Introduction to Blue Star Ltd.

- Good afternoon, everyone. Thank you for joining us today.

- Today, we will be presenting on Blue Star Ltd., a company with over 80 years of excellence in air
conditioning and commercial refrigeration.

- Founded by Mohan T. Advani in 1943, Blue Star has become a significant player in the HVAC&R
(Heating, Ventilation, Air Conditioning, and Refrigeration) industry.

- The company was incorporated in 1943 and has since diversified into various segments, including
Mechanical, Electrical, Plumbing, and Fire-fighting (MEP).

- It was listed on the stock exchange in 1969, and today, Blue Star has earned a reputation for its
innovative solutions and reliable customer service.

Growth and Global Presence

- Blue Star has experienced significant growth, with revenue increasing by 85% over the past six
years.

- The company exports to 20 countries, ranging from North America to East Asia, and has an
extensive presence in 900 towns in India supported by 5,000 delivery partners and 10,000 retail
outlets.

- With seven world-class manufacturing plants in India, including new plants in Sri City and Wada,
Blue Star continues to expand its production capacity for future growth.

Leadership and Innovation

- Currently, the company is led by Vir S. Advani, who serves as Chairman and Managing Director.

- Blue Star has heavily invested in R&D, with a recent investment of ₹143.47 crores dedicated to
expanding its product portfolio and enhancing manufacturing processes.

- The company is embracing cutting-edge technologies such as automation, robotics, and

digitalization to improve efficiency in its manufacturing plants.

Market Segments and Business Model

- Blue Star operates across two main segments: B2B and B2C.

- The B2B segment focuses on large industrial air conditioning systems, MEP solutions, and
electromechanical projects.

- The B2C segment focuses on residential air conditioners and refrigeration products.

- The company's revenue is split between product sales and services, including installation,
maintenance, and after-sales services.
Financial Performance

- In terms of financial health, the Return on Equity (ROE) has increased by 23% over the past 5 years.

*Return on Assets (ROA), which measures how efficiently the company uses its assets to generate
profit, also saw a significant drop during the pandemic due to lower sales but has since recovered in
**FY2022. A **notable increase in FY2023* was driven by higher *net income* from exceptional
items.

- Net Profit has grown by 180% during the same period, driven by increased demand as people
returned to offices and schools post-COVID.

- For FY2024, Blue Star's net profit grew by 45%, and its Interest Coverage Ratio improved to 15.1
times compared to 10.8 times the previous year. The increase in profits is partly due to improved
operating profits and lower finance costs.

Financial leverage* has fluctuated in recent years, reflecting the company’s strategy around
managing debt. During the initial years, financial leverage increased as the company took on more
debt to fund expansion【4†source】.

- However, in *FY2024, financial leverage **decreased, largely because Blue Star raised funds
through **Qualified Institutional Placement (QIP)*, which allowed the company to reduce
debt【4†source】.

- The company's *debt ratio* also improved significantly after the QIP, as Blue Star used the funds to
pay off liabilities and improve its *debt-to-equity ratio*, making it financially more stable.

- This financial restructuring has not only reduced the debt burden but also strengthened the
company’s balance sheet, preparing it for future growth.

Strategic Initiatives

- To combat market risks, Blue Star is focusing on:

- Geographic expansion by appointing new distributors in countries like Sri Lanka, Senegal, Uganda,
and Oman.

- Tackling seasonality risks in the unitary products segment by continuously improving its
procurement processes and expanding its portfolio.

- Mitigating sourcing risks by diversifying procurement sources and considering backward

integration strategies.

- Managing currency risks by leveraging a Foreign Exchange Risk Management Policy.

Key Competitors and Market Position

- In the Indian market, Voltas, Blue Star, and Amber Enterprises are key players.

- Blue Star distinguishes itself through:

 - A strong presence in both the B2B and B2C segments.

- A commitment to R&D, ensuring innovative products and services.

- In-house production of many of its products, giving it better control over the supply chain.

- Unlike Voltas, which outsources a significant portion of its production, Blue Star takes pride in
maintaining control over its manufacturing processes.

Future Outlook

- Blue Star continues to innovate by diversifying its product portfolio and expanding into new
geographical markets.

- There is also a strong focus on digitalization and automation, which will not only improve
productivity but also reduce costs, ultimately increasing free cash flows and ensuring better project
delivery.

- Government initiatives, like the PLI Scheme, are expected to boost Blue Star’s investment in
component manufacturing like heat exchangers, further contributing to its growth.

Risk Management

- Blue Star actively mitigates several risks:

- It uses Business Continuity Management Systems to handle disruptions like global events or
natural disasters.

- The company also places a strong emphasis on cybersecurity, with cyber-insurance policies in
place.

- In response to environmental risks, Blue Star promotes energy-efficient products and complies
with environmental regulations.

Call to Action for Investors

- In conclusion, Blue Star is a well-established company with strong financials, growing demand for its
products, and a firm commitment to innovation and expansion.

- With earnings per share up by 43% over the last five years, the company is clearly on a growth
trajectory.

- Recent efforts to reduce debt levels and enhance profitability through strategic investments and
innovation make it a solid investment opportunity.

- I strongly encourage investors to consider buying Blue Star shares, as the company is poised to
continue its growth in both domestic and international markets.

- Thank you for your time, and we welcome any questions you may have.