ACKNOWLEDGEMENT

Nobody is born perfect in himself, it is some timely guidance, proper teachings

and blessings by the well wishers and seniors around us, who gives us perfection

and skills to make ourselves prepared for a walk on the path of success.

My project work, which is the first step of mine in the field of professionalism, has

been successfully accomplished only because of my timely support of well-

wishers

I would like to pay our sincere regards and thanks to those heroes, who directed

me at every step in our project work. We would like to express our thanks to Dr. D. D. CHATURVEDI (Director, RDIAS) for giving us such a wonderful

opportunity to widen the horizons of our knowledge.

With all my respect, I would like to thank DR. VIJAY KUMAR KHURANA (project

guide) for her moral support and timely guidance. On this moment I would like to

pay my sincere regards to her.

KSHITIJ KHATTAR

PROJECT FOR THE PARTIAL FULFILMENT OF BACHELOR OF BUSINESS ADMINISTRATION

SUBMITED BY: - PROJECT GUIDE: - KSHITIJ KHATTAR Dr. VIJAY KUMAR KHURANA 09810557788ROLL NO: - 1231591705

INTRODUCTION

We associate the word 'brand' with products, particularly those that are heavily advertised. But company names can be brand names too and this is very much the case in the services sector. Hotels such as Hilton, restaurants such as McDonald's, airlines such as Lufthansa, business schools, tend to have a number of things in common. “The first is that the name of the organization, the corporate name, is the same for the service that the customer buys, for the company employee’s work force and for the company the supplier sells to”. But product marketers are often changing the way they approach markers and emphasizing their corporate names as well as their product names. Com-panies, who, in the past relied on having names for themselves that were not used for products, are changing their approach.

Companies have still not rationalized the names selecting only the one umbrella name and sell them all from one location. This will mean that different service criterion will be important in selling one brand than in another.

This, in turn, implies in an era of rapid technological leapfrog that increasingly the COMPANY BRAND will become the main discriminator. That is, consumer’s choice of what they buy will depend rather less on an evaluation of the functional benefits to them of a product or service, rather more on their assessment of the people in the company behind it, their skills, attitude, behaviors, design, style, language, greenism, altruism, modes of communication, speed of response, and so on the whole company culture.

A company makes a corporate brand extension when it relies on its corporate name to launch a new product. A corporate brand extension clearly identifies an organization with the product, and so evokes different reactions from consumers than a product brand extension. A corporate brand may create associations in consumer’s minds that reflect the values, programs, and activities of the firm. For example SONY, LG, SAMSUNG, BPL, - are the corporate brands that convey organizational associations in addition to product offerings. These corporate-level associations may be only tangentially related to the company’s products.

Corporate brand is a construct distinct from that of identity.

The demarcation b/w corporate identity and corporate branding is becoming less distinct.

For many organizations the corporate brand is the primary instrument for achieving distinctiveness.

It is not a prerequisite, or necessarily desirable, for an organization to have a corporate brand.

Most of the companies are today in neck-to-neck race to earn coveted position as corporate brand image with main focus on customers. However, only a few companies are able to achieve that position with focus on internal & external stakeholder groups and networks.

Company as a brand main thrust is on the values of the entire corporate culture and subcultures, and the strategies adopted are multidisciplinary. For example: HLL focusing on its power brands as the product brands rather than the single umbrella corporate brand specially in FMCG segment.

Others in consumer durables segment focus mainly on the corporate brand image including the leaders as SAMSUNG, LG

So this project is also concern with that brand name. IN this project there is a comparison between two Brands i.e. BLUE STAR and VOLTAS.

OBJECTIVE OF THE STUDY

The objectives of the study are: -

1. To study the consumer awareness about Air conditioner market.

2. To study the place where a BLUE STAR Branch or service stations

should come up.

3. To analyze the interests and preferences of customers about

BLUE STAR products in relation with other company’s products.

EXECUTIVE SUMMARY

In today’s business scenario, it is very much imperative that a good management

professional must be well versed with practical application of theories and

principle of management, learned during management course pursued by

summer training.

The project gives the needed beneficial practical knowledge and helped the

management professional in understanding the nature of markets, people and

organizations.

This project report is made on the basis of research conducted through

questionnaire and personal interview method.

In the beginning of the project report, the introduction is given about the VOLTAS and BLUE STAR. It is followed by the product profile and then is followed by

details of accounts. It is followed by the research design, which was being

adopted for conducting the study. Summarized data is shown with the help of

well-labeled graphs and findings have been given.

Later part of the report contains SWOT analysis, followed by the conclusion;

which is made on the basis of the study carried out. A few suggestions have

been given fore effective marketing strategies.

RESEARCH METHODOLOGY

The purpose of methodology section in the report making is to describe the

research process that is followed while doing the main part. This would however

include the research design, the sampling procedure, and the data collection

method. This section is perhaps difficult to write as it would also involve some

technical terms and may be much of the audience will nor be able to understand

the terminology used. The methodology followed by the researcher, during the

preparation of the report was:

a) SECONDARY DATA

b) PRIMARY DATA

c) PERSONAL VISITS

Secondary Data

When an investigator uses the data that has been already collected by others, is

called secondary data. The secondary data could be collected from Journals,

Reports, and various publications. The advantages of the secondary data can be

–It is economical, both in terms of money and time spent .The researcher of the

report also did the same and collected secondary data from various internet sites

like www.Google.co.in, www.Voltasacs.com, www.bluestar.com and many

more. The researcher of the report also visited various libraries for collection of

the introduction part.

Primary Data

Primary data is that kind of data which is collected by the investigator himself for

the purpose of the specific study. The data such collected is original in character.

The advantage of this method of collection is the authentic. A questionnaire of

about 50 questions was made and it was given to the dealers to fill it up for our

research. The research was a kind of conclusive research as it helps in the

testing of hypothesis. The method of sampling was the Random method as it is

unbiased.

Personal Visits

As a part of the analysis, it was necessary to visit the students of different school,

as it would always help me knowing the nature of students. we visited different

schools and asked the student different questions which are formatted in the

questionnaire.

HISTORY

Blue Star Limited (originally known as Blue Star Engineering (Bombay) Pvt Ltd) was founded by Mohan T. Advani in 1943. The Company was initially engaged in reconditioning of refrigerators and air-conditioners.

Today, Blue Star is India's largest central air-conditioning company with an annual turnover of Rs. 716 crores, a network of offices in 29 cities and three modern manufacturing facilities.

Blue Star became a public limited company in 1969 with its corporate headquarters at Kasturi Buildings in Mumbai.

Corporate Headquarters

Blue Star manufactures and markets a wide range of airconditioning and refrigeration systems and products. These include large central airconditioning plants, packaged airconditioning systems, split and window air conditioners; commercial refrigeration equipment such as water coolers, bottled water dispensers, ice-cube machines, deep freezers and walk-in cold rooms. Blue Star's other businesses include marketing and maintenance of hi-tech electronic and industrial products such as Testing Machines, Data Communication products, Medical and Analytical Instruments and Special Control Valves.

The Company has business alliances with world renowned technology leaders such as York International, USA; Hitachi, Japan; Kolpak, USA; Electrolux, Sweden and many others, so as to offer superior products to the customers.

he lines of business include Central Airconditioning, Room Aircondioners, Commercial Refrigeration, Commercial Equipment and Professional Electronics and Industrial Products.

The International Software Services business was spun-off into a separate company, Blue Star Infotech Limited (BSIL) in April 2000. BSIL provides Internet/E-commerce, HP 3000/ MPE, BaaN ERP services, Client Server applications and Embedded Systems to clients in USA, Europe and Japan. This software export business was started in 1983 and is headquartered in Mumbai, at the Santa Cruz Electronics Export Promotion Zone (SEEPZ) with offices in the U.S. and U.K

BOARD OF DIRECTORS

Ashok M AdvaniChairman & Chief Executive

Ashok M Advani is an MBA from the Harvard Graduate School of Business Administration, an Electrical Engineer from MIT, USA and a B Sc (Honors) from Mumbai University.

He joined Blue Star in 1969 and held a variety of senior positions in manufacturing and finance in the Company before he took over the Company's affairs as Chairman & Chief Executive in 1984. Ashok is also the Vice Chairman of Blue Star Infotech Limited.

He has been a member of the Local Advisory Board of The Chase Manhattan Bank and a past President of the Bombay Chamber of Commerce and Industry.

Suneel M AdvaniPresident & Vice Chairman

Suneel M Advani is a double graduate in Electrical Engineering and Economics from MIT, USA. He also holds a degree in Law from Bombay University.

He joined Blue Star in 1969 as a Management Trainee and moved up steadily by holding responsible positions before he was elevated to the position of President and Vice Chairman in 1984. Suneel is also the chairman of Blue Star Infotech Limited, Blue Star Infotech (UK) Limited, Blue Star Infotech Malaysia and Blue Star Infotech America, Inc., apart from being on the board of Arab Malaysian Blue Star Sdn Bhd.

Suneel has been the President of the Refrigeration and Air conditioning Manufacturers' Association (RAMA) and is actively involved in CII and other trade associations

.

T.G.S. BabuExecutive Director

T G S Babu is an Engineering Graduate from IIT, Madras and has done his MBA from IIM, Ahmedabad. He has been working with Blue Star from 1977 in various positions, except for a four - year period when he worked with MRF Ltd as GM Sales.

Prior to his current appointment T G S Babu was Executive Vice President. Under his leadership, Blue Star's Central Air conditioning Business has achieved a clear market leadership and continues to grow at a healthy rate.

Satish JamdarExecutive Director

Satish is a Mechanical Engineering graduate from IIT Powai and also qualified in Systems Management from NIIT and Management Studies from UK and USA. He joined Blue Star in 1996 as Vice President - Manufacturing. Satish has over 30 years of experience in manufacturing, materials management and IT projects having worked for companies such as Siemens, BPL-Sanyo and Alstom.

Satish spearheaded the establishment of Blue Star's modern state-of-the-art manufacturing facility at Dadra in 1997. Under his able and competent leadership, the productivity and product development capabilities of all three factories of Blue Star has substantially increased. As ED, Satish will now oversee manufacturing, international sales and material management apart from an additional portfolio of airconditioning and refrigeration service business.

Suresh N TalwarDirector

Suresh Talwar is a Commerce & Law Graduate. He is a solicitor and the Senior Partner of the Crawford Bayley & Company, and is also a legal counsel to various Indian companies, multinational corporations and Indian and foreign banks.

He joined the Board of Blue Star in 1986. In addition to Blue Star, he is also on the Board of several leading companies such as Merk, Cadbury India, Sandvik Asea, Esab India, Johnson & Johnson, Madura Coats, Uhde India and Wyeth Lederle amongst others.

Pradeep Mallick Director

Pradeep Mallick is a B. Tech from IIT, Madras and Diploma holder in Business Management from UK. He is also a Chartered Engineer and Fellow of the Institution of Electrical Engineers, London. Before joining Wartsila India Limited as its Managing Director in 1988, he worked with several leading companies such as Crompton Greaves, Tata Exports and General Electric, to name a few. Currently, he is an advisor to Wartsila India Ltd. He joined the Board of Blue Star in January 2003.

Pradeep is also on the Board of several other leading companies such as Schenectady - Beck India, Tata Telecom, and on the Indian Advisory Board of ING Bank. In addition, he is associated with several industrial associations such as Confederation of Indian Industry, Bombay Chamber of Commerce & Industry and social organizations like Population First and Dignity Foundation.

Gurdeep SinghDirector

Gurdeep Singh is a Chemical Engineering Graduate from IIT, Delhi. After his graduation, he joined Hindustan Lever Ltd as a Management Trainee. He held various responsible positions in the Company before he was expatriated to Brazil as Technical Director of Unilever Detergents business.

In 1998, Gurdeep returned to Hindustan Lever and is currently the Director - Human Resource, Corporate Affairs and Technology. He joined the Board of Blue Star in May 2003. He is also the Co-Chairman of Nepal Lever, and on the Board of Hindlever Chemicals, Sivalik Cellulose and Levers Associated Trust.

Nawshir MirzaDirector

Nawshir Mirza is a graduate in commerce and a Fellow of the Institute of Chartered Accountants of India. He was with Ernst & Young and its predecessor firm, Arthur Young during the period 1967 to April 2003. His career achievements include becoming the youngest partner in the Indian firm, holding the position of National Director of Audit & Accounting Services, and Managing Partner Western India.

Mr. Mirza has also held responsible positions in various professional and trade associations like Indo-American Chamber of Commerce, Institute of Internal Auditors and the Bombay Chamber of Commerce & Industry. He is actively involved in philanthropic organizations including Childline and Red Cross.

Senior Management

A Pandit : Executive Vice President

H Rajaram : Executive Vice President

A Khorana : Vice President - Electronics Division

R Majumdar : Vice President - Human Resources & Quality

S Sankaran : Vice President - Airconditioning Projects Division

N Sivasankaran : Vice President - Corporate Communications & Marketing

B Thiagarajan : Vice President - AC & R Service Division

K P T Kutty : Company Secretary

JOINT VENTURE

Arab Malaysian Blue Star Sdn. Bhd.

Arab Malaysian Blue Star Sdn. Bhd. is a joint venture between Arab Malaysian Development Berhad (AMDB) and Blue Star Limited. This joint venture was set up in 1993 to undertake Heating, Ventilation, Airconditioning and Refrigeration (HVAC) installation business in Malaysia. Blue Star assumes full responsibility for engineering and installation of the HVAC&R needs as well as maintaining and servicing the airconditioning systems.

This concept of Design & Build has grown out of customer feedback on the difficulties faced with traditional construction methods including the normal plan and spec projects.

Blue Star is proud of its excellent working relationship with many large industrial houses and developers who have such faith in Blue Star's engineering and constuction strengths that they entrust the entire engineering and construction work for their projects to Blue Star, thus saving themselves valuable time normally lost in preparation of specifications and the tendering and evaluation process.

To date the Company has successfully completed the supply, installation and commissioning of central airconditioning systems for hotels, office buildings and factories. This involvement has made AMBS to grow from strength to strength.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The market size for airconditioning in India is estimated to be around Rs. 4400 crores. Of this, the market for central airconditioning, including central plants and packaged airconditioning systems, is around Rs. 2200 crores, whilst the market for window and split airconditioners comprises the balance Rs. 2200 crores.

The commercial airconditioning market catering to corporate and commercial establishments is estimated at Rs. 3300 crores. Booming segments such as retail, IT/ITES, BPOs, healthcare, hospitality, entertainment, telecom, banking and other service sectors have fuelled the growth of the commercial airconditioning industry. Apart from this, increased demand from light commercial segments such as restaurants, ice cream parlours, boutiques and coffee parlours have resulted in growth. In continuation with the current trend, the commercial airconditioning industry is expected to grow at more than 20% over the next few years.

It is to be noted that India is still far behind countries like China in terms of per capita consumption of airconditioning and therefore the scope for manifold growth in this sector is immense. While the current growth is being fuelled

Research & Development

In its thrust towards new product development, the Company has upgraded and expanded its manufacturing facilities and substantial investments have been made in setting up sophisticated test laboratories. During the year under review, the Company launched a host of new products. These include air cooled screw chillers, process chillers, Hisen and Hiper Plus packaged units, glass top deep freezers, bottle coolers, mega splits and precision control packaged units. In addition, a new range of ducted indoor units and hi-static fan coil units for exports was introduced. The Company also completely re-designed window rconditioners and introduced new models of wall mount indoor units. Tandem scroll chillers were developed with enhanced features. Special projects for large air handling units for DMRC, pharmaceutical and textile applications were executed. The Company also developed a water cooled version of cooling units, and medium temperature application cooling units. In all, a total of 47 new products and 21 derivative products were introduced, during the review period. A new R&D uilding has been set up at Dadra Plant with the addition of two labs to meet local and export requirements, inclusive of heat pump testing. The laboratory is partially operational and will be fully operational by mid 2005. At Thane Plant, the Company added a calorimetric lab for cooling and freezing units as well as small chillers. At Bharuch Plant, the deep freezer and water cooler labs were upgraded

PLANTS

Dadra Plant

Blue Star’s state-of-the-art automated plant at Dadra is regarded by industry experts as the best manufacturing facility in the country for airconditioning products. The product range manufactured by this plant includes packaged

airconditioners, ducted split airconditioners, split airconditioners and window airconditioners. The plant is also an OEM supplier to other companies to sell under their brand names in the domestic and export markets. During the review period, the plant continued to do good work in value engineering and improving procurement processes. Output recorded an increase of 38% over the previous year, with window and split airconditioners fuelling growth. Increase in exports also contributed significantly to the growth of production with several orders received from the Middle East and European markets.The coil shop of the plant was upgraded with latest equipment, thereby doubling capacity, while the paint shop was augmented to handle higher loads. In its efforts to protect the environment, the plant implemented a rain water harvesting system, which has resulted in saving of water up to 30%. A platform was created for lean manufacturing with the implementation of 5’S’, visual management and waste management techniques.

Thane Plant

The plant manufactures a wide range of chillers – reciprocating, scroll and screw for central airconditioning applications as well as a range of airside products including air handling units and fan coil units. It also manufactures PUF panels

and refrigeration units for prefabricated cold storages and mortuary chambers.

During the review period, output recorded substantial growth of 51%, with most of the increase coming from air handling units and fan coil units. The plant invested in a variety of new equipment during the review period to increase productivity. It also set up a reliability lab for stringent testing of components and finished products in order to further enhance quality.

Bharuch Plant

This plant mainly manufactures refrigeration products such as water coolers, bottle coolers, deep freezers and cooling units apart from air handling units. During the year, the plant recorded major growth of 39% with increased demand coming from nearly all the product categories. The plant is currently undergoing major expansion. Within a year, the total area of the plant will be doubled and will be in a position to cater to the growing demand for refrigeration products. In its efforts towards environment protection, the plant installed a rainwater harvesting system which has substantially reduced the use of water. Also initiated is the development of a 2000 sq m lush green lawn and planting of over 200 shrubs and other vegetation. The manufacture of deep freezers was initiated in 2003-04. Over 12,000 indigenously manufactured deep freezers have been supplied and the response from the market place is encouraging with customers appreciating their superior technical features, ruggedness and tropicalised design.

EXPORTS

On the export front, the Company continued to make good progress especially in the Middle East. Blue Star has developed a comprehensive range of cooling roducts for the international market. The year ended March 31, 2005 saw a ubstantial increase in exports with revenues of Rs. 61.19 crores compared to Rs. 37.84 crores in the previous year. For the first time, Blue Star participated in a major overseas exhibition namely Big 5 in Dubai in November 2004.The bjective was to showcase Blue Star’s manufacturing, product development and project design capabilities. The response to Blue Star’s range of products was overwhelming and the Company is confident about its business prospects in the international market.

AIR-CONDITIONING

Over the years, Blue Star has developed all-round competence in providing value added after-sales services to its customers, and today it maintains over 500,000 TR of installed airconditioning and refrigeration equipment, which includes

many prestigious corporate institutions, commercial establishments and industries. In line with global trends, customer needs in the sub-continent

are changing. Apart from cooling, they expect solutions like energy savings, balanced air distribution, high indoor air quality, chilled water balancing, treatment of cooling water, product upgrades and enhancements. Having understood these needs of the customers, the Company acquired and developed capabilities in the areas of energy management, air management, water management, product upgrades and enhancements. In addition, the Company signed up with Danfoss, Denmark as their Energy Solution Partner for distribution of variable frequency drives and Ecospec for distribution of water treatment systems. Further, based on the domain knowledge existing within the Company, the service offerings were re-designed in line with the respective segment needs, and the customers can now choose from a basket of customized options

available from Blue Star. Superior service delivery was a strategic thrust area, and for achieving the same, the Company initiated and implemented several developmental programmes. These were: l Service delivery process improvements through re-engineering and standardisation. Simultaneously, the Company

Initiated the ISO certification programmed. ISO 9001:2000 accreditations from UL India were obtained for the service operations of Central Plants, Western Region.

l Formation of a Service Quality Assurance Group for benchmarking best practices existing in other service industries within the country and abroad, and developing and implementing service delivery standards in conformity with the same. l Formation of Service Specialists Group comprising experts to handle complex technical problems. l Certification and Developmental programme for channel partners and business associates, aimed at the development of their infrastructure, manpower resources and capabilities. The programme also

includes modernization and up gradation of service instruments, tools and tackles. L Improvement of service parts availability by setting up Regional Parts Centre at Mumbai, Kolkata, New Delhi, Chennai, Bangalore, Hyderabad and Kochi in addition to the National Parts Centre. l Expansion of Call Management function. Further, apart from extended hours of service operation, 24 x 7 was

also available to customers as an option. The Company acquired several large maintenance contracts, and also orders for augmentation and replacement of old airconditioning plants with an objective to improve energy efficiency as well as capacity. The Company also expanded the market for new services such as duct cleaning. Thus, through structured service marketing initiatives and service delivery improvement programmes, the Company made significant progress towards emerging as the industry benchmark. DUCT CLEANING SYSTEM

SUPPLY CHAIN MANAGEMENT

In the past, the Company’s supply chain management strategy entailed outsourcing of warehousing and distribution of finished goods to optimize distribution cost. Encouraged by its success, the Company embarked on the more

demanding task of product lifecycle enhancement through supply chain integration. The approach involves partnership with key materials suppliers who continuously participate in value engineering projects leading to component

Cost reduction, as well as seamless integration of product lifecycle management of all supplied parts through an elaborate part utilization mapping process. This approach was supported by strategically located Regional Parts Centres which are equipped to supply all required service parts at short notice.

CHANNEL DEVELOPMENT

During the review period, a turnover of close to Rs. 400 Crores was achieved through channel driven businesses i.e. packaged air conditioners, room air conditioners, refrigeration products, and standard cold rooms. Blue Star has

Close to 160 systems dealers who exclusively deal in the Company’s systems businesses consisting of packaged airconditioning and cold rooms. These dealers were provided technical expertise, installation and service competence

of a higher order.

On the other hand, room air conditioners and refrigeration products, which are simple to install products, are sold through a larger network of approximately 500

dealers. Most of them deal exclusively with Blue Star products in the HVAC domain. A few of them are multi-brand, multi-product dealers.

The Company has established a Channel Management Centre to oversee the policy framework, certification and development of dealers and has also put in place a Training Department for training channel partners. Approximately

3600 man-days of training were delivered in 2005-06 using the training centers at Chennai and Delhi.

FINANCIAL PERFORMANCE

The analysis for the 12-month period ended March 31, 2006 in comparison with the corresponding figures for the 12-month period ended March 31, 2005 is as follows:

1. INCOME

Total Income grew 30% from Rs. 716.06 crores to Rs. 930.92 crores. Sales, work bills, service and commission climbed to Rs. 916.80 crores, an increase of Rs. 222.06 crores over the previous year. Other income comprised of Rs. 14.11 crores generated from profit on sale of assets, dividend income and income tax refunds.

2. COST OF SALES, WORK BILLS AND SERVICES

The cost of sales, work bills and services during the year stood at Rs. 717.03 crores. This represents 77% of the Total Income, compared to a corresponding figure of 73.6% in the previous year. The increase in the cost of sales was

Mainly due to hike in prices of inputs, cost of transportation and freight.

3. EMPLOYEE REMUNERATION AND BENEFITS

There was an increase in employee costs of 21.4%, mainly due to higher salaries, training and welfare expenses.

Employee remuneration and benefit costs for the year under review stood at Rs. 72.37 crores. This represents 7.8% of the Total Income compared with 8.3% of the previous year.

4. OPERATING AND GENERAL EXPENSES

Operating and general expenses increased marginally in the review period. Operating and general expenses for the year under review was Rs. 73.5 crores, representing 7.9% of the Total Income compared to 9.9% in the previous year.

5. INTEREST

Interest cost during the year was Rs. 3.2 crores compared to the previous year’s figure of Rs. 1.8 crores representing 0.34 % of the Total Income.

6. DEPRECIATION

Depreciation charge for the year under review was Rs. 12.35 crores compared to Rs. 9.98 crores in the previous year.

7. TAXATION

Provision for taxation increased from Rs. 11.88 crores to Rs. 13.71 crores.

8. NET PROFIT

Net profit increased to Rs. 39.16 crores compared to Rs. 32.55 crores in the previous year, representing an increase of 20%. Profit before Tax stood at Rs. 52.44 crores, a rise of 12.5 % from previous year’s figure.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

For sound and healthy operation, every Company needs to be supported and aided by robust and sturdy internal control systems and processes. Blue Star has, over the years, paid considerable attention to this aspect and has established a well-oiled internal control system with clearly defined roles and responsibilities at all levels. The Company's decision to implement BaaN ERP system to cover all aspects of its operations has helped to reinforce its focus and attention to this aspect. Internal audits are carried out at frequent intervals to validate the adequacy and appropriateness of processes, to suggest suitable changes from time to time and to ensure compliance with the laid down processes.

The Company's internal audit processes, procedures and practices have been recently awarded with ISO 9001:2000 accreditations from RvA Management Systems, Netherlands. The Company is also supported by a well-structured

Management Information System which helps ensure that revenues, expenses and resources are in accordance with budgets.

HUMAN RESOURCES

The Management of Blue Star takes pride in the fact that the technical and business knowledge it has acquired over six decades as an organization

in the field of airconditioning and refrigeration is perhaps the richest in the country, and is invaluable.

During the review period, with the substantial increase in the business volume, the Company increased its total head count to 1868 as on March

31, 2006, an increase of 70 over the previous year. The focus on people development continued in the same pace with special attention to developing

Technical skills of dealers and business associates.

During the year under review, there was a significant increase in the training inputs provided to our business associates. While a few new soft skills training programmes were introduced for Blue Star employees, selected

Managers were nominated to leading Management Institutes like IIM, Ahmedabad, Lucknow and Bangalore for attending specific Management Development Programmes.

A training module was developed to communicate Corporate Values and Beliefs as well as the desired behaviouralactions to employees. A workshop on this module was conducted across the country covering approximately 70%

Of the employees. A few discussion forums were also created to allow employees to debate discuss and share their thoughts on these Corporate Values.

As part of the Management Development initiative, a competency model was developed and competency maps created for a number of unique positions within the organization. As the first step, 30 senior managers were covered through a two-day development workshop based on this competency model. The development center reports were used for creating development plans for individual managers.

For the second year in a row, the Company participated in the Best Employers survey organized by Hewitt Associates. The survey findings were analysed and discussed with each Division and action plans have been worked out for enhancing overall employee engagement.

The welfare initiatives of providing life coverage to all employees through the HDFC Standard Life Insurance continued during the year. The Mohan T Advani Education Trust disbursed scholarships to a number of children of employees who are pursuing higher professional education. Blue Star Sahayata Foundation also extended financial

aid to a number of deserving cases for emergency medical expenses.

The Industrial Relations scenario has improved significantly with Management and workmen working together for the growth of the organization.

INFORMATION TECHNOLOGY

Blue Star, over the last few years, has made substantial investments in IT and communication infrastructure, as well as in advanced state-of-the-art software. Implementation of an ERP package from BaaN had begun in 2003-04.

During the review period, this project called Manthan was rolled out in the Western Region and Northern Region and will be implemented throughout the country in a phased manner. This project covers all business divisions of

The Company, and will provide a centralized integrated solution for the Company.

Blue Star uses an outsourced model for inter-connecting its branches. The year 2004-05 saw a complete deployment of WAN using HCL-Infinet’s backbone. Currently, the Company has over 30 links, and uses this network predominantly

for BaaN connectivity.

The Company has an intranet called “Infovine”, which facilitates knowledge sharing amongst Blue Star employees, who are currently geographically dispersed. The employees are constantly updated on the latest happenings and

this platform helps in enhancing customer relationship management, collaboration between employees, as well as in increasing productivity.

BRAND EQUITY

The Company embarked on a brand equity building programme around six years ago, recognizing that although it enjoyed strong brand recall with the corporate and institutional segments, amongst individuals and small businessmen its visibility was not adequate. The Company subsequently made substantial investments in marketing and advertising to strengthen its brand equity, particularly in the latter segment of the market. These investments

have gone a long way in building the Corporate Brand, and have substantially increased visibility for the brand.

Blue Star is now a well-recognized name amongst its target group of corporate and commercial customers, including small businessmen and self-employed professionals. To enhance brand equity and recognition, the Company invested not only in mass media channels of print and television, but also in field marketing which involves creating leaflets and literature, participation in exhibitions and events and relationship programmes amongst others. Since Blue Star is not a consumer durables player, in order to effectively target its core audience of corporate and commercial customers, including small businessmen

and self-employed professionals, the Company arrived at an optimum media mix with the value proposition of “Cooling Solutions To Help Your Business Do Better” In the summer of 2005, the Helpline campaign was executed in all major

markets for room air conditioners in mainline dailies. This campaign was also supported with internet banners on popular portals. Based on the Company’s

Experience, customers are often confused about which capacity of air conditioner to buy, whether they should buy a window or split air conditioner, by how much would the power bills go up by purchasing an air conditioner and so on. The Helpline campaign addressed these common customer queries and provided them with answers to all their questions on cooling. Since Blue Star positions

itself as experts in providing cooling solutions, this campaign helped in reinforcing the expertise. The response to the campaign was overwhelming.

The Company received over 11,000 calls on its toll free number in response to the campaign. Apart from the advertising campaign, the Company also made significant investments in field marketing. These include participation in trade exhibitions, IDEAC (Interior Designers, Architects and Consultants) relationship management and public relations through the Press. These field activities are critical and go a long way in complementing mass media campaigns and strengthening brand equity.

DEMATERIALISATION OF SHARES & LIQUIDITY

About 88% of the equity shares have been dematerialized by about 63% of the total shareholders as on March 31, 2006. The Company’s shares can be traded only in dematerialized form as per SEBI notification. The Company has

Entered into agreements with NSDL & CDSL whereby shareholders have the option to dematerialize their shares with either of the Depositories. About 42% of the equity shares are held by public and the shares are actively traded in BSE and NSE.

INVESTOR RELATIONS PROGRAMME

Blue Star Limited has an active investor relations programme directed to both individual and institutional investors. The Company’s investor relations mission is to maintain an ongoing awareness of the Company’s performance

among its shareholders and the financial community. The Company welcomes inquiries from its investors, large or small, as well as from members of the

financial community. For further information, please contact Blue Star’s Investor Relations Department at the above address.

BLUE STAR SHAREHOLDERS

As of March 31, 2006, the Company has 17187 registered shareholders. Approximately 42 per cent of the Company’s shares are held by individual investors. The Promoters hold approximately 40 per cent of the shares while Foreign Investors, Institutions and Body Corporate hold the balance shares

SHAREHOLDER INQUIRIES

Questions concerning your folio, share certificates, dividend, address changes (for physical shares only), consolidation of certificates, lost certificates and related matters should be addressed to Blue Star Limited, directly or their share

Transfer agents. Address changes in respect of Demat shares should be intimated to the concerned Depository Participant. BLUE STAR LIMITED Intime Spectrum Registry Ltd Kasturi Buildings C-13, Pannalal Silk Mills Compound

Mohan T Advani Chowk L B S Marg, Bhandup (West) Jamshedji Tata Road Mumbai 400 078.

Mumbai 400 020. Tel: 91-22-5555 5454

Tel: 91-22-5665 4000 Fax: 91-22-5555 5353

Fax: 91-22-5665 4151

www.bluestarindia.com

Share transfer documents will also be accepted at

Intime Spectrum Registry Ltd

203 Dawar House, 2nd floor

Next to Central Camera Building

197 D N Road

Fort, Mumbai 400 001.

Tel: 91-22-2269 4127

PRESS RELEASE

Blue Star FY05 Net Sales grows 32% to Rs 921 croresDeclares 100% Dividend

Financial PerformanceCentral airconditioning and commercial refrigeration major Blue Star has reported Net Sales of Rs 920.77 crores for the year ended March 31, 2005, representing 32% growth over last year. Net Profit grew 0% to Rs 39.16 crores, while Earnings Per Share increased to Rs 21.77 from Rs 18.10, on an equity base of Rs 17.99 crores. Total income for the year grew 30% to Rs 930.92 crores.

For the quarter ended March 31, 2005, the Company reported Net sales of Rs 312.42 crores representing 25% growth over the corresponding quarter in the previous year. Total Income for the quarter at Rs 319.49 crores was up by 22%. Net profit for the quarter increased marginally over the same period last year to Rs 20.88 crores.

The growth in Net Sales was fueled by buoyancy in the central airconditioning business, which grew by 36% during FY05.

The Company bagged several prestigious orders during the quarter ended March 31, 2006 including orders from Bank of America, Mumbai; Patni Computers, Navi

Mumbai; Ranbaxy, Mohali; HSBC, Secunderabad; Atos Origin, Mumbai; Oberoi Mall, Mumbai; Cross River Mall, Delhi; Saint Gobain, Chennai; Big Bazaar, Bangalore; Suzuki, Delhi; Polaris Software, Secunderabad; Wipro, Kolkata and Delhi; Ispat Industries, Mumbai and HCL Technologies, Chennai.

DividendThe Directors have recommended a dividend of Rs. 10.00 per share compared to Rs 9.00 per share declared last year. The Company has paid attractive dividends for the past 35 years, since its IPO in 1969.

New Plant at Kala Amb, Himachal Pradesh

Blue Star is in the process of setting up a fourth plant at Kala Amb in Himachal Pradesh with an investment of Rs 25 crores. The Plant is expected to be commissioned in the next few months and will manufacture room airconditioners. By setting up this new manufacturing facility, the Company intends to benefit from both the economies of scale of the new Plant, as well as the tax and duty incentives in the region. This will level the playing field vis-à-vis the growing competition, most of who are already benefiting from these incentives. This is in addition to the investments that the Company is making for the modernization and capacity expansion of the existing three plants.

Ashok M Advani, Chairman and Chief Executive Officer adds "Blue Star's continued focus on growth and competitiveness in our core businesses, and efficient use of resources resulted in higher sales and profitability. We expect the central airconditioning market to grow at a healthy pace over the next few years. While the overall market growth potential may attract new entrants, Blue Star's all- India network combined with the value proposition of energy efficiency, system design expertise and after-sales service excellence, will ensure market leadership and profitable growth."

Place: MumbaiDate: May 11, 2006

Blue Star Q3 Net Profit up 55% Total Income up 52%

Central airconditioning and commercial refrigeration major Blue Star has reported a Total Income of Rs 224.14 crores for the quarter ended December 31, 2004 representing a growth of 52.4% over the corresponding period last year. Net Profit for the quarter grew 55.4% to Rs 5.93 crores, while Earnings Per Share (EPS) increased to Rs 3.30 from Rs 2.12.

The Total Income for the nine months ended December 31, 2004 grew 34.8% to Rs 611.43 crores. Net Profit for the same period increased from Rs 12.04 crores to Rs 18.28 crores representing an increase of 51.9% over the same period last year. The cumulative EPS for nine months stood at Rs 10.16 as against Rs 6.69 last year.

The Company bagged several prestigious orders during the quarter including orders from Ram Manohar Lohia Hospital, New Delhi; Times of India, Mumbai; Vascon Multiplex, Pune; RMZ Eco Space Building, Bangalore; DHL Worldwide Express, Mumbai; Sun Microsystems, Bangalore; HCL Technologies BPO Services, Chennai; Delhi High Court, New Delhi; Columbia Hospital, Bangalore; Altana Pharma, Mumbai; NTPC, Sipat and HSBC, Sri Lanka.

Ashok M Advani, Chairman & Chief Executive adds "The Indian economy has been growing at rapid pace and with the construction boom, investments in

infrastructure projects, and growth in the services sector, the net profit as well as revenue growth of the Company have substantially improved in the nine month period ended December 31, 2004. The favorable macro economic conditions and the Company's strong fundamentals in the airconditioning, commercial refrigeration and professional electronics business will help in sustaining profitable growth in the future as well as further strengthen its leadership position."

It may be recalled that the Company had reported a Net Profit of Rs 32.55 crores on a Total Income of Rs 716.06 crores for the year ended March 31, 2004.

Place: MumbaiDate: January, 25, 2006

AFTER SALES SERIVCE

Service Solutions to help your business do better, year after year

Thank you for placing your trust in Blue Star for your cooling requirements. However, choosing the right equipment is only half the job. While you have wisely invested in Blue Star's cooling solutions, there are many components in an airconditioning and commercial refrigeration system that need to be looked after during the life span of the system, to ensure that your business does better, year after year. The compressor, motors, fan, blowers, electrical controls, filters as well as ancillaries such as ducts, grilles, dampers, insulation, cooling towers and pumps need constant attention to get the best out of your airconditioning or commercial refrigeration system. Infact, cooling experts need to periodically check the whole system, repair and replace whatever is necessary and calibrate the system for perfect air distribution and balancing.

Airconditioning and commercial refrigeration systems, like all other machines, degrade with time and if, not properly maintained, can progressively lose efficiency, consume more power, be a drain on your profits and ultimately break-down causing a lot of inconvenience to you. Taking decisions on your expensive

and technologically advanced equipment from damage is therefore as important for you as your initial investment.

Service Solutions from the experts in cooling.

Presenting Service Solutions from the experts in cooling solutions. Service Solutions to help your business do better, year after year. Blue Star, has various service offerings to take care of your airconditioning and commercial refrigeration systems. With its experience of over six decades in cooling solutions, Blue Star has the expertise to optimize your system and ensure maximum energy efficiency, perfect air distribution and superior indoor air quality. This would not only result in substantial power savings but also your employees and customers will be comfortable at all times and breathe cleaner air. What's more, the life of the equipment will definitely be enhanced making your initial investment go a longer way.

Why Blue Star?

Very often, customers tend to believe that maintaining airconditioning or refrigeration systems needs no great expertise and that they can always call their local AC repair technician incase of a breakdown. Sure, the local technicians might be trustworthy and may have genuine intentions to maintain your system to

the best of their ability. However, do they have extensive knowledge on the science of cooling ? Do they understand the intricacies of indoor air quality, airside management and energy efficiency? Do they know our designs and circuits well enough to optimize the system periodically? Moreover, do they have the necessary infrastructure and resources to handle your system in case of eventualities? Often, not relying on the experts can cause a lot of heartburn and inconvenience apart from potential loss of business and productivity. When you deal with experts and customer focused professionals like Blue Star, you can forget about your airconditioning or commercial refrigeration system and breathe easy.

Advantage Blue Star When you opt for a Service Solution from Blue Star you can avail of the following unbeatable advantages :

Trained Personnel : Our engineers and technicians are intensively trained to handle the costly, sophisticated airconditioning and commercial refrigeration equipment at our training centers across India.

Priority Service : All customers who opt for our annual service solutions, are always offered priority service so that your calls get attended quicker and the system is up faster.

Preventive checks : Under all our service solutions, we offer preventive maintenance checks which help in identifying problems early and costly down times are prevented.

Any Time Access : All our service personnel including technicians are giving cell phones for ease and convenience to contact us.

Genuine spares : By opting for our service solution, you are assured of genuine spares that will go a long way in ensuring high uptime for your system.

Low Power Bills : The Blue Star engineers will periodically check your system and optimize it for least power consumption and reduced electricity bills.

Extended Life : Genuine Spares and regular maintenance help in extending the life of your system.

Seasonal Settings : In summer, you would prefer lower temperatures and when the climate is cold you often feel the need to change your settings to higher temperatures. Our engineers will before the onset of a season, calibrate the airconditioning system to suit the season to keep you comfortable at all times.

Wide range of service solutions

We have a wide bouquet of service solutions to meet your requirements. Apart from standard and comprehensive solutions, we also offer premium services to cater to your critical needs.

Its no wonder that Blue Star's service solutions services over two lakh tonnes of airconditioning across the country. Our customers see value when they come to us. They get the best out of their systems. They get the expertise of the most preferred airconditioning and commercial refrigeration company in India. And above all they get peace of mind.

History:

Established in 1954, Voltas is India's premier air conditioning and engineering services provider. It offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, climate control, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, pollution control and chemicals.

The company's strengths lie in the design and manufacture of industrial equipment, the management and execution of air-conditioning and public work projects, the procurement, installation and servicing of technology based systems, and in being a representative of global technology leaders.

All these capabilities are ISO 9001-2000 certified.

Throughout the years Voltas has a list of innovative firsts in India:

       Manufactured the first ever room air conditioner in 1954  Set up the first integrated plan in 1969   Introduced the first innovative split air conditioner in 1984

  Introduced the tall and elegant slimline air conditioner in 1993   Introduced micro-processor based packaged unit in 1998   First to introduce water dispensers with mini fridge   Launched the 55 litre refrigerator for kids

  Among the first to launch sub 1.0 Ton ACs

     

 

PROFILE

Part of the TATA Conglomerate with revenues touching Rs. 1230.41Cr. for the year 2002-2003, Voltas offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, climate control, electro-mechanical projects, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, pollution control and chemicals. The Company's strengths lie principally in the design and manufacture of industrial equipment; management and execution of air conditioning and public work projects; sourcing, installation and servicing of technology-based systems; and representation of global technology leaders, serving diverse industrial sectors and applications.

   

 

OPERATIONS

Voltas' operations have been organized into four independent business-specific clusters, namely the Air Conditioning and Refrigeration Business Group, Unitary Products Business Group, Engineering Products Business Group and International Operations Business Group. Each of these has its own facilities for market coverage and service to customers.

     

AIR CONDITIONING AND REFRIGERATION BUSINESS GROUP

Central Plant Equipment Packaged / Ductable Split Units HVAC Turnkey Projects and Services International Operations Business Group Electro-mechanical Projects Pumps and Projects

Civil Construction Chemicals Unitary Products Business Group Room Air Conditioners Water Coolers Commercial Refrigeration Engineering Products Business Group Textile Machinery Mining & Construction Equipment Machine Tools Materials Handling

   

 

MANUFACTURING

Voltas possesses total capability in the manufacture of room/split air conditioners, industrial air conditioning and refrigeration equipment, water coolers, refrigerators, visicoolers, freezers, fork-lift trucks and large water supply pumps. All these products bear the stamp of state-of-the-art automated manufacturing plants resulting in consistently high quality and reduced costs. Furthermore, the Company is partnered with international companies such as LG Electronics of Korea and Fedders International of USA for 'manufacture only' alliances producing low cost, high quality refrigerators and room air conditioners, respectively.

     

 

PROJECTS

Over the years, Voltas has built up a substantial reputation in engineering, procurement and construction (EPC) fields, for electro-mechanical projects, specializing in heating, ventilation and air conditioning, building management systems, power and lighting, communication systems, water management and pollution control. The Company has ISO 2000 certification in this business, and has successfully undertaken and executed project works in the Middle East, South and Far East Asia, CIS countries and Africa.

     

 

MARKETING

Voltas' sourcing and marketing operations cover air conditioners, textile machinery, machine tools, mining and construction equipment and industrial chemicals. In these sectors, the company demonstrates its specialized engineering expertise, as well as its extensive network of global sourcing.

       NATION-WIDE FACILITY NETWORK

The Company has its head office in Mumbai; zonal headquarters in Mumbai, Kolkata, New Delhi and Chennai; territorial offices at Ahmedabad, Bangalore, Chandigarh, Hyderabad, Jamshedpur, Lucknow, Pune and Kochi; Overseas offices in Abu Dhabi (UAE) Hong Kong, Singapore and Qatar and factories at Thane in Maharashtra, Dadra, Union Territory and Sanathnagar in Andhra Pradesh.

     

 

SUBSIDIARIES

Metrovol FZE VIL Overseas Enterprises B.V. Voice Antilles N.V. Simto Investment company Limited

 

AWARDS

United Nations' Grand Award for Excellence in Public Service Worldwide, 1993-94. International Public Relations Associations' Golden Trophy for Excellence in Customer Service, 1994-95. Mumbai Chamber of Commerce and Industry's Good Corporate Citizenship Award, 1995-96.

     

 

PRODUCTS AND SERVICES

Air Conditioners and Water Coolers: Products include window and split air conditioners, Sensicool air conditioners and water coolers. Commercial Refrigeration: Products include chest freezers, Deep freezers,upright coolers, visi-coolers, chest coolers.

    

AIR CONDITIONING AND REFRIGERATION:

Voltas has executed installations for different applications including, naval warships and mercantile ships, pharmaceutical production plants, telecommunication and computer facilities, research laboratories, atomic energy plants, power plants, hotels, information technology parks, Hospitals, Air ports, Metro Stations, Petrochemical Plants and many more diverse

applications.    

 

ELECTRO-MECHANICAL PROJECTS:

Voltas undertakes turnkey projects in the fields of heating, ventilation and air conditioning ( HVAC ), mechanical, public health, plumbing, electrical, building power and lighting, low current systems, fire fighting and safety systems, for airports, palaces, five-star hotels, convention centers, district cooling plants, defence establishments, research centres, techno parks, training centres, power stations, railways, hospitals, auditoriums, townships, pharmaceutical factories, textile factories.

BOARD OF DIRECTORS

Chairman Ishaat Hussain

Managing Director A. Soni

Directors N.M. MunjeeN.J. JhaveriS. D. KulkarniYash PaulS.N. TripathiRavi KantN.D. KhurodyNoel N. Tata

Dy General Manager Taxation & Company Secretary

V.P. Malhotra

CORPORATE MANAGEMENT

Managing Director A. Soni

Executive Director S.N. Tripathi

Executive Vice Presidents S.R. SrinivasanP.N. DhumeM.M. Miyajiwala

Vice President A.J. GoleS. Bilgi

Solicitors Messrs Mulla & Mulla and Craigie, Blunt & Caroe

Auditors Messrs S.B. Billimoria & Co., Chartered Accountants

EXECUTIVE SUMMARY OF VOLTAS

Voltas Ltd., a Rs8.4bn Tata group company, has revamped its business to concentrate onto its core strengths namely air conditioning, refrigeration and engineering. The company's strategy to hive off non-core divisions viz. chemical plants and white goods will pay dividends in the long term.

The air-conditioning (AC) sector(Rs14.7bn) is considered a luxury industry therefore subjected to high duty structure. This has obviously effected industry growth. Demand for AC is highest around Maharashtra, a highly industrialized state with Mumbai alone accounting for 20% of the demand.

In the room AC segment (RAC), until FY93, the unorganized sector controlled almost 67% of the market. However rationalization of excise duties has diluted this benefit reducing its share to less than 50% in FY99. The RAC segment grew by 36%yoy in FY94 and 45%yoy in FY95, before slowing down to 18%yoy in FY96. Demand growth had slowed down considerably in FY98 and FY99. Reasons attributed are industrial and economic slowdown, tight money supply, early monsoon etc. With higher growth of disposal income, thanks to the Fifth Pay Commission Recommendations, and a marked preference for branded goods among urban consumers, the segment is expected to grow at 20% in FY01.

The industrial AC segment is also affected by the general slowdown in the economy. However, with the growth in the economy slated to improve, the fortunes are expected to turn for the better.

BACKGROUND

The company was promoted by Tata Sons Pvt Ltd. and Volkart Brothers, way back in 1954 to operate the engineering and import division of Volkart. Voltas marketed imported products and acted as indenting agent till the year 1961. By 1963, the company had its own factory at Chinchpokli (Mumbai) to manufacture ACs and refrigeration equipment. Gradually the scope of activities widened to include engineering, electrical and agricultural equipment. Later in 1985 the company in collaboration with Danfoss of Denmark set up a compressor unit and a refrigerator plant at Warora near Nagpur. The company’s cooling appliances are manufactured at the Thane and the Dadra plants. The Sanatnagar Plant is a sophisticated manufacturing facility for manufacture of commercial refrigerators (which include deep freezers and display cabinet coolers/ wisy coolers).

CAPACITY BREAKUP

Period ended 03/98 03/99 03/00 03/01No. of months 12 12 12 12 Capacity volume(unit)Forklifts (Nos) 0.5 0.5 0.5 0.5Forklift trucks (Nos) 500.0 500.0 500.0 500.0Power driven pumps (Nos) 2,400.0 2,400.0 2,400.0 2,400.0Refrigerators (Nos) 600,000.0 600,000.0 180,000.0 300,000.0Room air conditioners (Nos) 75,000.0 75,000.0 75,000.0 75,000.0Water coolers (Nos) 8,000.0 8,000.0 8,000.0 8,000.0Washing machines (Nos) 100,000.0 100,000.0 - -

PRODUCTION BREAKUP Period ended 03/98 03/99 03/00 03/01No. of months 12 12 12 12 Production volume (unit)

Forklift trucks (Nos) 505.0 365.0 304.0 333.0Power driven pumps (Nos) 371.0 249.0 242.0 234.0Refrigerators (Nos) 470,962.0 399,626.0 210,802.0 250,093.0Room air conditioners (Nos) 35,436.0 47,713.0 38,103.0 56,607.0Water coolers (Nos) 8,082.0 6,484.0 6,373.0 9,112.0Washing machines (Nos) 45,012.0 14,398.0 - -

BUSINESS

The company’s business comprises-- the cooling appliances business division, which includes the manufacture of air-conditioners and water coolers and other business namely refrigerators and engineering.

The company has hived off its chemical plant at Patancheru to Ralchem --a subsidiary of Rallis India and part of the white goods business to Electrolux. This has effected the overall topline growth. During FY00, the core business activity namely -central air-conditioning plant and room air-conditioners registered a 6% growth over the previous year's turnover, however, the company’s net sales and income from operations dipped by 16.25% to Rs8.24bn.

In an attempt to regain a dominating position in air conditioning market, the company has launched a new range of products with warranty and service facilities. On the marketing front the company has increased its dealer network to 500 (from 300).

In refrigerators, the company controls 65% of the organized commercial refrigerator market. Voltas supplies close to 90,000 commercial refrigerators per annum to Pepsi, Amul, Nestle, HLL, UB group, Delhi based Mother Dairy etc. The company has supplied over 0.225mn refrigerators to LG Electronics in the last two years. Currently, the company has bagged an order worth Rs9bn from LG to manufacture and supply 1.2mn refrigerators over three years.

As for engineering, the company has designed a nucleus "Product Support Group" for marketing and servicing of surface mining equipment for coal, copper and iron ore mining.

DIRECTORS' REPORT 

1. Dividend:

The Directors recommend a dividend of 12% for the year 2000 2001 (1999 2000: 12%).

2. Finance:

Financial Items have gone down by Rs138mn or 64% due to further reduction in borrowings and efficient management of borrowings carried out by the Company. The Company has exploited cheaper sources of funds like Commercial Paper, FCNR (B) Loans, etc.

Consequent upon the liquidation of a large part of borrowings over the last two years, the Company's Debt Equity Ratio has further improved and was 0.87:1 as at 31st March, 2001 as compared to 1.23:1 as at 31st March, 1999.

In view of the substantial carried forward losses, MAT is applicable. Hence, a 'Minimum Alternate Tax' provision of Rs3.400mn has been made in the accounts. Against this, an excess provision of Rs2.563mn in respect of the previous years has been adjusted, reducing the net charge to Rs0.83mn. In addition, Wealth Tax of Rs0.600mn has been provided.

3. Management Discussion and Analysis Air Conditioning and Refrigeration (AC&R) Business Groups:

The millennium year gave a shot in the arm to the comfort air conditioning segment of the industry. The air conditioning demand from service industry was predominant. As against a market growth of 15% in this segment, the Division achieved a 36% growth in order booking over the previous year.

The new AC&R facility at Dadra enhanced the total manufacturing capacity, substantially, and the value of production grew by 44% over the previous year. The production volumes have also increased steeply over the previous year viz., Packaged Units by 40%, Packaged Chillers by 55% and Vapour Absorption Machines by more than 100%.

Introduction of a variety of products through continuous in-house design and technology acquisition has helped the Business Group to be the major player in each product segment. The Business Group introduced 15 new models of Packaged Units and Ductable Splits and 8 models of Reciprocating Chillers.

Technology transfer from Hitachi, Japan helped the Business Group to launch Direct Fired Vapour Absorption Machines in the "KOALA" range, successfully.

The industrial air conditioning segment continues to be sluggish though there are signs of revival in the process cooling industry. The Business Group, with a wide product range of Vapour Compression and Vapour Absorption Machines is geared to meet the requirements of special markets.

Investment in intellectual capital has resulted in maintaining a high level of satisfied customers and employees, which in turn has improved the profitability. Superior technology and project management will keep the Business Group as a distinct leader in central air conditioning.

A healthy carry forward order book position assures the continuance of improved performance.

4. Engineering Products Business Group:

a) Machine Tools Division:

Though the Division improved its performance both in terms of turnover (20% increase) and contribution, as compared to the previous year, the performance was below expectations. The overall demand for machine tools continues to be

poor due to the slow down in engineering industries and major user segments such as automobiles, auto ancillaries, etc., and no significant improvement is foreseen in the next one or two years, except, perhaps, in defence undertakings. The Division is, however, constantly exploring avenues for expanding its products portfolio and improving its revenue by focusing on and giving greater emphasis to service activities.

b) Materials Handling Business Division:

The demand for forklift trucks in the domestic market estimated at 1000 numbers continues to be near stagnant. Efforts put in to develop export markets have met with success and the Division has commenced exporting forklift trucks.

The Division has regained its leadership position -with a market share of 36% as the largest manufacturer of forklifts in India, by over taking its nearest competitor, in terms of production and despatches. The Division has achieved significant cost reduction through innovative product design, re engineering and planned reduction in manpower, and is now well poised to face the competitive pressures of the market. A major export thrust is also being planned so that the Division gains the economic advantages of volumes.

c) Mining and Construction Equipment Division:

The Division successfully commissioned and put in operation all the dump trucks and mining shovels supplied to various mine sites of Coal India Ltd., procured under World Bank funding. Excellent product support to ensure high availability of the products won accolades from Coal India and World Bank officials. The Division has strengthened the infrastructure of the spare parts depots, field service offices, etc., to enhance machine up time.

Further procurement of capital equipment under Phase II with World Bank funding was postponed by Coal India Ltd. However, the Division sustained its planned level of profits with emphasis on product support and sales of spare parts.

To exploit the emerging opportunities in road building activities on a national scale, the Division has created a strong and new product portfolio and the requisite organisation structure. It has entered into distributorship agreements with world class manufacturers such as Cedarapids, Power Screen, Benford, etc. The Division is now in a position to offer a wide range of products like high capacity crushers, screens, pavers and compactors required for the construction of modern highways and express ways. Negotiations are under progress with other reputed manufacturers for expanding this product portfolio. The Division is thus well placed for accelerated growth over the next 3 to 5 years.

d) Pumps and Projects Business Division:

Planned shift in thrust towards turnkey pumping projects and engineering service businesses, has enabled the Division to register a growth of 80% in sales over the previous year and a steep increase in profitability. The Division caters to the core sectors of the economy water supply pumping projects and treatment, power sector, irrigation sector, sewage/drainage treatment and effluent

While there is a growing need for investments, both' by the public and private sectors in the above areas, faster pace of reforms and funds availability are essential to accelerate growth in these sectors. The Division is well positioned to meet the increasing demands of the customers to serve as a Total Solution Provider design engineering of complete electro mechanical systems including erection and commissioning, operation, maintenance and after sales service. The Division has also developed expertise in refurbishment/retrofitting of existing plants and equipment, and has further expanded its range of vertical and horizontal pumps and its manufacturing, engineering and pump testing

capabilities. The project management teams, skills and use of IT have been strengthened to meet the growing business needs. Henceforth, under the umbrella of Voltas International, the Division will also seek projects overseas.

e) Textile Machinery Division:

The Division has registered a significant improvement in performance by achieving 15% growth in sales. Supported by the "Technology Upgradation Fund" for the textile industry, spinning as well as knitting segments showed demand growths of 21% and 8%, respectively. With the active support of its Principals like the Lakshmi Group for spinning sector and Terrot for knitting sector, the Division is poised to maintain sustained growth. It continues to enjoy strong customer loyalty and preferred supplier status, through its commitment for supply of high quality products and efficient product support. The economic health of the Indian textile industry)Jasa significant impact on this Division's business.

5. Chemicals:

Chemicals Division:

The Division, during 2000 2001 passed through difficult times. Owing to large imports of vitamin premixes from European countries and cellulose derivatives from a new international supplier, sales and profitability were affected. The

Division has, however, made significant gains in the sale of pigments, fatty acids and rosin derivatives. These businesses grew by about 25%, a trend which will be maintained during the next two years. The Division has established itself as a key supplier to the paint, toothpaste, personal care, adhesive and polymer industries.

The outlook for the year 2001-2002 appears to be fair. For several products under stock and sale, the Division has obtained from its Principals, lower prices and longer credit terms which will result in higher sales and better margins. While the Division would, effective 1st October, 2001, discontinue the present distribution arrangement for the agency line of Nicholas Piramal, it is exploring various opportunities for expanding its current product lines and acquiring new agencies. The Division is developing new products and these would be commercialised by the second half of the current year.

Henceforth, under the umbrella of Voltas International, the Division will also handle exports of chemicals and allied profits.

6. Unitary Products Business Products:

a) Cooling Appliances Business Division:

The Cooling Appliances markets witnessed heightened activity during the year 2000 - 2001 with a number of Korean and international brands entering the fray, particularly in the room air conditioner category.

Based on thorough consumer studies and analysis, the room air conditioners manufactured by the Division were regrouped under two sub brands, namely, Verdant in the premium segment and Vectra in the sub premium category.

Verdant was launched formally with a multi media campaign using press, television, hoardings and window displays. The campaign was received well, delivering a 32% growth in volume as against the industry growth of approximately 20%. However, profitability declined due to lower price realisations.

The Water Cooler business registered a growth of over 50%, following the launch of new models and other initiatives such as direct marketing.

While efforts on cost reduction at manufacturing units have brought savings, efforts are now being put towards rationalising the post manufacturing costs needed to offset the impact of falling price realisations. In the past two years, prices have gone down by 13%.

The decision to brand value added service products and market them aggressively has improved the profitability of service operations by 37%. The

'Crystal Care' range of service products introduced last year has been well received in the market and the brand has started to be equated with premium service.

New revenue streams have been added for the benefit of the large base of customers with old air conditioners. The Division plans to add more revenue streams and has launched the 'Upgrade Scheme' for customers who desire the recently introduced features to be added to their air conditioners, with retrofits.

The economic slow down this year may arrest the aggressive growth rates achieved, though demand from certain sectors like Telecom show vibrancy.

b) Commercial Refrigeration and Contract Manufacturing Business Division:

The last financial year saw the completion of the modernisation programme for refrigerator manufacturing of the diverse nature of the businesses and the ever

increasing pressures of consumer demand on quality and costs. The new structure will provide further focus on enhancing market share in specific segments. While the business groups will concentrate on performances, Corporate Management will drive all processes which enhance business excellence using the Tata Business Excellence Model (TBEM), so that shareholders value and productivity of capital and other resources is maximised. In the period when markets for engineering products are sluggish, your management has to gain economic value out of services and contineous cost reduction. The IT initiatives will also continue a pace so as to get ERP in place, all leading to lighter yet more robust commercial practices.

7. Subsidiaries and Associates:

a) Voltas international Ltd (VIL):

Voltas international Ltd (VIL), a wholly owned subsidiary of the Company, recorded a significantly higher income at Rs1430.92mn for the year ended 31st March, 2001, as compared to Rs740.11mn in the previous year. VIL has earned a higher profit before tax of Rs41.33mn for the year under review as compared to Rs33.6mn in the previous year.

VIL has over a period of time, earned a good reputation as an electromechanical contractor and has successfully completed several integrated and complex electromechanical works. VIL is now geared to take up larger sized projects and in view of its good working relationships with reputed international consultants and contractors, who are now focusing their operations within India, VIL expects good business in the future as it extends its operations in India.

The Directors have at its Meeting held on 10th April, 2001, approved of the Scheme of Amalgamation of VIL with the Company effective 1s1 April, 2001, subject to obtaining the requisite approvals in that behalf, including the sanction of the Scheme of Amalgamation by the High Court, Mumbai under the provisions of Sections 391 and 394 of the Companies Act. 1956. The amalgamation of VIL with the Company would facilitate VIL in raising adequate finance facilities needed to undertake large contracts on better terms. At the same time, upon amalgamation, the Reserves of VIL would form part of the Company's Reserves and enhance the net worth of the Company.

b) Perfect Moulds Ltd (PML),

Perfect Moulds Ltd (PML) wholly owned subsidiary recorded a higher turnover of Rs.81.381m for the year ended 31st March, 2001 as compared to Rs66.299mn in the previous year. PML, however, continues to incur losses and the loss for the year was Rs10.584mn as compared to Rs10.523mn in the previous year. As reported in the Annual Report of last year, despite obtaining the requisite approvals, the joint venture arrangements with Jaud S.A., France, could not be

concluded due to diverse reasons. PML had on a regular basis executed export orders of Jaud and the export business for the year 2000 2001 of PML was close to Rs30mn. During its association with Jaud, for almost 3 years, PML became known in France as reliable and quality conscious mould maker. The Company is presently negotiating with a party for a joint venture for PML. At the same time, various options are under consideration to step up the operations of PML and make it financially viable.

C) Voltas Switch Gear Lts (VSGL):

Voltas Switch Gear Ltd (VSGL), a wholly owned subsidiary of the Company has after obtaining the approval from the Registrar of Companies, Maharashtra, extended its financial year 2000 -2001 to 18 months to close on 30th September, 2001. Accordingly, the accounts of VSGL are not attached to the Accounts of the Company, for which the necessary application has been made to the Central Government as required by Section 212 of the Companies Act, 1956. At the same time, various options are under consideration to find a solution to the deteriorating performance of VSGL.

d) Virat Investment Company Ltd (VIRAT):

Virat Investment Company Ltd a wholly owned subsidiary of the Company engaged in investment activities has recorded higher income at Rs60.283mn for the year ended 31st March, 2001 as compared to Rs49.671mn in the previous year. Virat had declared and paid interim dividends aggregating Rs11.175mn

(75%) and has recommended a final dividend of 25% aggregating Rs3.725mn, for the year ended 31st March, 2001.

e) Voltas Air International Ltd (VAIL):

Voltas Air International Ltd (VAIL) is a joint venture company between Voltas and Air International Group, Australia, engaged in the business of transport air conditioning. During the year 2000 - 2001, the off take of air conditioning units for Indica cars by Telco had dropped considerably, thereby adversely affecting the performance of VAIL for the year ended 31st March, 2001. A larger part of the year was utilised by VAIL in upgrading the product including the design to meet with the requirements of Telco and market expectations. The future of this business is linked closely with the growth of the auto sector. VAIL also supplies air conditioning units to Defence, which has been well accepted and more than 70 units have been supplied to the Defence sector. VAIL is the only manufacturer of defence systems in India, which were hither to being imported from France.

EXPORTS

PUTTING CUSTOMERS FIRST EVERY TIME

International Business of Unitary Products Business Group is a leading division in Airconditioners worldwide. Having Airconditioned many of the prestigious establishments like Queen Mary II, Hong Kong International Airport, Sultanate of Oman palace. It is this very same expertise that goes into window and split Airconditioners. Providing a full spectrum of products of Aircondtioners, from Window, Split, Stand alone slimlines, Casettes and Ductable type. It also produces Domestic Refrigerators, Visi Coolers, Chest Freezers, Water Coolers and Water Dispensers from its State of Art factories. The products offered are of world class quality, latest features, high performace machines which have stood the test of time in some of the very high ambient conditions in countries like UAE, Kuwait, Qatar and Sultnate of Oman.

Against this robust background, we have built a unique organization committed to delivering nothing but the best with exceptional levels of services with a single aim being, "Passionately Customer Focussed".

Latest Quarterly Results - 04/2005 (3 months)            (Rs mn)Period ended 02/03 01/03 GrowthNo. of months (3) (3) (% yoy)Sales 2,616.6 2,099.5 24.6Other income 65.1 40.6 60.3Total income 2,681.7 2,140.1 25.3Expenditure (2,576.3) (2,045.3) 26.0Operating profit 105.4 94.8 11.2Interest (5.6) 5.8 (196.6)Depreciation (14.3) (37.3) (61.7)Profit before tax 85.5 63.3 35.1Tax (19.3) 3.6 (636.1)Profit after tax 66.2 66.9 (1.0)Extra-ord.items/PYA 48.4 (62.6) (177.3)Adjusted profit after tax 114.6 4.3 2,565.1OPM (%) 1.5 2.6 -Equity 330.5 330.5 -EPS (Rs) 8.0 8.1 -

Notes:1. Extraordinary Items (Net) for the year ended March 31, 2002 comprise Profit on sale of Undertaking Rs 196.721 million (previous years Nil). Profit on sale of property/transfer of development rights - Rs 368.587 million (previous year Rs 31.162 million) write back of diminution in value of investments Rs 71.771 million (previous year Nil) Other income Rs 23.376 million (previous year - Rs 226.750 million). Loss on sale of investment in subsidiary companies Rs 192.395 million (previous year Nil). Provision for diminution in value of investments - Nil (previous year Rs 145.215 million). Amortisation of VRS expenses Rs 307.795 million (previous year Rs 227.357 million). Advances written off/provided for Rs 132.852 million (previous year Nil). Provision for contingency Rs 20.00 million (previous year Nil). Other expenses Rs 22.016 million (previous year Nil)

2. Accounting Standard 22 relating to Accounting for Taxes on Income is mandatory effective April 1, 2001. In accordance with the requirements of this standard, Tax effect of timing difference arising during the year of Rs 30.10 million has been accounted. Net deferred tax asset pertaining to the period prior to April 1, 2001 amounting to Rs 86.80 million has been added to the Reserves as at April 1, 2001 and the Reserves as on April 1, 2001 have increased to Rs 1307.00 million

3. As per Bombay High Court order received on September 20, 2001, Voltas International Ltd (VIL), a wholly owned subsidiary of Voltas Ltd has been merged with the Company w.e.f. April 1,2001.

These results for the year ended March 31, 2002 include full year results of VIL as given below:

Net Sales/Income from Operations Rs 1388.20 millionTotal Expenditure Rs 1149.50 millionProfit before tax Rs 238.70 millionProvision for taxation (including foreign income tax) Rs 23.40 millionProfit after tax Rs 215.60 million

4. Provision for taxation includes Foreign income tax of Rs 29.70 million and wealth tax of Rs 0.80 million.

5. Figures for the corresponding period last year have been regrouped for making them comparable.

6. The Board of Directors have recommended a dividend @ 18% for the year 2001-02 (previous year 12%).

7. The above results have been taken on record by the Board of Directors at its meeting held on May 29, 2002.

Voltas launches a new brand of air conditioners  October 31, 2004

Voltas Limited, a pioneer in the air conditioning and refrigeration industry, has launched a new range of air conditioners. Called Vertis, the new state-of-the-art range of air conditioners is the product of a "manufacturing only" joint venture (JV) between Voltas and Fedders International Inc., USA.

The new  range was launched at a national première show in Hyderabad on 11th October, 2004 Mr SN Tripathi, ExecutiveDirector  and  COO, Unitary Products Business Group, Voltas Ltd, said, "Vertis competes with the best products in the world and is built using the latest technology."  

New eco-friendly Fedders technologyThe newly-formed joint  venture  company — "Universal Comfort Products Private Limited" (UCPL), aims to achieve international  quality and technology standards in a cost effective manner by merging Voltas' long experience in climate control technologies with Fedders' product design. 

Voltas' existing manufacturing facility at Dadra, which is ISO  9001 certified, has recently been upgraded with a Rs 40 crore  investment. The facility has been transferred to the JV and will  manufacture the Vertis range of world-class window and split air conditioners.

New technology strengths The joint venture will give Voltas the competitive edge it needs to capture a winning share of the growing retail segment in India. It will also facilitate Voltas' entry into the domestic segment  through the retail channel. The company has traditionally had a significant presence in this segment. The Vertis range  incorporates the latest top-of-the-line technology at affordable prices in keeping with Voltas' business philosophy  to provide value for money products with top-end features. 

Vertis follows the popular Verdant and Vectra range of air conditioners. It includes features ranging from a value-engineered electronic controller with a wireless remote. Vertis is available in capacities ranging from 0.75 to 3.0 tonnes and is equipped with the latest air purification processes.

The 'Verdant' range includes the best in  class high-tech models with features like electronic dust absorbers, sleep mode, a PLTC filter, ionisers, an anti-bacteria filter, and a  4-way air deflection  system.  It also incorporates the unique Oxy Max Air Purification process. The  popular  `Vectra'  is Voltas' regular range and has a four-stage Quadra Plus Air Filter to effectively combat active odour, cigarette smoke and bacteria.

Contemporary designThe new international range has non-CFC rotary and reciprocatory compressors with microprocessor controls for efficient cooling and power saving. Cutting edge Fedders technology makes Vertis one of  the most silent air conditioners in the

market today. The design, which combines  convenience, aesthetics and durability, suits urban home/office interiors.

Crystal Care serviceThe new range is backed by Voltas' Crystal Care Service. It offers life-long service through its nation-wide network of service centres. Well-trained engineers, technicians and a fully computerised network response system support each centre.

Aggressive marketingTo take an aggressive position in the market place for the new range of air conditioners, Voltas will increase its advertising and promotion budget three-fold, and launch a unique customer relationship management programme,  a streamlined and re-invigorated dealer network and new customer-friendly easy finance schemes.

RAW MATERIALS COST BREAKUP Period ended 03/98 03/99 03/00 03/01No. of months 12 12 12 12Raw materials cost(Rs mn)Compressors 201.3 330.1 189.1 657.2Engines 34.0 16.0 20.2 19.6Ferrous metals/materials 482.7 428.8 244.8 338.7Forgings and castings 68.8 44.3 31.2 27.1Non ferrous metals/materials 253.6 278.1 122.8 65.9

Shells 9.4 4.7 1.8 2.3Tyres and tubes 17.4 9.0 7.9 10.2Others 3,010.4 2,399.0 1,738.6 1,905.4 Raw materials volume(unit)Compressors (Nos) 38,169.0 50,771.0 44,546.0 317,986.0Engines (Nos) 492.0 261.0 287.0 282.0Ferrous metals/materials (Ton) 14,839.0 11,042.0 6,308.0 9,481.0

Forgings and castings (Nos) 1,385,720.0 803,070.0 52,734.0 53,389.0Non ferrous metals/materials (Ton) 2,877.0 5,780.0 1,560.0 292.0

Shells (Nos) 39,969.0 27,528.0 638.0 504.0Tyres and tubes (Nos) 7,898.0 4,894.0 4,304.0 5,247.0 Unit realisation (Rs/unit)Compressors (Nos) 5,275 6,501 4,244 2,067Engines (Nos) 69,033 61,375 70,247 69,383Ferrous metals/materials 32,530 38,836 38,813 35,722

(Ton)Forgings and castings (Nos) 50 55 592 508Non ferrous metals/materials (Ton) 88,140 48,110 78,695 225,757

Shells (Nos) 236 170 2,770 4,512Tyres and tubes (Nos) 2,198 1,837 1,830 1,937

CASH FLOW STATEMENT (RS MN)

Period ended 03/98 03/99 03/00 03/01No. of months 12 12 12 12Pre tax income from operation (180.6) (264.2) (96.3) 50.8

Depreciation 250.0 204.7 150.2 147.9Expenses (deferred)/written off 9.5 (7.0) (406.6) (141.1)

Other income/prior period adj 87.5 405.4 155.9 6.4

Tax (2.4) (13.3) (4.6) (1.4)Cash profits 164.0 325.6 (201.5) 62.6(Inc)/Dec in trade working capital-Inventories (24.2) 852.3 169.8 (80.4)-Sundry debtors (384.5) 517.4 (15.0) (65.3)-Sundry creditors 373.2 (578.1) 45.7 356.6-Others 46.4 (185.8) (131.4) 222.5Net adjustment 10.9 605.8 69.1 433.4Operating activities 174.9 931.4 (132.5) 496.0(Inc)/Dec in fixed assets (96.4) 831.4 (179.3) (272.9)(Inc)/Dec in investments 35.1 (357.8) 480.3 110.3(Inc)/Dec in loans & advances 192.6 (170.2) 265.6 (293.6)

Investing activities 131.3 303.4 566.7 (456.1)Inc/(Dec) in debt (42.1) (1,385.1) (459.5) (74.1)

Inc/(Dec) in equity/premium (12.6) 0.0 0.0 -

Direct add/(red) to reserves spl item (1.9) 0.0 0.0 0.0

Dividends - (44.1) (44.1) (43.8)Financing activities (56.6) (1,429.1) (503.5) (117.8)Cash generated/(utilised) 249.6 (194.3) (69.3) (78.0)Cash at start of the year 289.1 538.7 344.4 275.0Cash at end of the year 538.7 344.4 275.0 197.0

BANKERS

State Bank of IndiaState Bank of Bikaner and JaipurState Bank of IndoreState Bank of TravancoreBank of IndiaAllahabad BankPunjab National BankCitibank N AUnited Bank of IndiaBanque Nationale de ParisState Bank of Hyderabad

AUDITORSM/s S B Billimoria & Co

SOLICITORSM/s Mulla & Mulla and Craigie Blunt & CaroeBoard of DirectorsBoard of Directors as on 4th June 2001Ishaat Hussain ChairmanN D Khurody Managing DirectorN A SoonawalaBir D SinghN M Munjee

N J JhaveriS D KulkarniYash PaulS N TripathiV P Malhotra

SECRETARYR C Thawani

AFTER SALES SERVICE PROVIDED BY VOLTAS

Siemens Appliances will expand to 640 Service Centres across IndiaRBS Home Appliances and Voltas Ltd come together to provide wider after sales service

1st July 2004, Hyderabad… In an increasingly cut-throat industry, strategic alliances are the only way forward. RBS Home Appliances has taken a decision to tie up with Voltas Ltd for the use of their 640 service centres across the country for after sales services. The tie-up brings together strengths of both appliances companies. Voltas will be the service provider and after sale service for Siemens Home Appliances will be accessible to consumers across the country through their network. Siemens Home Appliances have been marketed mainly in the West and South, will soon be available all India. With presence in all product categories i.e. Washing, Dishwashers, Refrigeration, Cooking and Small Appliances it can fulfil the customers' need of a Siemens Home.

Speaking about the alliance Mr. S N Tripathi, Executive Director & COO - Unitary Product Business Group, Voltas Ltd, stated " this strategic tie up with RBS Home Appliances will enable Voltas to service the customers having premium range of products of Siemens which includes Frost Free Refrigerators, Washers , 100% Dryers and Dishwashers apart from other products. Also Siemens will have

marketing access in new regions through wide spread service network of Voltas. This will be a mutually beneficial arrangement and will cover the service of new products which will be launched by Siemens in the future"

According to Mr Vipul Raval, MD RBS Home Appliances " We are delighted to be associated with Voltas for providing after sales services on our Siemens range of appliances and this alliance will help us reach out to all the markets in India".

Finding a Silverlining

Ferocious activities witnessed in Air-conditioning Industry. Advent of multinationals such as LG Electronics, Samsung, Hitachi etc into this Rs14bn market has hit the existing players. MNCs with an intention of building clear identities for their respective companies and brands, are eating into the  market share of dominant players like Carrier Aircon (in room ACs). Rising competition has forced companies like Blue Star (leaders in central ACs) and Voltas Ltd into restructuring.

Though the industry is still dominated by the unorganized segment, the gap between the two has narrowed down on account of the reduction of excise duties. International players have seized this opportunity to gain at the cost of smaller players. Improved technology, reduction in excise duties from a 110% to 65% and prices slide by about 8-10 per cent has reflected into higher growth rates, especially in room ACs.

The industry is likely to witness good growth in the next three years, backed on affordable prices and changing perceptions of the middle class. However, a cause for concern with reference to the players would be plummeting margins due to aggressive marketing, brand building exercise and innovations. With margins likely to come under immense pressure, the emphasis will be on volumes.

A shakeout is inevitable, unorganized players would be wiped out and lower end players would merge throwing open a vast uncatered market before the final consolidation.

Industry Profile

This industry can be broadly divided into Room ACs and Industrial ACs (chillers). Of this Room ACs are the fastest growing segment i.e. at nearly 30%, while the Air-condition market on a whole is growing at a rate of 10%.

Room ACs account for 55% of the total market, which is further, divided into windows and splits. Windows account for 75% of the market and are dominated by unorganized sector. Unorganized market includes dumping from South East Asia. Despite no servicing centers and shortage of replacement these ACs have started gaining shares. It’s the futuristic technology and products developed based on consumer perception, which has lead to a success of these products.

Central Air-conditioning (30 tons and above)

This market has remained stagnant since past three years. Margins from this segment are as low as 7-8%, which makes it less attractive compared to others. Leading players in this segment are shifting their focus towards the faster growing segment-Room ACs.

Companies Market Share (%)Blue Star 38Voltas 17Carrier Aircon 9ETA 13Suvidha 3KPC/MCO 1Trane 1ABB-Flakt 1Thermax 9Others 8

Source: FY99 Balance sheet of Blue Star Ltd

Ducted System (5-20 tons)

This is a segment, which lies in-between central and room ACs. These are packaged airconditioners (PAC), fitted with scroll compressors, which are more reliable because it has only three moving parts within the compressor, compared to 15 moving parts otherwise. And more importantly it ensures saving of energy cost to the consumer.

Companies such as Blue star, who are leaders in central ACs are now vouching on about 50% future revenues from packaged air conditioners.

Companies Market share (%)Blue star 33Carrier 29Voltas 21Amtex 7Others 10

Source: FY99 Balance sheet of Blue Star Ltd

Mini Split Air-conditioners (1-3 tons)

The unitary products would include the window ACs and the mini-splits (without ducts). These ACs are ideal for rooms with low heat loads. They are available in the capacity range of 0.5 TR to 3 TR. The room AC sector caters to residential premises, offices and small establishments. Overall growth rate in this segment is about 15%.

Split ACs are so named because the unit is 'split' into two parts. The compressor and the condenser forming an outdoor unit and the cooling coil remaining as an indoor unit. Split units can be with or without ducts. In PAC’s, the unit is placed in a separate room and the cold air is carried through ducting to the required areas. It is suited for those establishments that are not large enough to go in for a central system.

This segment is growing at 25%. With many more show rooms and commercial establishments companies the future looks bright for this segment.

Companies Market share (%)Carrier 42Voltas 22Blue Star 9Amtrex 14Videocon 3Godrej 1

Others 9

Source: FY99 Balance sheet of Blue Star Ltd

Demand /supply

The Rs6bn strong room air-conditioner market has recorded an impressive demand growth rate of 23% (compounded) between 1991 and 1996. From 0.13 million units in 1992-93, it has grown to 0.386 million units in 1997-98. With distinct recessionary trends affecting the economy in 1997, a reversal in fortunes was witnessed. The trend was resumed in 1998-99 with a growth rate of 15%. This growth has been possible due to cuts in excise duties, which have reduced prices bringing them to as low as Rs18,000 for a 0.75 TR machine. Historically,

excise cuts have played a significant role in boosting demand, the ratio being a 2% increase in demand for every 1% cut in excise, as seen in the previous years whenever a cut has taken place.

Fighting the chilling market

The industry, which was characterized by few players like Carrier Aircon Ltd (CAL) and Voltas Ltd dominating the market, has to combat the threat of new entrants, the likes Hitachi, Matsushita, Samsung and LG.

Voltas Ltd

Once a market leader in room air-conditioning, slipped into the red in FY97due to unrelated diversification. Lack of concentration on core competencies resulted into loss of leadership position (room ACs) to the new comer Carrier Aircon. To combat the crisis the company had decided to restructure its strategies and cut costs. The market has already discounted the turn around story.

1 H FY00, the company posted a net profit of Rs55mn against loss of Rs 84.9mn last year. Improved profitability was on account of sale of white goods division to Electrolux and chemicals division to Rallis. However a fall in the contribution from these division resulted into a slide in sales to Rs5.46bn from 6.77bn last year. Company is emphasizing on cost cutting measures and VRS to improve future profitability.

In last few months, the company has bagged some large prestigious orders in CAC, which would see it through in the next few years. In room AC segment, Voltas has taken on the leader Carrier Aircon by launching 44 new models of room ACs and spending more on advertising to build its product visibility and awareness.

In the engineering business, prospects depend on the overall economic environment. Its product lines include textile machinery, machine tools, cranes, forklifts etc. The company also has substantial trading and agency business. Here also, the company has done well by bagging a few large orders.

Blue Star Ltd

Buoyant activities were witnessed in this stock after the announcement of a swap arrangement wherein every Blue star shareholder would receive 1 share in Bluestar Infotech Limited. This in turn has trimmed the equity base of the Blue star by about 25%.

The company has initiated a multi-pronged strategy to increase business and improve profitability. Air-conditions constitute to 65% of the total turnover. Of this nearly 59% sales comes from central A/C segment and 26% from ducted systems. The window air conditioning system contributes only about 8% while mini-split segment contributes to about 7% of A/C sales. The company is a leader in central A/C with 38% share.

1 H FY00, the company posted a 62%yoy rise in net profits to Rs67.4mn while net sales increased marginally to Rs2.16bn from RS 2.12bn. Sales, were flat due to flat earnings from the core business, central air-conditioners. Cost effective measures adopted by the company helped in improving profitability.

The company is shifting focus from central ACs to room ACs. It also plans to double its dealer network from 56 to 100 and invest heavily on brand equity

QUESTIONNAIRE FOR AIR CONDITIONER INFORMATION

NAME :

AGE :

SEX :

ADDRESS :

PHONE NO. :

OCCUPATION :

1. House hold income (p.m)

o Below 5000o 5000 – 10000o 10000 – 15000

o Above 15000

2. Are u using a Air Conditioner: - (if no go to question 10)

o Yes o No

3. If YES then which brand?

o BLUE STARo SAMSUNG o VOLTASo LGo HITACHI

4. What is the type of Ur Air Conditioner

o SPLIT ACo WINDOW AC

5. Agree with the prices?

o Yeso No

6. Are u satisfied with Ur air conditioner.

o YESo NO

7. If yes then reason

__________________________________________________________

8. If no then reason

__________________________________________________________

9. Do u want to change your Air Conditioner?

o YESo NO

10. If you want to buy an Air conditioner to which brand you will move?

o BLUE STARo SAMSUNG o VOLTASo LGo HITACHI

11. What is your preference while purchasing an air conditioner?

o Priceo Brand Nameo Qualityo Warranty o Durability

12. How do you generally came to know about a company’s products?

o NEWS PAPER / MAGAZINES

o T.V o FRIENDS / RELATIVES o HOARDINGS / BILLBOARDS

Analysis to the QUESTIONNAIRE

After analyzing this questionnaire we found the following results.

2.)

There are 60% people who are not using the air conditioners and 40% are using it

3.)

D o u h a v e A ir C o n d i t io n e r

Y E S

N O

B r a n d N a m e

S a m s u n g

B lu e S t a r

V o l t a s

H i t a c h i

L g

35% customers are using BLUE STAR Air conditioners.25% customers are using VOLTAS Air conditioners.20% customers are using SAMSUNG Air conditioners.15% customers are using LG Air conditioners.05% customers are using HITACHI star Air conditioners.

4.)

60% customers are using WINDOW Air conditioners.40% customers are using SPLIT Air conditioners.

5.)

A g r e e w i t h p r ic e s

Y e s

N o

65% customers are agreed with the prices.35% customers are not agreed with prices.

6.)

S a t is f y w i t h y o u r A C

Y e s

N o

90% customers are satisfied with their Air Conditioner. 10% customers are not satisfied with their Air Conditioner.

7.)

D O u w a n t t o c h a g e u r A c

Y e s

N o

65% customers want to change their Air Conditioner.35% customers do not want to change their Air Conditioner.

10.)

w h ic h n e x t

B l u e s t a rS a m s u n gV o l t a s

L gH i t a c h i

40% people want to buy BLUE STAR Air Conditioner.25% people want to buy VOLTAS Air Conditioner.15% people want to buy LG Air Conditioner.15% people want to buy SAMSUNG star Air Conditioner.05% people wants to buy HITACH Air Conditioner.

11.)

p r e f e r e n c e

P r i c eB r a n d n a m eQ u a l i t y

W a r r e n t yD u r a b i l i t y

30% people say the prefer PRICE.15% people say the prefer BRAND NAME.20% people say the prefer QUALITY.10% people say the prefer WARRANTY.25% people say the prefer DURABILITY .

12.)a w a r n e s s o f c o m a p n y ' s p r o d u c t

N e w s P a r e r/ m a g a z i n e sT . v

F r i e n d s / R e l a t i ve

H o a r d in g s/ B i l l b o a r d s

40% people aware from the NEWS PAPER / MAGAZINES.30% people aware from the T.V.20% people aware from the FRIENDS / RELATIVE.10% people aware from the HOARDING / BILLBOARDS.

LIMITATION OF STUDY:

Due to the following unavoidable and uncontrollable factors the results might not

be accurate. Some of the problems might faced while conducting the survey are

as follows:

1. Certain open-ended questions have been put in the questionnaire

to give respondents freedom to express their perception.

2. Time and cost constraints were also there

3. Chances of some biasness couldn’t be eliminated.

4. A sample size of 100 has been used due to time limitations.

5. The data has been collected from Delhi(North) and there the

perception of the people from the smaller towns could not be judged

6. Al the data has been collected at random but it is always liable fro

biasness.

7. The primary data has been collected from the middle and upper

section of the society.

RECOMMENDATIONS FOR THE BLUE STAR

It should improve upon the quality of service provided.

It should advertise more.

It should try to create a favorable image of itself in the eyes of the

people.

It should rework its infrastructure.

It should improve the quality of its staff.

It service stations should have Sunday open facility.

The Company must have there service stations at places like

Rajouri Garden, Pitampura and Shalimar Bagh as in these areas the

number of customers is high.

The company should also think about the middle class people.

SWOT ANALYSIS

Strengths:

Human Resource philosophy of the company aims at

nurturing an organizational culture that respects people,

empowers and enables them to deliver high quality performance

and rewards talent with competitively superior compensation

and accelerated career growth opportunities.

The company continues to accord the highest priority to

Environment, Occupational Health and Safety (EHS). The Best after sales service is provided by the company.

Weaknesses:

High prices of products.

No small models are available.

Very limited products.

Opportunities:

Climate in which investments can become productive and internationally competitive.

A favorable economic climate with a clear thinking in key

policy areas.

Installment facility must be there like VOLTAS.

Threats:

The foreign export policy

Increasing market competition.

Other companies offering same product in cheaper prices

CONCLUSION

The healthy competition in the Air conditioner market has set new trends in the

quality of services. It is a matter of great significance that the company staff now

care about the customer comfort and take pains to see the customers get value

for the money they are spending. Also the increasing competition with VOLTAS,

SAMSUNG and many more make them more sensible to the needs and

requirements of the customer.

They are becoming more conscious to the needs of the society as well i.e. they

are assuming their social responsibilities. BLUE STAR provides the best after

sales service which is the major reason of its growth in India.

At last we conclude that at present BLUE STAR leads the Indian

market.

BIBLIOGRAPHY

www.bluestarindia.com

www.voltasacs.com

www.google.com

www.indiainfoline.com

various news papers and magazines