Consistently high commodity prices and increase in general operating
 costs due to the overall inflationary conditions eroded margins and
 resulted in a reduction of 8% in the Profit before Interest,
 Depreciation and Taxation to Rs. 282.67 crores as compared to Rs.
 305.84 crores in the previous year.
 
 FINANCIAL PERFORMANCE
 
 The Companys financial expenses increased sharply from Rs. 8.45 crores
 in the previous year to Rs. 24.39 crores in the current year, due to a
 higher interest rate regime and additional borrowings. The major
 slowdown in execution of several large projects, resulted in a
 comparatively tardy cash flow and increase in the Capital Employed in
 the business. As a result, the Profit before Tax for the year saw a
 reduction of 18% to Rs. 227.00 crores as compared to Rs. 276.62 crores
 in the previous year.
 
 The higher income tax rate rose mainly due to lower benefits for the
 Himachal plant. This resulted in the Profit after Tax declining by 27%
 from Rs. 211.49 crores to Rs. 155.00 crores.
 
 EXPORT & FOREIGN EXCHANGE EARNINGS
 
 Product exports revived during the year, growing by 33% to Rs. 130.8
 crores. Foreign Exchange inflow for the year, including commission
 income, was Rs. 160.3 crores as compared to Rs. 129.4 crores for the
 previous year. Foreign Exchange outflow for the year was Rs. 561.5
 crores as compared to Rs. 475.5 crores in the previous year.
 
 SUBSIDIARY COMPANY
 
 During the year, the Company made an investment of Rs. 98 crores in the
 acquisition of the plumbing and fire fighting business of D S Gupta
 Construction Pvt Ltd, through the Companys wholly owned subsidiary,
 Blue Star Electro-Mechanical Limited, which was incorporated during the
 year.
 
 CONSOLIDATED RESULTS
 
 The Annual Report also includes the Consolidated Financial Statements
 of the Company, which include the results of the Companys wholly owned
 subsidiary Blue Star Electro-Mechanical Limited and its share in the
 results of its joint venture companies and associate company. The
 Consolidated Financial results for the year show a Total Income of Rs.
 3009.85 crores and a Profit after Tax of Rs. 160.96 crores.
 
 AUDITORS
 
 M/s S R Batliboi & Associates, Chartered Accountants, retire as
 Auditors of the Company at the forthcoming Annual General Meeting and
 have given their consent for re-appointment. As required under the
 provisions of section 224 of the
 
 Companies Act, 1956, the Company has obtained a written certificate
 from M/s S R Batliboi & Associates, Chartered Accountants, to the
 effect that their appointment, if made, would be in conformity with the
 limits specified in the said section.
 
 M/s ABK & Associates, Cost Accountants have been appointed as the Cost
 Auditor of the Company to conduct the cost audit of airconditioners
 manufactured by the Company for the financial year ending March 31,2012
 upon the remuneration and terms and conditions as may be mutually
 agreed between the Company and M/s ABK & Associates.
 
 The observations made in the Auditors Report are self-explanatory and
 do not call for any further comments under Section 217(3) of the
 Companies Act, 1956.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors would like to inform the members that the Audited
 Accounts for the financial year ended March 31, 2011 are in full
 conformity with the requirement of the Companies Act, 1956.These
 financial results have been audited by the statutory auditors M/s S R
 Batliboi & Associates, Chartered Accountants. The Directors further
 confirm that:
 
 1) In the preparation of the Annual Accounts, the applicable accounting
 standards have been followed.
 
 2) The accounting policies are consistently applied and reasonable,
 prudent judgment and estimates are made so as to give a true and fair
 view of the state of affairs of the Company at the end of the financial
 year and of the profits of the Company for that period.
 
 3) The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for providing and detecting fraud and other irregularities.
 
 4) The Directors have prepared the Annual Accounts on a going concern
 basis.
 
 DIRECTORS
 
 During the year, Mr Vir S Advani was appointed as Executive Director of
 the Company with effect from July 1, 2010.
 
 Mr Vir S Advani and Mr Shailesh Haribhakti will retire from the Board
 by rotation and being eligible, offer themselves for re-election.
 
 It is proposed to appoint Mr Ashok M Advani as Managing Director
 designated as Executive Chairman and re-appoint Mr Suneel M Advani as
 Managing Director designated as Vice Chairman & Managing Director at
 the forthcoming Annual General Meeting.
 
 EMPLOYEES
 
 The increased level of operations and strengthening of the Companys
 R&D capabilities has resulted in an increase in the number of employees
 from 2603 as on March 31, 2010 to 2825 as on March 31, 2011.
 
 DISCLOSURE OF PARTICULARS
 
 Information as per Section 217(1)(e) of the Companies Act, 1956, read
 with the rules made thereunder relating to conservation of energy,
 technology absorption, foreign exchange earnings and outgo are given in
 Annexure A forming part of this report. Particulars of employees as
 required under Section 217(2A) of the Companies Act, 1956, read with
 the Companies (Particulars of Employees) Rules, 1975, as amended, form
 part of this report. However, in pursuance of Section 219(1)(b) of the
 Companies Act, 1956, this report is being sent to all the shareholders
 of the Company excluding the aforesaid information.The said
 particulars will be made available for inspection at the Registered
 Office of the Company.  Members interested in obtaining such
 particulars may write to the Company Secretary at the Registered Office
 of the Company. A Management Discussion and Analysis Report, as
 required under Clause 49 of the Listing Agreement is published
 separately in this Annual Report.
 
                                   For and on behalf of the Board
 
                                                   Ashok M Advani
 
 Mumbai, May 24, 2011                          Executive Chairman