ANALYST MEET February 25, 2008

1. ANALYST MEET February 25, 2008 ANALYST MEET February 25, 2008

2. About Blue Star

3. About Blue Star • Blue Star is an end-to-end solutions provider in the field of airconditioning and commercial refrigeration as a • Manufacturer • Contractor • After-sales service provider • Another business interest is distribution and maintenance of professional electronics and industrial systems

4. About Blue Star • Specialist organisation, deliberately tuned to satisfy the needs of corporate, commercial and institutional customers • Differentiated products and expert solutions • As market leaders, it often sets the standards for products, practices and services • Has successfully adapted itself to leverage on opportunities in emerging segments

5. Blue Star today

6. Blue Star today

7. Q3 Financial Performance

8. Business Model

9. Target Segments

10. Growth Drivers

11. Competitive Advantages • Technical Competence • Credentials of over six decades • Vast pool of talented engineers • Turnkey solutions • Energy Efficient and differentiated products • Wide network and reach • Strong Relationships with national/repeat customers • Domain expertise

12. Margin Improvement • Substantial operating margin improvement over the last few years - from 4.2% in Q1FY05 to 10.6% in Q3FY08 • Increase in margins can be attributed to • Scale • Product Mix • Value Engineering • Procurement Efficiency • Customs Duty Reduction • Higher Price Realisation due to differentiated products, value-added offerings and brand equity • Selectively pursuing high margin projects • Himachal Plant Tax benefits • Low interest costs due to lean balance sheet, sound working capital management and low borrowings • Tight control on operating expenses (Headcount up by only 30%, while Total Income has nearly tripled in the last four years)

13. Human Resource Management • Take pride in employing the largest pool of talented engineers in the country • Two-thirds of employees are white collared • Over 1500 engineers/professionals • Attrition under control at less than 15% • Grooming, mentoring, training and development to make the employee practice the ‘Blue Star Way’ • Customised management development programmes for senior managers

14. Business Outlook

15. Unprecedented growth in construction driving AC&R and Building Electrification industry

16. Airconditioning Opportunities (non-residential) over the next 5 years (cumulative)

17. Airconditioning Opportunities (non-residential) over the next 5 years (cumulative) (* Source : Internal Market Research through Feedback Marketing)

18. Airconditioning Opportunities (non-residential) over the next 5 years • Rs 37,600 crore of airconditioning potential over next 5 years as against Rs 12,000 crore of airconditioning in the last 5 years • Blue Star can participate with • Own manufactured products such as chillers, AHUs, FCUs, packaged ACs, VRF etc • Contracting • After-sales service • Equal amount of potential is available for building electrification and MEP offerings

19. Building Services

20. FY08 FY12 HVAC Orders bundled as MEP HVAC orders bundled as MEP HVAC orders bundled as MEP Stand-alone HVAC orders Stand-alone HVAC orders Market Size Rs 5,000 crore Market Size Rs 12,500 crore

21. Blue Star Growth Agenda • Aggressively grow core businesses of central airconditioning and commercial refrigeration • Retain market leadership • Enter building electrification business • Grow integrated MEP contracting business • Pursue inorganic growth opportunities

22. Reasons for acquistion • MEP turnkey projects expected to grow from current 10% to 30% over the next five years • Offer integrated solutions to our strong customer segments • Ramp up time in organic growth would have been too long – may have resulted in significant opportunity loss • Prudent to grow inorganically and leverage on the opportunities in the construction boom

23. Naseer Electricals Overview

24. About Naseer Electricals • Founded by A S Dawood in 1978 • Headquartered in Bangalore with branches in Chennai and Hyderabad • Business model revolves around providing building electrical contracting services – right from design to execution • Pre-dominantly a South India player • Focused on commercial buildings

25. About Naseer Electricals • Turnover Rs 107 crore (FY07) • Order book Rs 90 crore • Margins equivalent to central airconditioning • 120 professionally qualified and highly skilled employees • 1000+ contract labourers • Executed several prestigious projects • Strong long term relationships with its customers and influencer segments

26. Details of Acquisition

27. Consideration • Slump Sale - Acquisition of the businesses of Naseer Electricals as a going concern • Consideration upto Rs 42 crore includes • Upfront Payment • Debt • Escrowed amount on fulfilment of certain conditions

28. Scaling up operations • Naseer Electricals is primarily functional in the Southern Region • Initial thrust to ramp up the business in other regions • Blue Star will also begin cross-selling Electrical Contracting services to its existing HVAC customers and vice versa • Will also pursue bidding for MEP jobs

29. Rolastar Divestment • Blue Star embarked on a programme to modernise site practices a decade ago • Pioneered factory made ducting by setting up Rolastar with a 49% stake • Being a non-core activity, Blue Star has divested 29% stake for Rs 36.75 crore • Balance 20% to be sold before Sep 2009 for a price to be determined then

30. Blue Star Design & Engineering • Provides outsourced design and drafting services to HVAC & Architectural consultants and contractors in the UK, Europe and Middle East • Currently employs over 100 engineers in its Mumbai facility • Blue Star Limited has 50% equity ownership • In the process of inducting a Strategic Partner into the business to scale the business • With the Strategic Investor in place, we are confident that our investment in BSDE will yield handsome returns in the coming 2-3 years

31. Scheme of Arrangement • The exercise is to reflect the operating profits of the Company i.e. earnings in the normal course of the business • Any one time items / non operational items / items that are not in the normal course of the business not to effect the operational results of the Company • The Company has recently acquired the business of Naseer Electrical Private Limited (“NEPL”)

32. Scheme of Arrangement • The Company has filed the Scheme in the Bombay High Court which envisages the following items as exceptional and non-recurring that should not impact the operational results of the Company: • Any Goodwill that may arise on account of the acquisition of the electrical contracting business. • Any payments to the advisors to this new business to stabilize the operation and ensure smooth integration of the same to Blue Star culture; • Any other exceptional items not pertaining to the business operations of the Company.

33. Thank You