Advani Chairman

Mar 31, 2014

The Directors are pleased to present their 66th Annual Report and the Audited Accounts for the year ended March 31, 2014.

SUMMARISED FINANCIAL RESULTS

(Rs. in crores) April 2013 April 2012 - March 2014 - March 2013

Total Income 2824.90 2803.58

Profit before Interest, Depreciation and Taxation 160.23 135.34

Financial Expenses 49.64 49.85

Depreciation 34.69 32.90

Add: Profit on sale of investments - -

Profit before tax 75.90 52.59

Taxes - 0.85

Profit after tax 75.90 51.74

Add: Balance brought forward 194.84 180.17

Total available for appropriation 270.74 231.91

Less: General Reserve 7.60 5.50

Proposed Dividend 35.97 26.98

Corporate Dividend Tax 4.71 4.59

Balance carried forward 222.46 194.84

DIVIDEND

The Directors have proposed a dividend of Rs.4.00 per equity share (Previous Year Rs.3.00 per equity share, which included a special dividend of Rs.1 per share on the occasion of the birth centenary of the Company''s founder, Mr Mohan T Advani). The dividend will absorb Rs.40.68 crores, including Corporate Dividend Tax.

OPERATING PERFORMANCE

Total Revenue of the Company for the year was practically flat at Rs.2824.90 crores as compared to Rs.2803.58 crores, on account of the challenging external environment. However, as a result of sharp focus on costs and efficiencies, the Operating Profit before Tax, Depreciation and Amortisation went up by 18.4% to Rs. 160.23 crores as compared to Rs. 135.34 crores in the previous year.

The Segment Result for Electro Mechanical Projects & Packaged Air conditioning Systems saw a small decline from Rs. 72.33 crores in the previous year to Rs.67.15 crores, primarily on account of sluggish execution of projects by customers. Cooling Products recorded a healthy increase of 18% in its Segment Result from Rs. 80.35 crores to Rs. 94.77 crores, with an 11% increase in its Segment Revenue from Rs. 965.16 crores to Rs. 1075.51 crores. The Revenue of Professional Electronics & Industrial Systems declined marginally by 3% from Rs.182.29 crores to Rs. 176.73 crores, whilst the Segment Result remained unchanged at Rs. 29.84 crores.

FINANCIAL PERFORMANCE

Finance costs for the year were held at Rs. 49.64 crores as compared to Rs.49.86 crores, due to a sustained focus on cash flow and tight control on borrowing levels.

EXPORT & FOREIGN EXCHANGE EARNINGS

Foreign exchange inflows for the year, including commission income, further improved to Rs. 180.87 crores as against Rs. 158.57 crores in the previous year. Foreign exchange outflow for the year was Rs.869.67 crores compared to Rs. 682.88 crores in the previous year, largely due to the sharp depreciation in the value of the local currency.

SUBSIDIARY COMPANIES

During the year, the Company''s subsidiaries, Blue Star Electro-Mechanical Ltd reported a turnover of Rs. 68.50 crores and a loss of Rs. 13.28 crores, whilst Blue Star Design & Engineering Ltd reported a turnover of Rs. 24.82 crores and a profit of Rs. 15.95 crores.

CONSOLIDATED RESULTS

The Annual Report also includes the Consolidated Financial Statements of the Company, which include the results of the Company''s subsidiaries; namely Blue Star Electro-Mechanical Ltd and Blue Star Design & Engineering Ltd, and its share in the results of its joint venture and associate companies. The Consolidated Financial results for the year show a Total Income of Rs. 2914.9 crores compared to Rs.2924.0 crores and consolidated Net Profit of Rs. 77.54 crores compared to Rs. 39.07 crores in the previous year.

In terms of the general permission granted by the Ministry of Corporate Affairs vide General circular no.2/2011, the Accounts of the subsidiaries have not been attached with the accounts of the holding company. Any member desirous of obtaining the same will be provided with a copy thereof upon making a request to the Company.

CORPORATE RESTRUCTURING

On May 30, 2014, the Board approved a proposal for amalgamation of the Company and its subsidiary; namely, Blue Star Design & Engineering Ltd, with its wholly owned subsidiary, Blue Star Electro-Mechanical Ltd (BSEML) w.e.f. October 1, 2014 (Appointed Date), subject to Court and statutory/regulatory approvals. Post the amalgamation, the shares of BSEML shall be listed on the exchanges, and the name of BSEML shall be changed to Blue Star Limited.

The amalgamation will result in a number of benefits, including business consolidation, integration of the MEP contracting activities, simplification of group structure resulting in better regulatory compliances and improved corporate governance, besides improving operational efficiency and reducing costs.

AUDITORS

M/s S R Batliboi & Associates LLP, Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting. They have expressed their unwillingness to be re-appointed. It is therefore proposed to appoint M/s S R B C & Co, LLP, Chartered Accountants as Statutory Auditors of the Company at the forthcoming Annual General Meeting. M/s S R B C & Co, LLP, Chartered Accountants have given their consent for this appointment. As required under the provisions of section 141(3)g of the Companies Act, 2013, the Company has obtained a written certificate from M/s S R B C & Co, LLP, Chartered Accountants, to the effect that their appointment, if made, would be in conformity with the limits specified in the said section.

In pursuance to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s N I Mehta & Company, Cost Accountants (Regn. No. 000023) were appointed as Cost Auditors to conduct audit of cost records for air conditioners activity for the financial year 2013-14. The Cost Audit Report for the financial year 2012-13 has been filed with the Ministry of Corporate Affairs.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors would like to inform the members that the Audited Accounts for the financial year ended March 31, 2014 are in full conformity with the requirement of the Companies Act, 1956. These financial results have been audited by the statutory auditors, M/s S R Batliboi & Associates LLP, Chartered Accountants. The Directors further confirm that:

1) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

2) The accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for providing and detecting fraud and other irregularities.

4) The Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

Ms Shobana Kamineni was appointed as Additional Director w.e.f. May 30, 2014 at the Meeting of the Board of Directors of the Company held on April 28, 2014.

She holds office upto the date of the forthcoming Annual General Meeting.

The Company has received notice together with the necessary deposit from a member signifying the member''s intention to propose Ms Kamineni as an Independent Director of the Company at the forthcoming Annual General Meeting.

Mr Vir S Advani retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-election thereat.

Mr Suresh N Talwar retired by rotation at the last Annual General Meeting. In line with the retirement policy of the Company for Directors, Mr Talwar did not seek re-appointment.

It is proposed to re-appoint Mr Satish Jamdar as Managing Director at the forthcoming Annual General Meeting.

In terms of Section 149 of the Companies Act, 2013, it is proposed to appoint the following Directors; namely Mr Pradeep Mallick, Mr Shailesh Haribhakti, Mr Gurdeep Singh and Mr M K Sharma as Independent Directors to hold office for a term of five consecutive years upto March 31, 2019, subject to the retirement policy of the Company for its Directors.

The Company has received necessary notices under Section 160 of the Companies Act, 2013 together with the necessary deposit from a member signifying his intention to appoint the aforesaid Directors at the forthcoming Annual General Meeting.

EMPLOYEES

The number of employees has gone down from 2698 at the end of the previous year to 2540 as at March 31, 2014.

EMPLOYEE STOCK OPTION SCHEME

During the financial year 2012-13, the Company had obtained the consent of the shareholders vide a Special Resolution passed by Postal Ballot for introduction of an Employee Stock Option Scheme. However, no options have been granted by the Company till date under the said Scheme. Necessary disclosures will be made by the Company as and when options are granted.

DISCLOSURE OF PARTICULARS

Information as per Section 217(1)(e) of the Companies Act, 1956, read with the rules made there under relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure A forming part of this report. Particulars of employees as required under Section 217(2A) of the Companies Act,1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, in pursuance of Section 219(1) (b) of the Companies Act, 1956, this report is being sent to all the shareholders of the Company excluding the aforesaid information. The said particulars will be made available for inspection at the Registered Office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. A Management Discussion and Analysis Report and Corporate Governance Report as required under Clause 49 of the Listing Agreement are published separately in this Annual Report.

For and on behalf of the Board

Ashok M Advani

Mumbai: May 30, 2014 Chairman

Mar 31, 2013

The Directors are pleased to present their 65th Annual Report and the Audited Accounts for the year ended March 31, 2013.

SUMMARISED FINANCIAL RESULTS

(Rs. in crores)

April 2012 April 2011 March 2013 March 2012

Total Income 2803.37 2724.59

Profit (Loss) before Interest, Depreciation and Taxation 135.34 13.25

Financial Expenses 49.85 70.25

Depreciation 32.90 31.45

Add: Profit on sale of investments - -

Profit (Loss) before Tax 52.59 (88.45)

Taxes 0.85 0.70

Profit (Loss) after Tax 51.74 (89.15)

Add: Balance brought forward 180.17 279.77

Total available for appropriation 231.91 190.62

Less: General Reserve 5.50 -

Proposed Dividend 26.98 8.99

Corporate Dividend Tax 4.59 1.46

Balance carried forward 194.84 180.17

DIVIDEND

The Directors have proposed a dividend of Rs.2.00 per equity share (Previous Year Rs.1.00 per equity share). In addition, a special dividend of Rs.1.00 per equity share has been recommended to commemorate the birth centenary of the Founder Chairman of the Company, Mr Mohan T Advani, as well as the 70th anniversary of the founding of Blue Star. The dividend will absorb Rs.31.57 crores, including Corporate Dividend Tax.

OPERATING PERFORMANCE

Total Revenue of the Company rose to Rs.2803.37 crores for the year ended March 31, 2013 from Rs.2724.59 crores in the previous year. Operating Profit before Interest, Tax, Depreciation and Amortisation increased substantially from Rs.13.25 crores in 2011-12 to Rs.135.34 crores in 2012-13. Total Segment Result showed a huge improvement from Rs.54.65 crores to Rs.182.52 crores.

The major improvement in profit was in Segment I i.e. Electro Mechnical Projects & Packaged Airconditioning Systems, where the Segment Result turned around from a loss of Rs.85.09 crores to a profit of Rs.72.33 crores. This was the result of a number of corrective actions such as control of cost overruns, faster closure of jobs and focus on more profitable business areas.

Cooling Products showed a modest increase in Revenue to Rs.965.15 crores, but a decline in Segment Result from Rs.87.45 crores to Rs.80.35 crores.

Professional Electronics & Industrial Systems had a difficult year with decline in Revenue to Rs.182.29 crores, while the Segment Result reduced to Rs.29.84 crores mainly due to the industrial slowdown.

FINANCIAL PERFORMANCE

There was a significant reduction in finance costs which declined from Rs.70.25 crores to Rs.49.85 crores. Focus on cash flow to reduce borrowing and lower foreign exchange loss succeeded in improving the financial position and reducing the finance cost.

EXPORT & FOREIGN EXCHANGE EARNINGS

Foreign exchange inflows for the year, including commission income, was Rs.158.57 crores compared to Rs.149.45 crores for the previous year. Foreign exchange outflow for the year was Rs.664.43 crores as compared to Rs.544.35 crores in the previous year.

SUBSIDIARY COMPANY

During the year, the Company''s wholly owned subsidiary, Blue Star Electro-Mechanical Ltd reported a turnover of Rs.97.64 crores, and a loss of Rs.15.95 crores.

CONSOLIDATED RESULTS

The Annual Report also includes the Consolidated Financial Statements of the Company, which include the results of the Company''s wholly owned subsidiary, Blue Star Electro-Mechanical Ltd, and its share in the results of its joint venture companies and associate company. The Consolidated Financial results for the year show a Total Income of Rs.2960.45 crores compared to Rs.2843.02 crores and consolidated Net Profit of Rs.39.07 crores compared to a Net Loss of Rs.105.10 crores in the previous year. In terms of the general permission granted by the Ministry of Corporate Affairs vide General circular no.2/2011, the Accounts of the subsidiary have not been attached with the accounts of the holding company. Any member desirous of obtaining the same will be provided with a copy thereof upon making a request to the Company.

AUDITORS

M/s S R Batliboi & Associates LLP, Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. As required under the provisions of section 224 of the Companies Act, 1956, the Company has obtained a written certificate from M/s S R Batliboi & Associates LLP, Chartered Accountants, to the effect that their appointment, if made, would be in conformity with the limits specified in the said section.

In pursuance to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s ABK & Associates, Cost Accountants (Regn. No. 036) were appointed as Cost Auditors to conduct audit of cost records for airconditioners activity for the financial year 2012-13.

The Cost Audit Report for the financial year 2011-12 was filed with the Ministry of Corporate Affairs within the prescribed time.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors would like to inform the members that the Audited Accounts for the financial year ended March 31, 2013 are in full conformity with the requirement of the Companies Act, 1956. These financial results have been audited by the statutory auditors, M/s S R Batliboi & Associates LLP, Chartered Accountants. The Directors further confirm that:

1) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

2) The accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for providing and detecting fraud and other irregularities.

4) The Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

Mr B Thiagarajan and Mr M K Sharma were appointed as Additional Directors at the Meeting of the Board of Directors of the Company held on May 13, 2013.

Mr Thiagarajan was also appointed as a Wholetime Director of the Company for a period of 5 years effective from May 13, 2013, subject to the approval of the shareholders at their forthcoming Annual General Meeting.

Mr Thiagarajan and Mr Sharma hold office up to the date of the forthcoming Annual General Meeting of the Company.

The Company has received notice from a member signifying his intention to propose Mr Thiagarajan and Mr Sharma as Directors of the Company at the forthcoming Annual General Meeting.

Mr Gurdeep Singh retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-election thereat.

Mr Suresh N Talwar retires by rotation at the forthcoming Annual General Meeting. In line with the retirement policy of the Company for Directors, Mr Talwar will be stepping down from the Board with effect from the conclusion of the forthcoming Annual General Meeting and accordingly, he is not seeking re-election thereat.

The Directors wish to place on record their deep appreciation and gratitude to Mr Talwar for the services rendered by him during his tenure as Director of the Company.

EMPLOYEES

The number of employees decreased from 2785 at the end of the previous year to 2698 as at March 31, 2013.

EMPLOYEE STOCK OPTION SCHEME

During the year, the Company decided to introduce and implement an Employee Stock Option Scheme, and for this purpose, has obtained the consent of the shareholders vide a Special Resolution passed by Postal Ballot. No options have been granted by the Company during the year under review. Necessary disclosures will be made by the Company as and when options are granted.

DISCLOSURE OF PARTICULARS

Information as per Section 217(1)(e) of the Companies Act, 1956, read with the rules made thereunder relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure A forming part of this report. Particulars of employees as required under Section 217(2A) of the Companies Act,1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, in pursuance of Section 219(1) (b) of the Companies Act, 1956, this report is being sent to all the shareholders of the Company "excluding" the aforesaid information. The said particulars will be made available for inspection at the Registered Office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. A Management Discussion and Analysis Report and Corporate Governance Report as required under Clause 49 of the Listing Agreement are published separately in this Annual Report.

For and on behalf of the Board

Ashok M Advani

Mumbai: May 13, 2013 Chairman

Mar 31, 2012

The Directors are pleased to present their 64th Annual Report and the Audited Accounts for the year ended March 31, 2012.

SUMMARISED FINANCIAL RESULTS

(Rs in crores)

April2011 April 2010 -March 2012 -March2011

Total Revenue 2724.59 2892.91

Profit (Loss) before Interest, Depreciation and Taxation 13.25 282.58

Financial Expenses 70.25 24.36

Depreciation 31.45 31.71

Add: Profit on sale of investments - 0.43

Profit (Loss) before Tax (88.45) 226.94

Taxes 0.70 71.94

Profit (Loss) after Tax (89.15) 155.00

Add: Balance brought forward 279.77 213.44

Total available for appropriation 190.62 368.44

Less: General Reserve - 15.50

Proposed Dividend 8.99 62.96

Corporate Dividend Tax 1.46 10.21

Balance carried forward 180.17 279.77

DIVIDEND

The Directors have proposed a dividend of Rs1.00 per equity share. The dividend will absorb Rs10.45 crores including Corporate Dividend Tax.

OPERATING PERFORMANCE

Total Revenue of the Company was Rs2724.59 crores for the year ended March 31, 2012 compared to Rs2892.91 crores in the previous year. Operating Profit Before Interest, Depreciation and Tax declined from Rs282.58 crores to Rs13.25 crores.

The sharp decline in Operating Profit was largely caused by a combination of factors in the Electro Mechanical Projects business in Segment 1. These included a slowdown in execution of projects due to delays in collections from customers; inflationary cost over-runs and erosion of gross margins on fixed price contracts; and higher expected costs for completion of ongoing projects. In accordance with Accounting Standard AS7, all these cost increases were absorbed in the accounts for 2011-12, resulting in losses and reduced revenues.

In the Cooling Products segment, while top-line growth was favourable, margins were under pressure due to higher input costs and significant increases in fuel and freight costs. Consequently, the segment result was marginally lower. The Professional Electronics and Industrial Systems business was also affected by the general business slowdown.

FINANCIAL PERFORMANCE

Finance costs increased sharply from Rs24.36 crores to Rs70.25 crores. This was partly due to higher interest on increased borrowings. In addition, there was a significant foreign exchange loss and cost of forward cover of Rs36.67 crores. Profit/(Loss) After Tax was a disappointing Rs(89.15) crores compared to Rs155 crores in the previous year.

EXPORT & FOREIGN EXCHANGE EARNINGS

Foreign exchange inflow for the year, including commission income, was Rs149.5 crores compared to Rs160.3 crores for the previous year. Foreign exchange outflow for the year was Rs544.4 crores as compared to Rs561.5 crores in the previous year.

SUBSIDIARY COMPANY

During the year, the Company made a further investment of Rs19.52 crores in the shares of the wholly owned subsidiary, Blue Star Electro-Mechanical Limited.

CONSOLIDATED RESULTS

The Annual Report also includes the Consolidated Financial Statements of the Company. This incorporates the results of the Company's wholly owned subsidiary, Blue Star Electro-Mechanical Ltd and its share in the results of its joint venture companies and associate company. The consolidated results for the year show a Total Revenue of Rs2843.03 crores compared to the previous year's Rs3012.59 crores and a Net Loss of Rs105.10 crores versus Profit After Tax of Rs160.96 crores in the previous year. In terms of the general permission granted by the Ministry of Corporate Affairs vide General circular no.2/2011, the Accounts of the subsidiary have not been attached with the accounts of the holding company. Any member desirous of obtaining the same will be provided with a copy thereof upon making a request to the Company.

AUDITORS

M/s S R Batliboi & Associates, Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. As required under the provisions of section 224 of the Companies Act, 1956, the Company has obtained a written certificate from M/s S R Batliboi & Associates, Chartered Accountants, to the effect that their appointment, if made, would be in conformity with the limits specified in the said section.

In compliance with the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s ABK & Associates, Cost Accountants (Regn. No. 036) were appointed as Cost Auditors to conduct audit of cost records for airconditioners for the financial year 2011-12. The Cost Audit Report for the financial year 2010-11 which was due to be filed with the Ministry of Corporate Affairs within 180 days from the close of the financial year (i.e. dt: 27.9.201 1) was filed on 27.8.201 1.

Vide an order of the MCA issued under Notification No.52/26/CAB-2010 dated 24.1.2012, the MCA has covered a number of industries, under automatic Cost Audit with effect from the financial year commencing on or after 1.4.2012. Accordingly, M/s ABK & Associates, Cost Accountants have been appointed as the Cost Auditor of the Company to conduct the cost audit of all the manufactured products of the Company, viz. airconditioning and refrigeration equipment, packaged airconditioners, industrial packaged chillers, air handling units and airconditioners manufactured by the Company for the financial year ending March 31, 2013, upon the remuneration and terms and conditions as may be mutually agreed between the Company and M/s ABK & Associates.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors hereby inform the members that the Audited Accounts for the financial year ended March 31, 2012 are in full conformity with the requirement of the Companies Act, 1956. These financial results have been audited by the statutory auditors M/s S R Batliboi & Associates, Chartered Accountants. The Directors further confirm that:

1) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

2) The accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for providing and detecting fraud and other irregularities.

4) The Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

With effect from April 1, 2012, Mr Ashok M Advani relinquished his position of Executive Chairman and Wholetime Director and continues as Chairman. Mr Suneel M Advani relinquished his position of Managing Director with effect from April 1, 2012 and is presently the Executive Vice Chairman of the Company.

Mr Satish Jamdar and Mr Pradeep Mallick will retire from the Board by rotation and being eligible, offer themselves for re-election.

EMPLOYEES

The number of permanent employees decreased from 2825 at the end of the previous year to 2785 as at March 31, 2012.

DISCLOSURE OF PARTICULARS

Information as per Section 217(1)(e) of the Companies Act, 1956, read with the rules made thereunder relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure A forming part of this report. Particulars of employees as required under Section 217(2A) of the Companies Act,1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, in pursuance of Section 219(1) (b) of the Companies Act,1956, this report is being sent to all the shareholders of the Company"excluding"the aforesaid information. The said particulars will be made available for inspection at the Registered Office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. A Management Discussion and Analysis Report, as required under Clause 49 of the Listing Agreement is published separately in this Annual Report.

For and on behalf of the Board

Ashok M Advani

Mumbai : May 16, 2012 Chairman

Mar 31, 2011

Consistently high commodity prices and increase in general operating costs due to the overall inflationary conditions eroded margins and resulted in a reduction of 8% in the Profit before Interest, Depreciation and Taxation to Rs. 282.67 crores as compared to Rs. 305.84 crores in the previous year.

FINANCIAL PERFORMANCE

The Companys financial expenses increased sharply from Rs. 8.45 crores in the previous year to Rs. 24.39 crores in the current year, due to a higher interest rate regime and additional borrowings. The major slowdown in execution of several large projects, resulted in a comparatively tardy cash flow and increase in the Capital Employed in the business. As a result, the Profit before Tax for the year saw a reduction of 18% to Rs. 227.00 crores as compared to Rs. 276.62 crores in the previous year.

The higher income tax rate rose mainly due to lower benefits for the Himachal plant. This resulted in the Profit after Tax declining by 27% from Rs. 211.49 crores to Rs. 155.00 crores.

EXPORT & FOREIGN EXCHANGE EARNINGS

Product exports revived during the year, growing by 33% to Rs. 130.8 crores. Foreign Exchange inflow for the year, including commission income, was Rs. 160.3 crores as compared to Rs. 129.4 crores for the previous year. Foreign Exchange outflow for the year was Rs. 561.5 crores as compared to Rs. 475.5 crores in the previous year.

SUBSIDIARY COMPANY

During the year, the Company made an investment of Rs. 98 crores in the acquisition of the plumbing and fire fighting business of D S Gupta Construction Pvt Ltd, through the Companys wholly owned subsidiary, Blue Star Electro-Mechanical Limited, which was incorporated during the year.

CONSOLIDATED RESULTS

The Annual Report also includes the Consolidated Financial Statements of the Company, which include the results of the Companys wholly owned subsidiary Blue Star Electro-Mechanical Limited and its share in the results of its joint venture companies and associate company. The Consolidated Financial results for the year show a Total Income of Rs. 3009.85 crores and a Profit after Tax of Rs. 160.96 crores.

AUDITORS

M/s S R Batliboi & Associates, Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. As required under the provisions of section 224 of the

Companies Act, 1956, the Company has obtained a written certificate from M/s S R Batliboi & Associates, Chartered Accountants, to the effect that their appointment, if made, would be in conformity with the limits specified in the said section.

M/s ABK & Associates, Cost Accountants have been appointed as the Cost Auditor of the Company to conduct the cost audit of airconditioners manufactured by the Company for the financial year ending March 31,2012 upon the remuneration and terms and conditions as may be mutually agreed between the Company and M/s ABK & Associates.

The observations made in the Auditors Report are self-explanatory and do not call for any further comments under Section 217(3) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors would like to inform the members that the Audited Accounts for the financial year ended March 31, 2011 are in full conformity with the requirement of the Companies Act, 1956.These financial results have been audited by the statutory auditors M/s S R Batliboi & Associates, Chartered Accountants. The Directors further confirm that:

1) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

2) The accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for providing and detecting fraud and other irregularities.

4) The Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

During the year, Mr Vir S Advani was appointed as Executive Director of the Company with effect from July 1, 2010.

Mr Vir S Advani and Mr Shailesh Haribhakti will retire from the Board by rotation and being eligible, offer themselves for re-election.

It is proposed to appoint Mr Ashok M Advani as Managing Director designated as Executive Chairman and re-appoint Mr Suneel M Advani as Managing Director designated as Vice Chairman & Managing Director at the forthcoming Annual General Meeting.

EMPLOYEES

The increased level of operations and strengthening of the Companys R&D capabilities has resulted in an increase in the number of employees from 2603 as on March 31, 2010 to 2825 as on March 31, 2011.

DISCLOSURE OF PARTICULARS

Information as per Section 217(1)(e) of the Companies Act, 1956, read with the rules made thereunder relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure A forming part of this report. Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, in pursuance of Section 219(1)(b) of the Companies Act, 1956, this report is being sent to all the shareholders of the Company "excluding" the aforesaid information.The said particulars will be made available for inspection at the Registered Office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. A Management Discussion and Analysis Report, as required under Clause 49 of the Listing Agreement is published separately in this Annual Report.

For and on behalf of the Board

Ashok M Advani

Mumbai, May 24, 2011 Executive Chairman

Mar 31, 2010

The Directors arc pleased to present their 62nd Annual Report and the Audited Accounts for the year ended March 31 r 2010.

HIGHLIGHTS OF 2009-10

- Total Income grew only marginally to Rs, 2556.11 crwes.

- Profit After Tax increased by 17% to Rs. 211.49 crores from Rs. 18029 crores [n the previous year.

Earnings per share reached Rs. 23.52 (face value of Rs, 2/-) compared to Rs. 20.05 in the previous year.

- A dividend of Rs, 8.00 per share (Rs. 7,00 for last year) has been recommended,

- Year-end borrowings reduced for the third year in succession to a low of Rs.8.93 crores from Rs. 27.28 crores in the previous year.

SUMMARISED FINANCIAL RESULTS

(Rs. in crores) April 2009 April 2008 -March 2010 -March 2009 Total Income 2556.11 2524.38

Profit before Interest, depreciation and taxation 305.84 281.35

Financial Expenses 8.45 17.25

Depreciation 34.73 25.88

Add; Profit on sale of investments 13.96 -

Profit before tax 276.62 238.22

Provision for taxation 67.21 60.90

Add/{Less): Deferred Tax 2.08 2.97

Profit after tax 31149 180.29

Add: Balance brought forward 165,46 119.22

Tota I avai labie for appropriation 377,34 299.51

Lass: General Reserve 80.00 60.00

Proposed Dividend 71.95 62.95

Corporate Dividend Tax 11.95 10.70

Balance carried forward 213.44 165.86

DIVIDEND

The Directors have proposed a dividend of Rs. 8.00 per equity share. The dividend will absorb Rs. 83.90 crones including Corporate Dividend Tax.

OPERATING PERFORMANCE

The economic slowdown Impacted the Companys revenue growth during the year. While the Electro Mechanical Projects and Packaged Airconditioning segment showed marginal growth, Cooling Products and Professional Electronics and industrial Systems recorded a small decline. However, on the profit front Cooling Products and Professional Electronics and Industrial Systems segments recorded positive growth which offset the small reduction in the Electro Mechanical Projects and Packaged Airconditioning segment.This, together with an exceptional item of sale of investments, increased the Profit After Tax by 17ft during the year

FINANCIAL PERFORMANCE

Effective cost control measures coupled with lower cost of finance helped the Company to cope with flat revenues. Financial expenses Including Interest cost reduced by over 50%. However, slow cash collections and Increased Sundry Debtors reduced the net cash flow from operations. Nevertheless, good inventory management and suppliers credit kept overall borrowings under control - a marked reduction to Rs. 8.93 crores from Rs.27.2fl crores In the previous year.

The Company made additional investments in fixed assets amounting to Rs. 47,47 crores during thÃ year which was

financed entirely out of Internal resources.

The Earnings per share increased by 17% to Rs. 2352 per equity share of Rs. 2/- each.

EXPORT & FOREIGN EXCHANGE EARNINGS

Export income declined sharply during the year, with product exports declining by 51% and commission Income by 7%. There were no project exports during the year.

Foreign exchange outflow during the year was Rs. 475.49 crores as compared to Rs. 510.45 crores during the previous year.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors would like to inform the members that the Audited Accounts for the financial year ended March 31, 2010 are in full conformity with the requirement of the Companies Act 1956, These financial results have been audited by the statutory auditors M/s S R Batliboi & Associates, The Directors further confirm that

1) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

2) The accounting policies are consistently applied and reasonable, prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

3) The Directors have taken proper and sufficient care for the mai ntena nee of adequate accou nting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for providing and detecting fraud and other irregularities.

4J The Directors have prepared the Annual Accounts on a going concern basis.

DIRECTORS

It is pro posed to a ppoint Mr Vir S Advani asaWholetimeDI rector of the Com pa ny with effect from July 1,2010. M r S u re sh N Ta I war and Mr Gurdeep Singh will retire from the Board by rotation and being eligible, offer themselves for re-election.

EMPLOYEES

Due to the business slowdown, employee strength was prudently contained. As on March 31, 2010, total employee strength stood at 2603, slightly lower than 2620 in the previous year.The Company provided modest performance linked increases in salaries which helped to maintain employee morale.

The employee relations scenario continued to be harmonious and congenial and the Company signed a short term settlement with the Union during the year.

Safety awareness among the employees and business partners was enhanced during the year. Over 4000 employees and technicians/workers of business partners were covered under the corporate safety training programme. Safety systems and processes were developed for project sites and factories and implemented to ensure a safer work place.

DISCLOSURE OF PARTICULARS

Information as per Section 217(1)[e) and 217(2A) of the Companies Act, 1956, read with the rules made thereunder relating to conservation of energy technology absorption, foreign exchange earnings and outgo and particulars of employees respectively, are given In Annexures A and 8 forming part of this report. A Management Discussion and Analysis Report, as required under Clause 45 of the Listing Agreement Is published separately In this Annual fleport

For and on behalf of the Board Alhok M Advani Mumbai: May 12, 2010 Executive Chairman

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