Financial Performance For The Quarter Ended December 31, 2011 (Q3FY12)

• Blue Star Limited reported Total Operating Income of Rs 589.69 crores for the quarter ended December 31, 2011, as compared to Rs 613.41 crores in Q3FY11, representing a decline of 4%.
• Operating loss (PBIDT excluding Other Income) for the quarter was Rs 3.14 crores compared to Operating profit of Rs 48.30 crores during the same period last year. Unprecedented input cost increases have impacted all business segments of the Company. As seen in the earlier quarters of this financial year, the Electro Mechanical Projects business has been particularly impacted largely due to the fixed price nature of the contracts. Projects in the Building Electricals segment, long gestation infrastructure projects and a few projects executed for Builders and General Contractors have been severely impacted.
• Financial expenses during the quarter increased from Rs 8.92 crores to Rs 22.10 crores. This was due to higher interest costs and unrealized foreign exchange losses on account of strengthening of the dollar.
• Consequently, there was a Net Loss of Rs 32.76 crores compared to Net Profit after tax of Rs 22.36 crores in Q3FY11.
• The Electro Mechanical Projects and Packaged Airconditioning business accounting for 63% of the total revenues in the quarter, declined by 15% while segment results fell sharply to a loss of Rs 15.18 crores as compared to a profit of Rs 29.13 crores during Q3FY11.
• Cooling Products revenue registered an increase of 28% in the quarter. However, Segment results declined by 30% to a profit of Rs 7.15 crores from Rs 10.22 crores, due to cost pressure.
• The revenues of the Professional Electronics and Industrial Systems business increased by 16%, while Segment results were flat at Rs 11.68 crores compared to Rs 11.66 crores in Q3FY11.
• Carry Forward Order Book as on December 31, 2011 increased to Rs 2160 crore compared to Rs 2072 crore as at December 31, 2010, representing a growth of 4%.

Financial Performance For The 9-Month Period Ended December 31, 2011

• For the 9-month period ended December 31, 2011, the Company reported Total Operating Income of Rs 1899.02 crores, as compared to Rs 1973 crores over the same period in the previous year, a decline of 4%. Other operating income declined from Rs 24.58 crores to Rs 13.79 crores, during the same period.
• Operating Profit (PBIDT excluding Other Income) declined by 77% from 174.36 crores to Rs 38.69 crores.
• There was a Net Loss of Rs 43.77 crores in the 9-month period as compared to a Net Profit of Rs 98.15 crores in the corresponding period last year.

Outlook

As communicated earlier, the Company expects the next few quarters to be challenging on account of the uncertain economic environment. Segment 1 margins will continue to be at current depressed levels, though improving progressively in FY13, on account of raw material prices holding at higher levels and the Company needing to execute its largely fixed-price order book. The Company will stay focused on reducing the capital employed in the segment and improving the quality of new orders with respect to margins and payment terms.

Margin pressure continues to be a concern in Segment 2 as well, and the Company has initiated several actions including price increases as well as value engineering and product cost reduction efforts that should yield results in early FY13. At an overall level, the Company will exercise prudent financial management measures in order to contain the decline in profitability.

The Company has been through several challenging periods in its seven-decade history and has been able to adapt well to the circumstances. The underlying demand for its products and services driven by increasing urbanization, rising incomes and infrastructure investment is robust and with its market leadership position, the Company is well placed to capture the tremendous opportunities in the near future. The Company will endeavour to return to the growth path in the next financial year, and is focused on returning to profitability on a stand-alone quarterly basis from Q1FY13.

For additional information, please contact: B Thiagarajan, President, Airconditioning & Refrigeration Products Group, Blue Star Limited, Bandbox House, 254D, Dr Annie Besant Road, Worli, Mumbai – 400 030 email: btn@bluestarindia.com Telephone: 09821078098.