Blue Star is India's largest central airconditioning company with an annual turnover of Rs 2700 crores, a network of 29 offices, 7 modern

manufacturing facilities, over 1600 dealers and around 2800 employees. It fulfils the airconditioning needs of a large number of corporate, commercial and residential customers and has also established leadership in the field of commercial refrigeration equipment ranging from water coolers to cold storages. The Company also offers comprehensive Electrical Contracting and Plumbing & Fire Fighting Services. Blue Star's other businesses include marketing and maintenance of hi-tech professional electronic and industrial products. Blue Star has business alliances with world renowned technology leaders such as Rheem Mfg Co, USA; Hitachi, Japan; Eaton - Williams, UK; Thales e-Security Ltd., UK; Jeol, Japan and many others, to offer superior products and solutions to customers. The Company has manufacturing facilities at Thane, Dadra, Bharuch, Himachal, Wada and Ahmedabad which use state-of-the-art manufacturing equipment to ensure that the products have consistent quality and reliability. Blue Star primarily focuses on the corporate and commercial markets. These include institutional, industrial and government organizations as well as commercial establishments such as showrooms, restaurants, banks, hospitals, theatres, shopping malls and boutiques. The Company has started pursuing the residential segment with its wide range of sleek and contemporary Room ACs. In accordance with the nature of products and markets, business drivers, and competitive positioning, the lines of business of Blue Star can be segmented as follows: Electro Mechanical Projects And Packaged Airconditioning Systems This comprises central and packaged airconditioning as well as electrical projects and plumbing & fire fighting projects. The central and packaged airconditioning business involves design, engineering, manufacturing, installation, commissioning and support of large central airconditioning plants, packaged airconditioners and ducted split airconditioners. In addition to this, Blue Star promotes after-sales service as a business, by offering several value added services in the areas of upgrades and enhancements, air management, water management, energy management and LEED consultancy for Green Buildings. The Company also executes building electrification contracting projects and offers expertise in the areas of electrical design and engineering, supply and installation of entire power systems as well as liasioning, approvals, commissioning and asset management. Blue Star has extended its mechanical contracting offering to include plumbing and fire fighting projects. With this, Blue Star has developed capabilities for executing integrated MEP (Mechanical, Electrical and Plumbing) projects. Cooling Products Blue Star offers a wide range of contemporary window and split airconditioners. The Company also manufactures and markets a comprehensive range of commercial refrigeration products and services that cater to the industrial, commercial and hospitality sectors. These include water coolers, bottled water dispensers, deep freezers, cold storages, bottle coolers, ice cube machines and supermarket refrigeration products. Professional Electronics And Industrial Systems For over five decades, the Electronics Division has been the exclusive distributor in India for many internationally renowned manufacturers of hitech professional electronic equipment and services, as well as industrial products and systems. The Company has carved out profitable niches for itself in most of the specialized markets it operates in, such as such as Industrial Projects, Industrial Products and Systems, Material Testing Equipment and Systems (Destructive / Non Destructive), Data Communication Products & Services, Testing and Measuring Instruments, Analytical Instruments and Medical Diagnostic Equipment.

History
Blue Star was founded in 1943, by Mohan T Advani, an entrepreneur of exemplary vision and drive. The Company began as a modest 3-member team engaged in reconditioning of airconditioners and refrigerators. Within three years, the Company secured the agency for US-based Melchoir Armstrong Dessau's airconditioning equipment. Shortly after, the Company was selected by Worthington, the US leader in airconditioning, as its India based partner - these were the first of numerous foreign associations to follow. An expanding Blue Star then ventured into the manufacture of ice candy machines and bottle coolers and also began the design and execution of central airconditioning projects. Then came the manufacture of water coolers. In 1949, the proprietorship company set its sights on bigger expansion, took on shareholders and became Blue Star Engineering Company Private Limited. Ever since, there has been a constant and profitable growth. Blue Star diversified and took up agencies for Material Testing Machines and Business Machines. The export arena beckoned and the Company began exporting water coolers to Dubai, where in fact, 'Blue Star' soon became the generic name for water coolers. The sixties and the early seventies witnessed Blue Star continuing to expand and thrive. A team of dedicated professionals aided Mohan T Advani in ever furthering his vision of a profitable company dedicated to its ideals

of professionalism and success. Employee strength crossed the 1000 mark and the company went public in 1969 to become Blue Star Limited, as it continues to be called today. In 1970, the Company took up the all-India distributorship of Hewlett-Packard products, a business relationship which continues today and has grown ever stronger through the years. As the Company's reputation for delivering the goods in the most challenging of airconditioning projects grew steadily, the early seventies saw a series of prestigious projects being entrusted to Blue Star - skyscrapers such as Air India Building, Express Towers, the Oberoi Hotel in Mumbai, apart from several others. Revenues touched the Rs. 10-crore mark and staff strength doubled to exceed 2000. As its Indian presence reached greater heights, the Company began building determinedly upon its existing overseas presence, Blue Star set up a joint venture with Al Shirawi in Dubai and went on to execute some outstanding projects in Syria, Iraq and Saudi Arabia. To complement its airconditioning projects and undertake turnkey industrial projects, an Industrial Division was set up in 1978. Always moving with the times and ever on the lookout for business possibilities, Blue Star next set up a software export unit at Seepz, Mumbai in 1983. Then came associations with more global leaders - a collaboration with York International of USA for central airconditioning equipment and joint ventures with Motorola and Yokogawa. In 1984, Ashok M Advani & Suneel M Advani, the sons of Mohan T Advani, took over the reins of the Company, after spending nearly 15 years within the Company steadily climbing up the ladder. A renewed thrust was placed on the company's core business areas - airconditioning and refrigeration and the distribution of professional electronics equipment - and the company emerged a market leader in these focus areas. The nineties witnessed India entering an era of economic liberalisation and an upsurge in competition as the dynamic business scenario attracted the world's most forward-looking corporations. It was time to re-look at existing business competencies, re-engineer those that were obsolete and forge ahead in acquiring new business competencies. Blue Star was more than equal to the challenge and expansion continued unabated. In keeping with this focus, an advanced manufacturing facility was set up at Dadra in 1997, in technical collaboration with Rheem, USA, to enhance manufacturing competency. Today it bears the distinction of being regarded as the best such plant India-wide. The dealer network was strengthened and expanded to bring products within easy reach of every customer. With the advent of the much awaited new millennium in 2000, the action continued. The software unit was spun off into a separate company, Blue Star Infotech Ltd., the export of airconditioning products from the Dadra factory began and contract manufacturing for local and foreign brands commenced. A new Corporate Vision was developed - "To deliver a world-class customer experience". Every employee is determined to follow this vision and keep their organization a competitive and forward-looking one. Blue Star crossed the Rs. 500 crore milestone in 2000 and the Rs. 600 crore milestone in 2002-03. With the boom in construction activity and increased infrastructure investments, the Company leveraged its leadership position to grow aggressively. In the following three years, the Company nearly doubled its turnover, clocking Rs 1178 crores in 2005-06. Even more than size, Blue Star enjoys an enviable reputation as an ethical corporation, ever mindful of its obligations towards customers, shareholders, dealers, business partners, employees and the environment in which it operates. In 2008, the Company ventured into the electrical contracting business, offering customers mechanical, electrical and plumbing (MEP) services. From a logistical and technological perspective, this move was facilitated by the company's acquisition of Bangalore-based Naseer Electricals Private Limited. In 2010, the company strengthened its electro-mechanical projects business through the strategic acquisition of D S Gupta Construction Private Limited, the largest independent plumbing and fire fighting contracting company in India. This move fortified Blue Star's position, placing it amongst the country's leading companies in the MEP field. In 2011, the Company forayed into the residential air-conditioning segment. The Company was witnessing a significant demand from the residential segment given the higher disposable income and the growing middle class who are upwardly mobile and seek comfort. Despite the fact that

Blue Star room airconditioners were not available in retail channels, a significant amount of Blue Star's sales came from the residential segment, mainly from consumers who believe that a specialist is better than a generalist and a conviction that if Blue Star is a leader in cooling large spaces, its room airconditioners must be good. Considering the above, the Company thought it prudent to aggressively target the residential segment and leverage on the expertise in cooling that Blue Star has built over the years. The Company significantly altered its marketing mix to focus on the residential segment. On the product front, it launched a new contemporary and stylish range of split airconditioners to appeal to home consumers

Air condition industry

AllAll

India Air conditioning & Refrigeration Association popularly known as "AIACRA" was established in the year 1961. The Association is a dynamic service organization playing a pivotal role at various levels for the development and growth of Air-Conditioning and Refrigeration Industry and Trade in India. In order to meet the demands of the entire trade, commerce and industry, and to render services to the constituents spread throughout the country, the association was brought on the line of horizontal coverage consisting of five zonal associations to cater to the regional needs of its members. The zonal associations of AIACRA are: RATA Mumbai, NIRATA Delhi, RATA SI Chennai, EIARA Kolkata, and TCRDA Secunderabad. AIACRA has Patron Members, Sustaining Members, Associate Members, and Special Associate Members on behalf of various companies and firms in the HVAC&R sector. The association presently consists of approximately 1000 members, representing an entire cross section of the industry and trade. The main objective set by the association is to function as a central coordinating body to formulate and adopt a common policy for collective action to advance the interest of this industry and its members. India Air conditioning & Refrigeration
Association popularly known as "AIACRA" was established in the year 1961. The Association is a dynamic service organization playing a pivotal role at various levels for the development and growth of Air-Conditioning and Refrigeration Industry and Trade in India. In order to meet the demands of the entire trade, commerce and industry, and to render services to the constituents spread throughout the country, the association was brought on the line of horizontal coverage consisting of five zonal associations to cater to the regional needs of its members. The zonal associations of AIACRA are: RATA Mumbai, NIRATA Delhi, RATA SI Chennai, EIARA Kolkata, and TCRDA Secunderabad. AIACRA has Patron Members, Sustaining Members, Associate Members, and Special Associate Members on behalf of various companies and firms in the HVAC&R sector. The association presently consists of approximately 1000 members, representing an entire cross section of the industry and trade. The main objective set by the association is to function as a central coordinating body to formulate and adopt a commo Aims n objective

The Main Objectives of the Association are as follows: Arranges General Body Meeting from time to time in which interim reports of its activities are presented and a detailed review of the industry and trade as a whole is made. The Association operates through expert panels representing various sectors of the Industry. The recommendations of such panels are forwarded to the General Body for final approval and for representing to the Authorities. The Association regularly arranges Seminars, Workshops, interaction with Ministers and Senior Government officials of both central and state governments on issues connected with Air conditioning and Refrigeration Industry and Trades. It arranges and provides facilities for exhibitions, demonstration and lectures from time to time to popularize the trends and development of the Industry. After seeking views and opinions and after pooling knowledge and experiences of various constituents, the Association represents to the Government on matters affecting or likely to affect the Industry and Trade. The Association regularly circulates to the member's News items connected with AC&R Industry and Government Notification and Trade Notices relating to AC&R Industry. The Association brings out a directory of members in which detailed information about each member is given. This publication is widely circulated amongst Industry Associations and Chambers, Government Departments, users of AC&R, Indian consulates abroad and Foreign Missions in India and is displayed and sold in various Exhibitions and Trade Fairs held in INDIA and OVERSEAS. The Association publishes a News Letter in which important and major activities of AIACRA and Zonal Associations are highlighted. Besides, enquires and other information and data on AC&R Industry and Trade is also published. The Association regularly organizes delegations to visit Exhibitions and Trade Fairs in foreign countries like China, Thailand, Germany, Korea, etc. AIACRA brings together the opinions and views of its diverse membership into an effective public voice

Market size of aiacra

The Air-conditioning and Refrigeration Industry began its real journey towards self sufficiency only in the late fifties starting with only a few assembly units. The Industry, in just four decades of post-independence, growth achieved some notable milestones. Pre independence the country's needs were met by imports as a large number of Domestic Refrigerators & Air-conditioners used to be brought into the country by persons of Indian origin returning back or on a visit who used to bring the appliances along with their personal effects in terms of the government policies in vogue. Interestingly the real spurt in indigenization came only with the foreign exchange crisis in late fifties when the Air conditioning & Refrigeration Industry in India started producing Appliances such as Air-conditioners, Refrigerators, Water Coolers, Bottle Coolers, Deep Freezers, Compressors, and other Air-conditioning & Refrigeration Equipments, Components and Controls following this. Today after nearly six decades of phased indigenization the size of the Indian Market for airconditioning and refrigeration has grown in leaps and bounds as revealed by the following figures:

FY 2008 ~ 09

Rs/cr

AC&R industry market size Airconditioning systems Commercial refrigeration AC&R servicing
Air conditioning Systems: Room Air-conditioners : 5,100 Central Plants : 3,200 Duct/package : 1,800 VRF systems : 400 Precision/Telecom : 500

14,200 (US$ 3.0 B) 11,000 2,000 1,200

Air conditioning Systems Growth during last 5 years : over 20% Present penetration level is barely 3% Expected growth during medium term (3~5 years) : 15~20% Segment-wise growth rate trend: Room air-conditioners : 20% VRF systems : 40% Chillers : 10% Ducted/package : 10% Others (precision/telecom) : 25~30% Commercial Refrigeration Sector Growth during last 5 years : ~10% Expected growth during medium term (3~5 years) : 10~12% Segment-wise growth rate trend : Water Dispensers : 20% Storage Water Coolers : 05% Display/storage equipment : 15% The year 2008-2009 was a remarkably good year for the Indian Economy with a GDP growth of over 8.5% with superb future prospects for consumer durables demand. No wonder the air conditioning and refrigeration industry had also recorded a fabulous growth with unprecedented increase in sales turnover and volumes of locally manufactured goods. In India the Rotary compressors dominate the market with 85% share. The industry achieved phenomenal growth in spite of many hurdles and heavy burden of taxation and VAT etc. imposed by the state and central governments.

Achivements
In the tenure of its existence, the Association has earned some notable achievements to its credit as follows: It has in the past been representing to the Government against the difficulties relating to excise, customs, imports etc. and has taken active interest in getting these redressed from the authorities. It is due to the vigorous efforts made by the Association that Government has been reducing the excise, and customs duties on Air conditioning and Refrigeration Equipments, Appliances and components and parts. It has helped in manufacturing equipments and component that were never produced in the country before. By a forceful plea, it got Industrial Refrigeration included among 59 Priority Industries. It has opened avenues for the development of export of the Industry's products and helped in the finalization of various standards of Air conditioning & Refrigeration Equipment and Appliances under the aegis of Bureau of Indian Standards. It has got sanction of monetary assistance and other subsidies for export of this industry's products. It was largely due to the efforts of the Association that the Ministry of Industrial Development & Company Affairs decided to set up a panel for Air conditioning & Refrigeration Industry, which was instrumental in

rendering useful service to its cause. The Association has been successful in convincing the Government that Air conditioning & Refrigeration is a necessity and plays a vital role in the national economy. This has resulted in providing substantial excise relief to the Industry. Starting from a humble beginning, the Association has developed into a well coordinated and disciplined organization to link organically this capital-intensive sector of the economy with other branches of Engineering Industries, the Government and growing number of constituents.

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Whirlpool Blue Star Symphony IFB Industries Hitachi Home Lloyd Electric Fedders Lloyd Value Ind

Last Price
258.00 177.25 392.00 92.50 130.00 48.45 48.00 10.73

% Chg
1.26 3.96 1.12 1.98 1.44 3.42 0.63 0.56

52 wk High
272.15 253.40 1,250.00 124.00 174.00 55.20 73.65 19.10

52 wk Low
141.80 150.55 173.00 58.05 93.30 36.05 41.60 10.10

Market Cap (Rs. cr)

3,273.29 1,594.12 1,371.16 381.84 298.48 150.20 147.69 42.05

policy for collective action to advance the interest of this industry and its members.

Blue str b/s

Balance Sheet of Blue Star Mar '12 Mar '11 ------------------- in Rs. Cr. ------------------Mar '10 Mar '09

12 mths

12 mths

12 mths

12 mths

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans 17.99 17.99 0.00 0.00 455.91 0.00 473.90 115.23 227.98 17.99 17.99 0.00 0.00 555.51 0.00 573.50 204.59 213.79 17.99 17.99 0.00 0.00 473.69 0.00 491.68 8.93 0.00 17.99 17.99 0.00 0.00 349.50 0.00 367.49 22.52 1.08

Total Debt Total Liabilities

343.21 817.11 Mar '12

418.38 991.88 Mar '11

8.93 500.61 Mar '10

23.60 391.09 Mar '09

12 mths

12 mths

12 mths

12 mths

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 427.12 208.79 218.33 20.70 121.36 437.16 695.86 50.81 1,183.83 506.34 0.07 1,690.24 0.00 1,180.26 53.26 1,233.52 456.72 0.00 817.11 374.05 180.98 193.07 28.47 101.84 400.57 778.59 46.49 1,225.65 618.65 0.00 1,844.30 0.00 1,073.54 102.27 1,175.81 668.49 0.00 991.87 351.88 154.22 197.66 1.58 4.20 258.01 628.21 13.22 899.44 503.85 0.00 1,403.29 0.00 990.09 116.04 1,106.13 297.16 0.00 500.60 332.87 144.92 187.95 24.79 4.38 207.30 643.08 4.80 855.18 292.68 0.85 1,148.71 0.00 672.97 302.37 975.34 173.37 0.60 391.09

Contingent Liabilities Book Value (Rs)

177.87 52.69

171.17 63.77

141.27 54.67

47.70 40.86

P&l
Profit & Loss account of Blue Star Mar '12 Mar '11 ------------------- in Rs. Cr. ------------------Mar '10 Mar '09

12 mths

12 mths

12 mths

12 mths

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 1,151.91 10.01 206.92 1,026.45 262.36 0.22 0.00 2,657.87 Mar '12 2,362.84 6.87 206.67 2.39 193.16 14.56 0.00 2,786.49 Mar '11 1,906.87 6.00 185.43 2.37 159.30 12.69 0.00 2,272.66 Mar '10 1,915.15 7.43 182.73 2.31 107.69 38.42 0.00 2,253.73 Mar '09 2,728.25 27.96 2,700.29 -30.00 -52.54 2,617.75 2,886.10 29.19 2,856.91 10.59 177.76 3,045.26 2,557.56 32.59 2,524.97 25.31 24.84 2,575.12 2,552.29 0.00 2,552.29 4.75 -34.58 2,522.46

12 mths

12 mths

12 mths

12 mths

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items)

-10.12 -40.12 33.59 -73.71 31.45 0.00 -105.16 16.71 -88.45

248.18 258.77 24.39 234.38 31.71 0.00 202.67 24.35 227.02

277.15 302.46 8.45 294.01 34.73 0.00 259.28 17.29 276.57

263.98 268.73 13.55 255.18 25.88 0.00 229.30 8.95 238.25

Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

0.70 -89.15 1,505.95 0.00 8.99 1.46

72.00 155.00 423.65 0.00 62.96 10.21

65.08 211.49 365.80 0.00 71.95 11.95

57.93 180.29 338.59 0.00 62.96 10.70

899.36 -9.91 50.00 52.69

899.36 17.23 350.00 63.77

899.36 23.52 400.00 54.67

899.36 20.05 350.00 40.86

Cash flw
Cash Flow of Blue Star Mar '12 ------------------- in Rs. Cr. ------------------Mar '11 Mar '10 Mar '09

12 mths

12 mths

12 mths

12 mths

Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

-88.45 260.41

227.00 -74.94

276.62 115.47

238.22 169.72

-68.16

-143.02

-11.20

-80.75

-187.64 4.60 46.20 50.81

244.46 26.50 20.43 46.93

-100.47 3.81 9.20 13.00

-86.00 2.98 2.67 5.65

Key Financial Ratios of Blue Star

Mar '12

Mar '11

Mar '10

Mar '09

Investment Valuation Ratios Face Value Dividend Per Share 2.00 1.00 2.00 7.00 2.00 8.00 2.00 7.00

Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio

-1.13 300.24 50.40 73.97

27.59 317.66 61.47 73.97

30.82 280.75 52.38 73.97

29.35 283.79 38.46 73.97

-0.37 -1.53 -1.53 -1.35 -1.35 -3.29 -3.29 -4.15 -18.81 -14.40 52.69 52.69 -7.16

8.68 7.55 7.57 5.60 5.60 5.40 5.40 22.71 27.02 22.48 63.77 63.77 39.28

10.97 9.56 9.60 8.41 8.41 8.34 8.34 50.35 43.01 36.31 54.67 54.67 51.27

10.34 9.28 9.32 7.99 7.99 7.02 7.02 64.09 49.13 48.83 40.79 40.79 68.00

1.00 1.02 0.72 --

1.03 1.22 0.73 --

1.25 1.03 0.02 --

1.13 0.97 0.06 --

-1.24 0.72 -0.08 -0.72

11.56 0.73 10.54 8.66

64.92 0.02 33.93 30.12

18.49 0.06 20.40 16.21

6.69 3.66 6.69

7.20 4.06 7.20

9.91 3.97 9.91

12.33 4.53 12.33

Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio

6.98 3.48 2.99

8.16 2.95 8.16

7.70 5.30 7.70

8.04 6.79 8.04

Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

37.22 21.16 60.89

44.84 23.13 84.24

30.72 12.91 42.37

36.16 8.23 24.45

42.65 34.18 3.43 5.53

82.70 27.42 2.57 5.61

75.52 28.99 3.29 5.12

75.03 49.24 2.64 9.16

------

47.20 39.19 43.25 54.45 2.60

39.67 34.07 53.02 60.67 0.04

40.85 35.72 58.89 64.08 0.12

Mar '12

Mar '11

Mar '10

Mar '09

Earnings Per Share Book Value

-9.91 52.69

17.23 63.77

23.52 54.67

20.05 40.86

Accounting Policy
(a) Presentation and disclosure of financial statements During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. (b) Use of estimates The preparation of financial statements in conformity with generally

Year : M

accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. (c) Tangible fixed assets and Capital WIP Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for their intended use are also included in the cost of the assets to the extent these relate to the period up to the date such assets are ready to be put to use. Expenditure (including interest) incurred during the construction period is included in Capital W.I.P. and the same is allocated to respective fixed assets on completion of the construction. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. (d) Depreciation on tangible fixed assets Depreciation is charged on all assets at rates applicable under Schedule XIV of Companies Act, 1956, on written down value of assets. Cost of leasehold land is amortised over the period of lease. (e) Impairment The carrying amounts of assets are reviewed at each balance sheet date to assess if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. (f) Intangible assets Intangible assets acquired seperately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Research and Development Cost: Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the recognition criteria are met. Development expenditure capitalised is amortised over the period of expected future sales from the related project not exceeding future sales.

Amortisation of Intangible fixed assets: - Softwares are amortised on written down value of assets effectively over a period 6 years. - Technical knowhow are amortised on straight line basis over a period of 6 years. (g) Leases Where the Company is the lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. (h) Government grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with capital subsidy received from the government are credited to capital reserve and treated as part of the shareholders'' funds. (i) Investments All investments intended to be held for more than one year from the date of the purchase are classified as Long term investments. Long-term investments are carried at cost. A provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. (j) Inventories Inventories are valued as follows: (i) Raw materials, stores and components are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis. (ii) Contract Work-in-Progress is stated at cost till such time as the outcome of the project cannot be ascertained reliably. (iii) Work-In-Progress and Finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis. (iv) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and

estimated costs necessary to make the sale. (k) Revenue Recognition (i) Revenue from long - term contracts, where the outcome can be estimated reliably, is recognized under the percentage of completion method by reference to the stage of completion of the contract activity. The stage of completion is measured by calculating the proportion that costs incurred to date bear to the estimated total costs of a contract. The total costs of contracts are estimated based on technical and other estimates. When the current estimate of total costs and revenue is a loss, provision is made for the entire loss on the contract irrespective of the amount of work done. (ii) Contract revenue earned in excess of billing has been reflected under Other Current Assets and billing in excess of contract revenue is reflected under Current Liabilities in the balance sheet. (iii) Annual Maintenance contracts: Revenues from annual maintenance contracts are recognised pro-rata over the period of the contract as and when services are rendered. (iv) Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which is generally on dispatch of goods. The company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year. (v) Commission income is recognised as and when the terms of the contracts are fulfilled. (vi) Claims recoverable are accrued only to the extent admitted by the parties. (vii) Export benefits are accrued only after the claims are lodged with the appropriate authorities, due to uncertainty involved in collecting necessary support documents from customers, banks etc. (viii) Dividend income is recognised when the right to receive dividend is established. (ix) Interest income is recognised on accrual basis. (l) Foreign Exchange Transactions (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are restated at the exchange rate prevailing on the balance sheet date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange difference Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise. (iv) Forward Exchange Contracts not intended for trading or speculation purposes The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. (m) Retirement and other Employee Benefits (i) Defined Contribution Plan The Company''s liability towards Excluded Employee''s Provident Fund and Superannuation scheme administered through the Trusts maintained by the Company, are considered as Defined Contribution Plans.The Company''s contributions paid/payable towards these defined contribution plans are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. There are no other obligations other than the contributions payable to the Trusts. (ii) Defined Benefit Plan Provident Fund: In respect of certain employees covered by the Employee''s Provident fund, the contribution towards shortfall in interest rate payable as per statue and the earnings of the Provident Fund Trust is considered as Defined Benefit Plans and debited to Profit & loss account. Gratuity: Company''s liability towards gratuity is considered as a Defined Benefit Plan. The present value of the obligations towards Gratuity and additional gratuity are determined based on actuarial valuation using the projected unit credit method. The obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to market yields on Government securities at the balance sheet date. Actuarial gains and losses are recognized in full in the period in which they occur in the statement of profit and loss. (iii) Other long term benefits: Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the year end. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are taken to the statement of profit and loss

and are not deferred. The Company presents the entire leave as a Current Liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting period. (iv) Voluntary Retirement Scheme Payments made under the Voluntary Retirement Scheme are charged to the Profit and loss Account in the same year. (n) Excise Duty Excise duty on direct sales by the manufacturing units is reduced from the sales. Excise Duty liability on closing stock of finished goods lying at the manufacturing units is accounted based on the estimated duty payable as at the close of the year. (o) Taxes on Income Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situation where the Company has unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainity supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises deferred tax assets to the extent that it has become reasonably certain , as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available. (p) Segment Reporting Policies (i) Identification of segments : The Company''s operating businesses are organized and managed separately

according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. (ii) Allocation of common costs/ assets & liabilities: Common allocable costs/assets and liabilites are consistently allocated amongst the segments on appropriate basis. (iii) Unallocated items: Includes general corporate income and expense items which are not allocated to any business segment. (iv) Segment Policies: The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole. (q) Earning per share Basic & Diluted earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. (r) Provisions A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. (s) Contingent Liability A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliabily. The Company does not recognise a contingent liability but discloses its existence in the financial statements. (t) Cash and Cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. (u) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.