Highlights
The carry forward order book position of the different segments of the company as on 31st Mar07 is as follows:
| Segment | Mar06 | Mar07 | Growth |
| Central Airconditioning | 495 | 633 | 28% |
| Cooling Products | 21 | 48 | 128% |
| Professional Electronics | 49 | 74 | 51% |
| TOTAL | 565 | 755 | 34% |
Achievements in FY07
- Consolidation of leadership in central and packaged airconditioning segment.
- Over 150 Blue Star screw chillers installed and commissioned.
- Dominated the telecom shelter airconditioning business with over 50% market share.
- Volumes of split airconditioners grew 75%.
- Tie-up with ISA, Italy for supermarket refrigeration equipment.
- Several new customer accounts in the cold chain business.
Central AC Segment
This segment is the core segment of the company and continues to enjoy 30% market share in this business with predominant focus on the domestic market. This business encompasses design, manufacturing, installation, commissioning and maintenance of large central airconditioning plants. The Central AC segment also comprises of Wide range of chillers, air handling units and fan coil units, Comprehensive range of packaged airconditioning systems, etc. With energy efficiency as the technology platform, Blue Star is a pioneer in products, which save power.
The Company derives 40% of central air-conditioning revenues from National/Major Account customers which have significant growth potential. Blue Star expects to garner a major portion of the HVAC requirement from these customers.
During the quarter, the company clocked a 38% rise in its central AC turnover to Rs 387.03 crore.
Cooling Products
This includes the business of Room Air Conditioners and refrigerator products. During the quarter, revenues from this business grew by a strong 36% yoy to Rs 122.02 crore and during the year showed a rise of 37% to Rs 372.78 crore. The realizations in the room ACs have increased mainly due to fast increase in volume of the split Acs as well as refrigeration products. Going forward, the company sees better growth opportunities in this business segment due to the evolving cold chain concept in the country. Also, this segment has witnessed highest rate of growth in order book position for FY07 at 128%, signalling strong growth ahead.
Professional Electronics and Industrial Equipments
The company mainly provides value added reselling through this business by having good relation with renowned equipment manufacturers of the world. This business encompasses value added services in many industrial segments, which are distinct in their own respect. Although the growth in this service led business is good but the company faces tremendous shortage of quality engineers for this business. Nevertheless as a matter of strategy the company has forayed into several new high growth niche segments with additional product lines. Despite the constraint of the availability of quality manpower the company foresees a promising outlook for this business.
Exports
Blue Star has been exporting water coolers for over five decades. The Window and split ACs for high ambient temperature conditions have been well received in the Middle East and Iraq. The Company has been successfully exporting customised ducted systems and heat pumps for the Middle East and Europe. Also, Central air-conditioning products such as AHUs and FCUs are exported. The Company recently opened office in Doha for project and product requirements from the region. The Companys export revenues have registered a robust growth of 32% to Rs 89.99 crore for the year ended Mar07.
Major growth drivers
- Construction boom
The Construction boom driven by IT/ITES, Retail and Infrastructure projects and the major growth plans announced by several players in these segments will translate into significant airconditioning and even refrigeration opportunities. Also, the Special Economic Zones (SEZs) are expected to drive growth.
- IT/ITES
IT/ITES services are expected to grow in excess of 25% per annum over the next 3 years. An estimated 1.4 million people will be added till FY10 and office space of over 100 million sq ft will be needed. This translates into airconditioning requirement of over Rs 1500 crores. Blue Star enjoys a preferred partner status with Infosys, HP, Satyam, Wipro, HCL, Cognizant, Microsoft who are major players driving growth in IT/ITES segments.
- Retail, malls and multiplexes
Based on plans announced by major players, 150 million sq feet of space will be added in this segment, translating into an airconditioning requirement of over Rs 2250 crores. Blue Star enjoys strong relationships with Reliance, Pantaloon, Shoppers Stop, Bharati, DLF, RPG, PVR, Adlabs and Vishal Megamart which are the main players driving growth.
- Opportunities from telecom segment
Blue Stars telecom business for airconditioning cell sites grew 185% in FY07. The Company enjoys a dominant 50% market share in this segment. The subscriber base is expected to double over the next 3 years to 500 million necessitating 150,000 additional cell sites, translating into an airconditioning opportunity of Rs 1000 crores.
- Opportunities from industrial segment
The Eleventh Five year plan includes addition of 48,000 MW of thermal power. Blue Star has already executed major power plant projects for NTPC, NPCIL and Jindal. The Company expects significant power plant project orders in the medium term. The pharma segment is another fast-growing segment which presents immense opportunites for the industry. Blue Star has strong credentials and expertise in the pharma segment as well.
- Contracting opportunities
The construction boom will fuel growth in HVAC contracting business. Currently, 15% of mega projects involve integrated mechanical, electrical and plumbing contracting. Blue Star has developed capabilities in this area as well.
Outlook
The macro economic trends are favourable for Blue Star and is in a strong position to leverage the opportunities available. With all three lines of business performing well, the Company is poised to outperform the market growth.
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