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ANALYST MEET Presentation by Ashok M Advani, Chairman & Managing Director May 26, 2006.

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Presentation on theme: "ANALYST MEET Presentation by Ashok M Advani, Chairman & Managing Director May 26, 2006."— Presentation transcript:

1 ANALYST MEET Presentation by Ashok M Advani, Chairman & Managing Director May 26, 2006

2 Agenda About Blue Star Financial Highlights Business Highlights The Way Forward

3 About Blue Star

4 Leadership Blue Star is India’s largest and preferred central airconditioning and commercial refrigeration company

5 History Founded by Mohan T Advani in 1943 Over 62 years of profit, growth and excellence Listed on Bombay Stock Exchange in 1969 Only 50 Indian companies listed on BSE are more than 60 years old- Blue Star is one of them Professionally managed; largest pool of HVAC engineers in the country Focused on corporate, commercial, and institutional customers Unbroken record of dividend payment Ethics-driven business philosophy

6 Blue Star today Total IncomeRs 1179 crores Net ProfitRs 49 crores Employees1999 Manufacturing Plants4 Offices23 Dealers570

7 Enhancing shareholder value Six bonus issues and two rights issues since listing in 1969 Spin-off of International Software Division into a separate company – Blue Star Infotech in 2000 Buy-back of shares in FY02 and FY03 Exit from Yokogawa JV in 2003 5 for 1 Stock-Split recommended by Board in 2006 Consistent record of dividends

8 Financial Highlights

9 Blue Star Financial Performance 2005-062004-05 Total Income Growth over previous year 1178.62 +27% 930.92 +30% Operating Profit (PBDITA) excl Non-operating income86.6857.85 Profit Before Tax Growth over previous year 69.09 +32% 52.44 +13% Profit After Tax Growth over previous year 48.90 +25% 39.16 +20% Shareholders’ Funds172.71148.42 Borrowings75.8737.28 Capital Employed248.58185.70 Operating Cash Flow18.3615.34 (Rs. crores)

10 Key Ratios 2005-062004-05 Gross Margin22.50%21.80% Operating Margin (excl. Non operating Income)7.40%6.30% Return on Capital Employed30.10%30.00% Return on Shareholders' Funds28.30%26.40% Earnings Per Share (Rs.)27.1921.77 Dividend Per Share (Rs.)12.0010.00 Capital Turnover4.745.01 Debt/Equity0.440.25 Inventory Turnover6.066.98 Receivables (Days Billings Outstandings)7478

11 Total Income (Rs. crores) 517 601 716 931 1179 0 200 400 600 800 1000 1200 1400 2001-022002-032003-042004-052005-06 (Rs.crores) CAGR = 22.9%

12 Profit After Tax 27.45 31.04 32.55 39.16 48.90 0 10 20 30 40 50 60 2001-022002-032003-042004-052005-06 (Rs.crores) CAGR = 15.5%

13 Capital Turnover 4.19 4.71 5.00 4.74 0 1 2 3 4 5 6 2001-022002-032003-042004-052005-06

14 Return on Capital Employed 33.3% 30.0% 33.8% 30.1% 26.7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2001-022002-032003-042004-052005-06

15 Return on Shareholders’ Funds 24.6% 26.9% 25.1% 26.4% 28.3% 0% 5% 10% 15% 20% 25% 30% 2001-022002-032003-042004-052005-06

16 Earnings Per Share & Dividend Per Share 6.5 9 9 10 12 27.18 16.79 13.52 18.10 21.77 0 5 10 15 20 25 30 2001-022002-032003-042004-052005-06 Dividend per share Earnings per share (Rs.)

17 Shareholding Pattern 39.61% Promoters 38.40% Indian Public 9.70% Financial Institutions/Banks/ Mutual Funds 8.07% FIIs 4.22% Bodies Corporate

18 Carry Forward Order Book SegmentMarch 05March 06Growth Central Airconditioning35644224% Cooling Products244483% Professional Electronics304963% TOTAL41056538% (Rs. crores)

19 Business Highlights

20 Business Segments 1.Central Airconditioning Systems 2.Cooling Products 3.Professional Electronics and Industrial Equipment

21 Central Airconditioning Systems (Rs. crores)

22 Central Airconditioning Systems Design, manufacturing, installation, commissioning and maintenance of large central airconditioning plants Packaged and Ducted Split airconditioners Special application products such as Process Chillers, fail-safe airconditioners for Telecom Energy efficiency as the technology platform; pioneers of products which save power

23 Central Airconditioning Systems Eco friendly products Various service products including Energy Management, Indoor Air Quality Management, Water Management; Revamping and Retrofitting for existing installations Value added products for the export market

24 Central Airconditioning Business Model  Large systems (above 100 tons) Manufacturer of equipment System Designing Specialists MEP Contractor (mechanical, electrical, plumbing) Value added Service Provider  Packaged systems (5 – 100 tons) Manufacturer of equipment Marketed through Channels System Integrator Value-added Service Provider

25 Central Airconditioning Market Size Market Size : Rs 2800 crores Blue Star 30%

26 Cooling Products (Rs. crores)

27 Cooling Products Wide range of window and split airconditioners Comprehensive range of commercial refrigeration equipment –Cold Storages –Deep Freezers –Water Coolers –Bottled Water Dispensers –Bottle Coolers Contemporary products with power saving design Custom-designed products for export markets

28 Cooling Products Business Model Manufacturer of equipment Marketed through Channels System Integrator Value added Service Provider Prime focus on the corporate and commercial segments

29 Room Airconditioners Market Size 4% Market Size : Rs 2800 crores Blue Star 4%

30 Refrigeration Products Market Size 25% Blue Star 25% Market Size : Rs 400 crores

31 Range of Cold Chain & Commercial Refrigeration Equipment FARMERS (storage, pack houses) TRANSPORT RETAILER CONSUMER Equipment supplied by Blue Star  Collection  Grading  Sorting  Pre Cooling  Cold Storages  Controlled Atmosphere Storages  High Humidity Storages  Bulk Milk Coolers  Mobile AC&R vans (sourced through partners)  Cold Storages  Deep Freezers & Display Freezers  Visi Coolers  Milk Coolers  Beer Coolers  Chest Coolers  Water Coolers  Bottled Water Dispensers  Deep Freezers

32 Professional Electronics & Industrial Equipment (Rs. crores) +35% +18% Revenue growth 80 59 50 0 10 20 30 40 50 60 70 80 90 2003-042004-052005-06 (Rs. crores)

33 Professional Electronics & Industrial Equipment Representation in India for world-renowned professional electronic equipment manufacturers from USA, Europe, Japan such as Hitachi, Thales e-security, Panametrics & Jeol, amongst others Wide range of complex, hi-tech and large value equipment in –Medical Electronics –Material Testing Equipment and Systems –Data Communication Products and Systems –Test and Measuring Instruments –Analytical Instruments –Industrial Products and Systems Catering to Healthcare, Manufacturing, R&D, Quality Control, Petrochemicals, Banking etc

34 Professional Electronics & Industrial Equipment Business Model Import–distribution Business Representing renowned manufacturers around the world System Integrator Value-added Services Provider

35 Major National Accounts…

36 Some Prestigious projects executed Parliament House Rashtrapati Bhavan Infosys, Bangalore DLF Square, GurgaonIMAX Adlabs, Mumbai Hotel Grand Hyatt, Mumbai

37 Ritz Carlton Hotel, Malaysia Some International prestigious projects executed State Bank of Mauritius, Mauritius Al Mansoury Plaza, UAE

38 Product Exports Product Exports grew by a healthy 34% to Rs 63.11 crores in FY06 Blue Star has recently enlarged its range of products in the international markets Offers central airconditioning products apart from traditional cooling products These products, which compete with global brands, have been very well received in the market place

39 International Projects Joint Venture with Arab Malaysian Group in Malaysia for central airconditioning projects since 1993 Selective in bidding for international projects considering the domestic boom Bid for a few prestigious projects in the Middle East and Mauritius New branch being opened in Qatar

40 The Way Forward

41 Strategic Agenda Pursue profitable growth at a rate higher than market growth Remain focused on core businesses: - Airconditioning - Commercial Refrigeration specifically Cold Chain Infrastructure - Professional Electronics Maintain market leadership Continue to invest for future growth: - Capacity expansion - Technology and new product development - Brand building - Channel Development - Human Resource Development

42 Strategic Agenda Reward stakeholders including - Shareholders - Employees Fulfill Corporate Social Responsibilities Globalise the Blue Star brand

43 Strategic Challenges Value engineering and cost management initiatives to maintain gross margins in a competitive market facing inflationary cost pressures Several innovative programmes are in place, and the results are beginning to show up To restore capital turnover to 5.0 by watchful control of working capital Strict control of inventory and focus on cash collections Attracting and retaining talent Blue Star is one of the preferred employers in the engineering industry and Employee Engagement is a corporate driven programme

44 Central Airconditioning Systems Growth drivers - Favourable economic environment - Major investments in infrastructure and construction - Boom in IT/ITES, retail, entertainment and manufacturing sectors

45 Competitive Strengths - Blue Star is the undisputed market leader - Blue Star is also recognised as Experts - Comprehensive range of superior products and services - Large base of satisfied customers Outlook - Market expected to grow at 25% in FY07 - Blue Star is confident of outperforming the market growth rate Central Airconditioning Systems

46 Cooling Products - Room Airconditioners Growth Drivers - Favourable economic environment - Growth of small and medium enterprises - Affordability of airconditioners Competitive strengths - Focused on corporate and commercial segments - Innovative and specialised solutions and products such as mega split and hiper split ACs - Since demand for split ACs is growing more than window ACs, Blue Star is well positioned - Reputation as ‘airconditioners from experts’

47 Cooling Products - Room Airconditioners Outlook - Market of corporate and commercial room airconditioners expected to grow at 20% in FY 07 - Blue Star plans to grow in line with the market growth rate

48 Growth Drivers - Government’s focus on building cold chain infrastructure - Emergence of super markets - Boom in fast food chains - Horticulture, sea food and processed food exports on the rise Competitive Strengths - Blue Star is the only branded player offering the entire range - Six decades of experience - Know-how of preservation and life extension for perishables - Large installed base Cooling Products – Refrigeration Products

49 Outlook - Market is expected to open up in a big way; (FDI in retail?) - In FY07 market growth estimated at 20% - Blue Star will outperform the market growth rate Cooling Products – Refrigeration Products

50 Professional Electronics & Industrial Equipment Growth Drivers - Favourable economic environment - Increased investments in R&D and quality control, manufacturing & service sectors specifically steel, petroleum, healthcare, banking and communication - Customers’ willingness to invest in sophisticated high-end equipment

51 Competitive Strengths - Over five decades of experience in this niche business - Strategic partnerships with renowned global manufacturers - Value added solutions - Technical expertise to handle servicing of sophisticated imported equipment Professional Electronics & Industrial Equipment

52 Outlook - Market growth will vary depending on the product category - Blue Star well positioned to grow at a rate higher than the market Professional Electronics & Industrial Equipment

53 In Conclusion Market is witnessing unprecedented sustained growth Blue Star is well placed to leverage the available opportunities The Company is poised to outperform the market growth

54 Thank You

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