Ladies & Gentlemen,

It is a pleasure to welcome you to the 67th Annual General Meeting of your Company.

The National Scene

More than a year after the formation of the NDA Government, India is making slow progress on the ambitious national agenda outlined by the Prime Minister, Mr. Narendra Modi. There are a number of encouraging signs such as moderating inflation aided by lower oil and and commodity prices. These developments are helping the balance of payments, supporting the exchange rate of the rupee and permitting the Reserve Bank of India to make modest cuts in the lending rate. Foreign investment inflows, both FII and FDI, are picking up and India's Foreign Exchange Reserves have reached record levels.

One of the annual uncertainties is the monsoon, which has major implications for agriculture and the lives of the huge rural population comprising 55% of India's total. Weather forecasts, which are notoriously unreliable, were not very optimistic this year and predicted that overall rainfall would be significantly below normal. With almost half the rainy season over, it is reassuring to learn that actual rainfall is satisfactory.

But GDP growth is not yet showing much sign of revival and capital investment is still lethargic due to resource constraints in the Government, banking and corporate sectors. What is particularly worrying is the political deadlock that is paralysing the functioning of Parliament and preventing key pending legislation from being passed.

Corporate Performance

The Annual Report for 2014-2015 gives a comprehensive financial picture of last year's results. As you would have seen, improved performance enabled the directors to propose a higher equity dividend of Rs 5 per share versus Rs 4 paid last year.

The Board also met this morning to consider and approve the unaudited financial results for the first quarter of the current year. Income from Operations grew by 8% to Rs 909 crores, while Profit After Tax at Rs 39 crores showed an increase of 26%. This performance is in line with our expectations.

With so much volatility and uncertainty in the external environment, it is difficult to forecast Blue Star's position at the end of FY 2016. On balance, I remain cautiously positive about the outlook for the Company's business growth and profit this year.

The Leadership Challenge

A great deal of debate and analysis is taking place nationwide regarding the diagnosis and treatment of the many problems confronting the country. It is not my intention to offer another set of prescriptions to our Prime Minister. He understands the aspirations of the common man and the need to respond aggressively with suitable plans that create jobs and new economic opportunities, reduce oppressive controls and red tape, improve basic education, sanitation, health care, and build vital infrastructure. The big problems are strong political resistance and powerful vested interests that are sabotaging progress. Leadership in a democracy is a difficult job because decisions cannot simply be rammed through. So resolution of these differences requires mature leadership with political give and take in order to find the way forward.

It is interesting to compare and contrast the leadership challenges at the national level with those faced by corporate leaders who must also drive change in their companies in order to succeed in competitive markets. Both sets of leaders need to have a vision which they must "sell" to their "customers." Of course, the sheer scale of the job of the Prime Minister is much bigger than that of a corporate CEO. And unlike an elected political leader, a CEO has greater freedom to implement his plans without facing political or parliamentary roadblocks. Corporate "opposition" exists mainly in the form of external competitors and sometimes, trade unions.

So the job of a Corporate CEO is less onerous than that of a national leader and both require different skills. Regardless of who they are, all leaders need more than a good vision and the ability to sell it. A leader must also have a strategic plan to attain his vision. This is particularly difficult to achieve in a political democracy. Sometimes there may be an important goal that is in the broader national/corporate interest but it could involve some sacrifice or have unpleasant consequences for a particular group. In such a situation, a good leader has the courage, integrity and decisiveness to bite the bullet, go ahead and deal with the fallout in the best available way. Stakeholders respect a leader who is open and fair in his decisions. A 'do nothing' or devious approach does not go down well with them.

History offers a number of examples of great national leaders. Margaret Thatcher of Britain, Lee Quan Yew of Singapore and Ronald Reagan of USA transformed their countries in the second half of the 20th century. I have not included Mahatma Gandhi in my list only because he was not an elected Government leader. There can be no doubt about his visionary leadership which won over the entire country in spite of his not having any official position.

The Corporate world too is replete with legendary leaders. Jack Welch built GE into a great corporate giant. IBM under Lou Gerstner and Chrysler Corporation under Lee Iacocca were difficult turnarounds of once-great companies that had declined to the verge of bankruptcy. To quote Jack Welch, "A leader's job is to look into the future and see the organization not as it is, but as it should be."

I will conclude with my customary thanks to all our stakeholders – customers, shareholders, employees, directors and business associates. Your active participation, confidence and support to Blue Star is important for our continuing progress.

ASHOK M. ADVANI

July 28, 2015
Mumbai