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Year End :2023-03

The Directors are pleased to present the 75^th Annual Report, together with the audited financial statements for the financial year ended March 31,2023.

COMPANY OVERVIEW

Your Company offers one of India's widest ranges of air conditioning and commercial refrigeration & air-conditioning products, as well as a comprehensive range of air purifiers, air coolers, water purifiers, cold chain equipment and specialty products. It fulfils the cooling, refrigeration & air-conditioning requirements of a large number of corporate, commercial as well as residential customers.

Leveraging on its project execution capabilities, your Company offers turnkey solutions in MEp (Mechanical, Electrical, plumbing and Fire-fighting) contracting for Buildings, Factories, data

Centres, Infrastructure, Heavy Industry and Water distribution projects.

the Company's integrated business model of a Manufacturer, Contractor and after-sales service provider enables it to offer end-to-end solutions to its customers, a factor that has proved to be a significant differentiator in the marketplace.

FINANCIAL HIGHLIGHTS

the financial statements of the Company are prepared in accordance with the applicable provisions of the Companies act, 2013 (the 'act') including accounting standards as specified in Section 133 of the act, read with the Companies (accounts) Rules, 2014, and amendments thereof. The consolidated and standalone financial highlights of the Company for the financial year ended March 31,2023, are summarised as follows:

('in crores)
Particulars	Consolidated		Standalone
	For the year ended		For the year ended
	March 31, 2023	March 31, 2022	March 31, 2023	March 31, 2022
Revenue from operations	7,977.32	6,064.08	7,353.13	5,395.49
Total Income	8,008.19	6,099.80	7,382.96	5,431.59
Total Expenses	7,624.02	5,849.99	7,049.17	5,235.84
Profit before share of profit of Joint Venture	384.17	249.81	NA	NA
profit before tax	555.38	250.90	504.60	195.75
Income tax	154.69	82.90	138.02	68.01
Profit after tax	400.69	168.00	366.58	127.74

OPERATING RESULTS

after two consecutive years disrupted by the pandemic, the year under review witnessed complete restoration of normalcy and, demand for all our products and services surged. The sentiments in the Indian economy were positive despite the geo-political uncertainties, rising interest rates both globally and in India and a depreciating currency which made imports costlier. Capex investments by both the public and the private sectors continued to be encouraging. Consequently, all the sectors that the Company operates in witnessed healthy growth and enabled the Company to end the year on a positive note and a robust order book. Your Company continues to stay focused on its mission to grow faster than the market, profitability improvement and efficient utilization of capital, while continuing to invest in manufacturing capacities, R&D and expansion of international footprint.

On a consolidated basis, revenue from operations for the current financial year grew 31.6% to ? 7,977.32 crores as compared to ? 6,064.08 crores in the previous financial year. During the year

under review, the Company sold a freehold land parcel at Thane and earned a profit of ? 170.81 crores which has been reported as an exceptional item. Net profit for the current financial year including the profit earned on sale of the land parcel at Thane, grew 138.5% to ? 400.69 crores as compared to ? 168 crores in the last financial year. On a standalone basis, revenue from operations of the Company grew 36.3% to ? 7,353.13 crores as compared to ? 5,395.49 crores in the previous year. Your Company's standalone Net Profit after Tax grew 187% to ? 366.58 crores as compared to ? 127.74 crores for the previous year. Likewise, the standalone profit includes the profit earned on sale of the land parcel at Thane.

Your Company's consolidated Total Income in the financial year crossed ? 8,000 crores. ah segments performed exceedingly well and generated record revenue and profits.

Your Company and its subsidiaries (Group) operate in three business segments: (i) Electro-Mechanical projects and Commercial Air Conditioning Systems; (ii) Unitary Products; and

(iii) Professional Electronics and Industrial Systems. Performance of the Group in the above-mentioned segments during the year under review is as stated below:

I. Electro-Mechanical Projects and Commercial

Air Conditioning Systems

a. Electro-Mechanical Projects Business

With the onset of construction and capex cycle, order inflows from commercial building, factories, data centers and infrastructure sector such as metro, water distribution and railway electrification sectors picked up. Government's commitment to augment social sector infrastructure such as airports, metro, railway network, water supply and hospitals continued to fuel growth opportunities resulting in inflow of tenders in the infrastructure sector. During the year under review, your Company booked its first order for railway electrification and received its largest ever order for an integrated data center project.

b. Commercial Air Conditioning Systems

during the year under review, a healthy flow of opportunities across all the segments that your Company operates in coupled with the revival of demand from the retail, manufacturing, healthcare, and entertainment segments enabled growth for the commercial air conditioning business. Your Company gained market share in all product categories and continued to maintain its market leadership in Conventional and Inverter ducted Air Conditioning systems as well as scroll Chillers and the second position in the VRFs and screw Chillers. demand from the government, industrial, healthcare and hospitality sectors coupled with continued focus on channel expansion across tier 2, 3 and 4 towns enabled growth in revenue during the year.

c. International Business

The Company witnessed growth across all segments with increasing demand for our products in the international markets in which it operates with a strong demand for our room air conditioners and VRFs and year under review saw a healthy order book.

revenue in this segment for the year grew by 25.3% to ? 4,015.63 crores as against ? 3,204.49 crores in the previous year. The segment result grew 42.1% to ? 276.78 crores as compared to ? 194.82 crores in the previous year.

During the year the Company set up subsidiaries in United States of America and Netherlands to serve American and European markets respectively.

II. Unitary Products

After two consecutive financial years in which the peak selling seasons were impacted by the pandemic, the room air conditioners business segment witnessed a strong demand with the new range of affordable mass-premium products being very well received by the market. Your Company strengthened its position as one of the preferred brands with first time buyers in Tier 3, 4 and 5 markets. Your Company offers a vast and comprehensive range of products that are priced competitively and at the same time deliver consistent performance and superior quality that is aligned with the Blue Star brand. The Company has diversified its product portfolio by positioning its products in premium, affordable premium and affordable segment. The Sri City plant of the subsidiary, Blue Star Climatech Limited commenced its commercial production of room air conditioners in January, 2023 which shall aid improvement in margins going forward.

In the commercial refrigeration business, your Company continued to maintain leadership position in deep freezers, storage water coolers and modular cold rooms. A new range of visi coolers with a wide capacity range to suit different customer needs was launched during the year. The new manufacturing facility at Wada commenced commercial production during the year with a new series of indigenously designed and manufactured hardtop and glass top deep freezers.

The overall pick-up in the demand, general improvement in consumer sentiments propelled a growth in revenue of this segment by 38.8% to ? 3,626.93 crores in the year under review as against ? 2,612.24 crores in the previous year. The segment's results improved to ? 282.31 crores in the current year as compared to ? 155.86 crores achieved in the previous financial year.

III. Professional Electronics and Industrial Systems (PE&IS)

Opportunities created by the digitalization initiatives by the BFSI sector continued to drive revenue growth in your Company's Data Security Solutions business. Additional investments in the Healthcare sector offered good opportunities for the growth of MedTech Solutions business. Testing Machines business also continued to witness growth with a revival of investments in the manufacturing sector. With a wide portfolio of products and solutions forming part of your Company's offerings, the prospects for this business segment have been positive.

The segment revenue for the year grew by 35.3% to ? 334.76 crores as against ? 247.35 crores in the previous year. The segment result improved to ? 50.50 crores as compared to ? 42.49 crores in the previous year.

BONUS ISSUE

The Board at its meeting held on May 4, 2023, recommended issue of Equity Bonus shares in the proportion of 1:1 i.e. 1 (One) equity share of ? 2 each for every 1 (One) existing equity share of ? 2 each held by the shareholders of the Company as on record date subject to the approval of shareholders by way of Postal Ballot. The said issue of bonus shares shall be undertaken by capitalization of sums standing to the credit of the General reserves and/or Retained earnings and/or Securities premium account of the Company.

DIVIDEND

The Board at its meeting held on May 4, 2023, has recommended a final dividend of ? 12 per equity share of ? 2 each on pre-bonus share capital, for the financial year ended March 31,2023. Subject to the approval of the bonus issue by the shareholders, the dividend shall be adjusted proportionately i.e. ? 6 per equity share on the increased paid up share capital (i.e. post-bonus share capital). This dividend will be paid subject to the approval of the members at the Annual General Meeting to be held on August 3, 2023, to those members whose names appear in the register of members as on the record date, i.e. July 21,2023.

The Board has adopted the Dividend Distribution Policy for the Company which can be viewed on the website of the Company at: https://www.bluestarindia.com/media/104569/ dividend-distribution-policv.pdf

FINANCING

On a consolidated basis, finance cost for the year increased to ? 54.70 crores as compared to ? 46.40 crores in the previous year, due to higher cost of financing and an increase in average gross borrowings during the year.

The Company's forex cost was ? 5.14 crores for the year as compared to ? 4.94 crores in the previous year. In spite of higher volatility caused by the geo-political factors and depreciating rupee, the cost was mitigated on account of dynamic forex risk management practices followed by your Company.

DEPOSITS

The Company has not accepted any deposits from the public, falling within the ambit of Section 73 of the Act, read with the Companies (Acceptance of Deposits) Rules, 2014.

CONSOLIDATED FINANCIAL STATEMENTS

As required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the 'Listing Regulations'), and Section 129(3) of the Act, the consolidated financial statements prepared by

the Company as per the Indian Accounting Standards (Ind AS), form part of this Annual Report.

The Consolidated Financial Statements shall also be laid at the ensuing Annual General Meeting of the Company.

NON-CONVERTIBLE DEBENTURES

In the year 2020-21, the Company had issued 3,500 unsecured, listed, rated and redeemable Non-Convertible Debentures (NCDs) of ? 10,00,000 each aggregating to ? 350 crores on private placement basis in two series i.e Series I and Series II of 1,750 nos. each.

Pursuant to the embedded call option at the end of two years in the Information Memorandum dated May 29, 2020 with respect to Series II issuance, your Company exercised the said call option on May 31,2022 and redeemed Series II - 1,750 nos., 7.65% unsecured, listed, rated and redeemable Non-convertible Debentures of ? 10,00,000/- each aggregating to ? 175 crores.

There is no deviation or variation in the utilisation of proceeds of the NCDs by the Company.

SUBSIDIARIES AND JOINT VENTURE COMPANIES

I. Subsidiary Companies:

a) Blue Star Engineering & Electronics Limited

Blue Star Engineering & Electronics Limited is a wholly owned subsidiary of the Company. It is a material subsidiary as per the thresholds laid down under the Listing Regulations. The company provides advanced technology products to the BFSI and Healthcare sectors as well as turnkey engineering solutions that cater to the Industrial sector. It is the exclusive distributor in India for many globally renowned manufacturers of high-technology professional electronics equipment and solutions, as well as industrial products and systems.

Revenue from operations from Blue Star Engineering & Electronics Limited for the year ended March 31, 2023, was ? 349.92 crores, as against its previous year's revenue of ? 265.94 crores. The subsidiary achieved a net profit of ? 40.27 crores for the year under review, as against last year's net profit of ? 31.52 crores.

b) Blue Star Qatar WLL

Blue Star Qatar WLL is a joint venture between the Company and Al Malki Trading and Contracting WLL, wherein the Company holds 49% of the share capital and voting rights, and the balance is held by Al Malki Trading and Contracting WLL. The company is principally engaged in the business of MEP contracting and maintenance in Qatar for residential, commercial and industrial purposes.

It is a subsidiary of the Company under Section 2(87)(i) of the Act, as the Company controls the management of this company.

The total income of this company for the year ended March 31, 2023, was ? 150.71 crores as compared to ? 284.09 crores in the previous financial year. The total income of the company was impacted due to restriction on construction activities in the country in the run-up to the FIFA World Cup, 2022. Net profit after tax for the year ended March 31, 2023, was ? 4.57 crores as compared to ? 5.73 crores in the previous year.

c) Blue Star International FZCO

Blue Star International FZCO is a wholly owned subsidiary of the Company, operating in the Dubai Airport Freezone, UAE. It is responsible for the development and growth of the Company's Global Products Sales business and Global Projects business.

This company primarily promotes the export of Blue Star's air conditioning and commercial refrigeration products and systems and its Original Equipment Manufacturing (OEM)/Original Design Manufacturing (ODM) business.

The consolidated total income of this company for the year ended March 31,2023, was ? 386.78 crores as compared to ? 332.76 crores in the previous financial period. On a consolidated basis, the company has generated a profit of ? 4.75 crores for the year ended March 31, 2023, as compared to a net profit of ? 9.26 crores in the previous year.

d) Blue Star Systems and Solutions LLC

This company is a wholly owned subsidiary of Blue Star International FZCO and is engaged in the activities of directly selling central air conditioning equipment, executing mid-sized HVAC projects, and offers after-sales service in the mainland UAE.

The company's total income for the year ended March 31,2023, was ? 47.52 crores as compared to last year's revenue of ? 24.32 crores. The company incurred a loss of ? 7.69 crores for the year ended March 31,2023, as compared to a loss of ? 4.99 crores in the last year.

e) BSL AC&R (Singapore) Pte Ltd

This company was incorporated on August 29, 2020, in Singapore as a wholly owned subsidiary of Blue Star International FZCO to directly sell central air conditioning equipment, execute mid-sized HVAC projects and offer after-sales service. This company also owns a 49% stake in the joint venture, Blue Star M&E Engineering Sdn Bhd.

The company's total income for year ended March 31,2023, was ? 2.50 crores as compared to last year's revenue of ? 2.16 crores. The company incurred a profit of ? 0.07 crore for the year ended March 31,2023, as compared to a loss of ? 0.07 crore in the previous financial year.

f) Blue Star Climatech Limited

Blue Star Climatech Limited is as a wholly owned subsidiary of the Company to carry on the business as manufacturers and dealers in all kinds of air conditioners, commercial refrigeration equipment, cooling appliances and other related products.

This company has set up a state-of-the-art manufacturing facility at Sri City, and the commercial production commenced in January, 2023. This new automated and smart factory is equipped with the latest automation techniques and tools for its assembly line and material handling, amongst others, as well as has extensively deployed a slew of initiatives towards IoT and digitization.

This company lays strong emphasis on sustainability and hence has also rolled-out numerous initiatives on this front such as installing advanced affluent treatment plant, engaging in rain water harvesting, and installing solar power.

Revenue from operations of the company for the year ended March 31, 2023, was ? 139.38 crores. The subsidiary incurred a net loss of ? 6.87 crores for the year under review, as against last year's net loss of ? 2.16 crores.

g) Blue Star North America Inc

Blue Star North America Inc was incorporated on September 22, 2022, as a wholly owned subsidiary of the Company as a part of your Company's plans to expand its international footprint.

The company incurred a loss of ? 2.99 crores.

h) Blue Star Europe B.V.

Blue Star Europe B.V. was incorporated on November 28, 2022, as a wholly owned subsidiary of the Company, again as a part of your Company's plans to expand its international footprint.

This company shall end its first financial period on March 31, 2024.

i) Blue Star Innovation Japan LLC

Blue Star Innovation Japan LLC was incorporated on February 10, 2023, in Japan as a wholly owned subsidiary of the Company for the purpose of research

and developments (R&D) of refrigeration cycles, control algorithms, and control boards for residential and commercial air conditioners and cold/hot water chillers. The setting up of the R & D centre in Japan will significantly accelerate, broaden and sustain investment in the technology and product development of the Company's products, which shall not only be energy-efficient but also ozone friendly thereby contributing to the decarbonization mission of its stakeholders.

the Company is yet to infuse capital in this subsidiary. II. Joint Venture Companies:

a) Blue Star M & E Engineering Sdn Bhd

Blue star M & E Engineering sdn Bhd, a joint venture between BsL AC&R (singapore) pte Ltd and Amcorp properties Bhd, Malaysia, has been principally engaged in the business of HVAC contracting and maintenance in Malaysia. the operations of this joint venture continued to be impacted by slow-down in construction amidst weak macro-economic conditions.

this company's total income for the year ended March 31, 2023, was ? 46.07 crores as compared to ? 43.12 crores in the previous financial year. Net profit after tax for the year ended March 31,2023, was ? 0.83 crores as compared to ? 2.23 crores in the previous year.

b) Blue Star Oman Electro-Mechanical Company LLC

A joint venture between W J Towell & Co LLC and the Company, Blue Star Oman Electro-Mechanical Company LLC was formed to principally engage in the business of MEP contracting and maintenance in Oman.

The Board of Directors of the Company had approved a proposal to exit this Joint Venture in FY19 due to the unattractive market potential for this business in Oman, subject to regulatory and other compliances as may be applicable. The Company has made an application to the Reserve Bank of India for its approval for a write-off of investment in this Joint Venture under the provisions of the Foreign Exchange Management Act.

As required under Section 136 of the Act, the audited annual accounts, including the consolidated financial statements of the Company and audited accounts of the subsidiary companies, are available on the website of the Company at www.bluestarindia.com.

A copy of these documents will be made available to the members, on their request in writing. The annual accounts will also be available for inspection by any member during business hours through electronic mode.

broaden and sustain investment in the technology and product development of its air conditioning and refrigeration products to meet the rapidly changing needs of the Indian and international markets.

NEW INITIATIVES

During the year, the Company launched several new products. Complete range of 3-star and 5-star inverter split room air conditioners and window air conditioners were launched to meet the new energy-efficiency norms applicable from July, 2022. Hot and cold Inverter split air conditioners were also introduced for the north Indian market. In commercial air conditioning segment, Blue star was the first company to launch QCo compliant & IsI marked complete range of ducted split and packaged air conditioners. Hot and cold range of ceiling concealed inverter split units were also introduced to address hotel and premium residential applications. The Company launched indigenously developed and AHRI certified centrifugal chillers in the range of 500 TR to 1000 TR to address large infrastructure projects. Blue star was also the first company to introduce complete range of air-cooled and water-cooled scroll chillers meeting the BEE star labelling program. In commercial refrigeration segment, entire range of hard top & glass top deep freezers manufactured at Wada & Ahmedabad plants was QCo certified with IsI marking. the Company also launched a new series of energy-efficient inverter condensing units for modular cold room applications.

a state-of-the-art R&D Centre was also inaugurated in November, 2022 at Wada plant. the centre houses elaborate testing facilities for chillers and commercial refrigeration products. With AHRI certified laboratories for 440 TR air cooled chiller and 1000 TR water cooled chiller, the facility is the largest integrated chiller facility in India. The laboratories are also accredited by NABL as per Iso-17025. Laboratories of the Company located at Thane, Dadra were also accredited by NABL for testing room air conditioners and commercial air conditioners as per Indian and various international standards.

The Company has embarked upon several initiatives in the areas of technology-led digitalisation of some key business processes, employee engagement, and internet-enabled automation across its products and services.

The Company has always remained ahead of the curve in developing and launching products and solutions that are not only energy-efficient, but also ozone friendly apart from being designed for mitigating global warming, thus contributing to the decarbonization mission of its stakeholders.

AWARDS AND RECOGNITIONS

during the year under review, the Company was felicitated

with many prestigious awards for excellence in its areas of business, and an illustrative list is given below:

• The prestigious'Golden peacock Award for Risk Management' for 2022

• 'Best Water R&D and Technological Breakthrough-domestic' award at the 15^th edition of Water Digest Awards (2021-22)

• 'Best Customer service Initiative of the Year 2022' for enhancing customers' trust through Digital Transformation in the Electronics Category at the CX Excellence Awards 2022

• Blue star Innovation Centre, Thane, was awarded the platinum certification by Indian Green Building Council (IGBC) in August, 2022

• 'MEP Contractor of the Year' award by Construction Week India for the seventh time in a row for the MEP works at the OLA Future Factory, Tamil Nadu

• Recognised for 'Design Innovation in Building'at Autodesk Imagine Awards

• Wada Plant declared the first runner-up at the 10^th Edition of Manufacturing Today Conference & Awards

• Platinum Rating Plaque, for Green Interiors for the Blue Innovation Centre at CII - IGBC Green Building Congress International Conference

• Best stall awards at CII Agro Tech Export, Chandigarh

• Wada Plant receives IGBC Platinum Certification under 'Green Factory Building' category

• First runner-up award under the category of 'Innovative Refrigeration Product, at the REFCOLD India Emerson Awards

• Customer service Group won the Platinum award and the star Championship award in the Renovative Kaizen Category at the 44^th National Kaizen Championships organised by CII.

DIRECTORS

Retire by rotation

As required under the provisions of the Act, Rajiv R Lulla retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends his re-appointment at the ensuing Annual General Meeting.

A brief profile of Rajiv R Lulla is annexed to the notice convening Annual General Meeting.

Resignation and Appointment of Independent Director

Consequent to the resignation of Rumjhum Chatterjee with effect from April 25, 2022, Anita Ramachandran was appointed as an Independent Director of the Company with effect

from June 13, 2022, for a period of five consecutive years till June 12, 2027.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received the necessary declarations from each of the Independent Directors of the Company under Section 149(7) of the Act and Regulation 25 of the Listing Regulations, confirming that they meet with the criteria of independence as laid down in Section 149(6) of the Act, along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations.

There has been no change in the circumstances affecting their status as Independent Directors of the Company.

KEY MANAGERIAL PERSONNEL

As required under the provisions of Section 203 of the Act, the following personnel have been designated as the Key Managerial Personnel of the Company:

Name	Designation
Vir S Advani	Vice Chairman & Managing Director
B Thiagarajan	Managing Director
Neeraj Basur	Group Chief Financial Officer*
Nikhil Sohoni	Group Chief Financial Officer**
Rajesh parte	Company Secretary & Compliance Officer

*Neeraj Basur, Group Chief Financial Officer tendered his resignation

effective end of business hours on May 31,2022.

**Nikhil Sohoni was appointed as a Group Chief Financial Officer of the

Company with effect from July 1,2022.

DIRECTORS' RESPONSIBILITY STATEMENT

Under the provisions contained in Section 134(5) of the Act, the

Directors, to the best of their knowledge and belief, confirm that:

• In the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

• They have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, to give a true and fair view of the state of affairs of the Company as at March 31,2023, and of the profit of the Company for the period April 1,2022 to March 31,2023;

• They have taken proper and sufficient care of the maintenance of adequate accounting records, under the provisions of the Act for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

• They have prepared the annual accounts for the year ended March 31,2023, on a going concern basis;

• They have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and are operating effectively; and

• They have devised proper systems to ensure compliance with the provisions of all applicable laws, and that such systems are adequate and operating effectively.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under review, 7 (seven) meetings of the Board of Directors were held. The intervening gap between these meetings was within the period prescribed under the Act and Listing Regulations. The details of the meetings and attendance of the Directors are provided in the Corporate Governance Report.

BOARD COMMITTEES

Your Company has in place all the Committees as mandated under the provisions of the Act and Listing Regulations. Currently, there are eight Committees of the Board, namely:

• Audit Committee

• Nomination and Remuneration Committee

• Investor Grievance cum Stakeholders' Relationship Committee

• Risk Management Committee

• Corporate Social Responsibility and Environmental, Social & Governance Committee*

• Share Transfer Committee

• Executive Management Committee

• Debenture Committee

• The Board at its Meeting held on January 31, 2023, amended the nomenclature of the Corporate Social Responsibility Committee to Corporate Social Responsibility and Environmental, Social & Governance Committee and modified its terms of reference thereby.

AUDIT COMMITTEE

The Audit Committee comprises Anil Harish (Chairman), Shailesh Haribhakti, Arvind K Singhal, and B Thiagarajan. The composition of the Committee is in compliance with the requirements of Section 177 of the Act and Regulation 18 of the Listing Regulations. The terms of reference of the Committee conform with the Act and the Listing Regulations as more particularly set out in the Corporate Governance Report, which forms a part of this Annual Report. During the year under review, there was no instance wherein the Board had not accepted any recommendation of the Audit Committee.

NOMINATION AND REMUNERATION COMMITTEE

Anita Ramachandran was inducted as a member of the

Nomination and Remuneration Committee with effect from June 13, 2022. Accordingly, the Committee comprises Sam Balsara (Chairman), Dinesh N Vaswani, shailesh Haribhakti and Anita Ramachandran.

The Committee is constituted in line with the requirements mandated by section 178 of the act and regulation 19 of the Listing regulations. the terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance report, which forms a part of this annual report.

INVESTOR GRIEVANCE CUM STAKEHOLDERS' RELATIONSHIP COMMITTEE

the Investor Grievance Cum stakeholders' relationship Committee comprises Arvind K singhal (Chairman), rajiv R Lulla, and sunaina Murthy. the Committee is constituted in line with the requirements mandated by section 178 of the act and regulation 20 of the Listing regulations. the terms of reference of the Committee conform with the said requirements, as more particularly set out in the Corporate Governance report, which forms a part of this annual report.

RISK MANAGEMENT COMMITTEE

the risk Management Committee comprises Vir s Advani (Chairman), Rajiv R Lulla, B thiagarajan, and anil Harish. the Company has adopted a formal risk Management policy. the Committee identifies, evaluates and assesses the risks, understands the exposure of risks, and accordingly prepares and oversees execution of appropriate risk mitigation plans and identification of possible opportunities. the Committee and the Board have identified elements of risks, which, according to them, are crucial to the Company. It has identified risk Management Units within the Company, the risk profiles of which are constantly monitored, and the severity of risk is tracked, based on a systematic risk rating methodology. details of these elements of risks have been covered in the Management discussion and analysis, and Integrated report, which form part of this annual report and in the standalone financial statement in Note 43.

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL, SOCIAL & GOVERNANCE (CSR & ESG) COMMITTEE

Rumjhum Chatterjee and sam Balsara ceased to be a member of the CsR & EsG Committee with effect from April 25, 2022 and June 13, 2022 respectively. Anita Ramachandran was inducted as a member of this Committee with effect from June 13, 2022. accordingly, the Committee comprises B thiagarajan (Chairman), anita ramachandran, and sunaina Murthy.

the Board of directors at its Meeting held on January 31, 2023, has changed the nomenclature of the Committee to 'Corporate social responsibility and environmental, social and Governance Committee' and has further amended terms of reference thereof.

During the year under review, the Company was required to spend an amount of ? 300 lakhs towards activities as stipulated under schedule VII of the act. the Company has spent an amount of ? 332.85 lakhs towards various CsR initiatives. Based on the recommendation of CsR & EsG Committee, the Board of Directors have approved set-off of excess CsR spent of ? 32.85 lakhs towards CsR obligation of FY24.

a brief outline of the CsR Policy and the initiatives undertaken by the Company on CsR activities during the year are set out in Annexure 2 of this report as prescribed in the Companies (Corporate social Responsibility Policy) Rules, 2014, and amendments thereof. the CsR Policy is available on the website of the Company at: https://www.bluestarindia.com/ media/217799/blue-star-csr-policy.pdf

Details of the other Committees of the Board are provided in the Corporate Governance Report.

EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND OF DIRECTORS

the Nomination and Remuneration Committee vide Circular Resolution dated January 20, 2023, and the Board at its meeting held on January 31,2023, approved the criteria for evaluating the Chairman, Directors, the Board, and its Committees. Accordingly, the questionnaires were circulated seeking inputs of the Directors to evaluate governance standards based on various parameters including structure and composition of the Board and committees, quality of Board processes, Board culture and dynamics, effectiveness vis-a-vis stakeholders' expectations in terms of strategic direction, and guidance to the leadership team.

the inputs received from the Directors were deliberated upon and reviewed by the Independent Directors at a separate meeting held on March 29, 2023. At this meeting, they evaluated the performance of the Non-Independent Directors, the Board as well as that of the Chairman, taking into account the views of the Executive and Non-Executive Directors. the Board of Directors carried out an annual evaluation of the performance of the Board as a whole, the Directors individually, and the working of the Committees of the Board. the outcome of the evaluation was noted by the Nomination and Remuneration Committee at its meeting held on April 26, 2023, and by the Board of Directors at its meeting held on May 4, 2023. Broadly, the Directors have expressed their satisfaction with the evaluation process and

the outcome. The Board also noted the key action points that emerged from the process for implementation. a detailed update on the Board Evaluation is provided in the relevant section of the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

the Nomination and remuneration policy provides broad guidelines on appointment, removal, retirement, qualifications, attributes, and structure of remuneration, of the Directors, Key Managerial personnel, and senior Management personnel. It is designed to foster a high-performance culture that enables the Company to attract, retain and motivate the employees to achieve results. the performance of the executive directors was

evaluated and reviewed by the Nomination and remuneration Committee at its meeting on april 26, 2023. the Nomination and remuneration policy is uploaded on the Company's website at https://www.bluestarindia.com/media/217800/ blue-star-nrc-policy.pdf

MANAGERIAL REMUNERATION

details of the ratio of the remuneration of each director to the median employee's remuneration and other details in terms of section 197(12) of the act, read with rule 5(1) of the Companies (appointment and remuneration of Managerial personnel) rules, 2014 and amendments thereof are provided below:

The Non-Executive Directors of the Company are paid sitting fees and commission as per the statutory provisions and within the limits approved by the members. the ratio of remuneration and percentage change for Non-executive directors' remuneration is therefore not considered for the purposes above. the details of the remuneration of Non-executive directors are provided in the Corporate Governance Report.

CORPORATE GOVERNANCE

the Company is committed to maintaining the highest standards of corporate governance and continues to be compliant with the requirements of corporate governance as enshrined in the Listing regulations. the report on corporate governance together with a certificate from the statutory Auditors of the Company, confirming compliance with corporate governance norms as stipulated in the Listing regulations, forms a part of this annual report.

VIGIL MECHANISM

Your Company is committed to conducting its business with the highest standards of ethics, integrity, and transparency across its operations, in compliance with the applicable laws and regulations. In line with a strong commitment to governance and compliance, the Company has instituted a robust Vigil Mechanism framework encompassing various elements and components in an integrated manner.

the Vigil Mechanism structure at Blue star is based on the Coso 2017 ERM framework governing risk, compliance, and controls. embedded in the Vigil Mechanism structure are three lines of defence. the first line of defence comprises key

management controls, viz., financial controls, governance policies, and internal control measures at the process owner level. the second line of defence is addressed by an assurance from risk management and compliance procedures. the third line of defence is provided through the work done by the internal and the statutory auditors.

Governance policies, internal controls, stakeholders'engagement, enterprise risk management, compliance, and the internal and statutory audit, are key components of Blue star's vigil mechanism. they are interwoven in the vigil mechanism system to enable constant interplays to drive home the assurance of best practices and creation of value for all the stakeholders of the Company.

As a part of its governance policies, the Company has in place a whistle blower policy to enable the directors, employees of the Company and its subsidiaries to report concerns of any unethical behaviour, unacceptable and improper practices, or suspected fraud. the policy has also been uploaded on its website. an ethics Committee has been constituted, comprising the Group Chief Financial officer, Chief Human resources officer, and Company secretary & Compliance officer (ethics officer) to administer this policy. the Company has also adopted a robust Governance, risk and Compliance Framework that enables a seamless integration of processes and components around the Company's governance, risk and compliance objectives.

the Company was declared winner of the Golden peacock award for risk Management in 2022 thereby reaffirming external validation of the robustness of the risk management practices followed by it.

The Whistle blower Policy is uploaded on the Company's website at: https://www.bluestarindia.com/media/271525/ whistle-blower-policy.pdf

the Audit Committee reviews on a quarterly basis, whistle blower and other complaints, if any, and oversees the implementation of corrective actions wherever necessary.

the Company has also adopted a Code of Conduct which is available on the website of the Company at: https://www.bluestarindia.com/media/271526/code-of-conduct.pdf

the Governance, Risk and Compliance Framework is uploaded on the Company's website at:

https://www.bluestarindia.com/media/335126/governance-risk-compliance-framework website.pdf

INTERNAL CONTROL SYSTEMS

the Company has established an internal control system commensurate with the size, scale, and complexity of its operations.

to enhance the standards of controls and governance, the Company has adopted the Coso 2013 framework to ensure that robust internal financial controls exist concerning operations, financial reporting, and compliance.

significant features of the Company's internal control system are:

• an independent firm of Chartered accountants manages the Internal audit function in line with best-in-class governance practices. It reviews and reports to the audit Committee about compliance with internal controls, the efficiency and effectiveness of operations as well as key process risks.

• the audit Committee periodically reviews internal audit plans, significant audit findings, and adequacy of internal controls.

• systematic self-certification of adherence to key internal controls, as part of control self-assurance by process owners, monitors, and reviewers.

• adherence with a comprehensive information security policy and continuous upgrades of the Company's It systems for strengthening automated controls.

• appropriate segregation of duties and usage of technology for continuous controls monitoring and enhanced controls assurance.

During the year, the internal controls were tested and found effective, as a part of the Management's control testing initiative.

accordingly, the Board, with the concurrence of the audit Committee and the auditors believe that the Company's Internal Financial Controls were adequate and operating effectively for the financial year ended March 31,2023.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the provisions of secretarial standards on Meetings of the Board of directors (ss-1) and on General Meetings (ss-2).

LOANS, GUARANTEES AND INVESTMENTS

details of loans, guarantees and investments covered under the provisions of section 186 of the act, as may be applicable, are given in the standalone financial statement as per Note 8 -10.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

ah the related party transactions are approved by the audit Committee. All related party transactions that were entered into during the financial year were on an arm's length basis and in the ordinary course of business.

there are no material transactions with any related party as defined under section 2(76) of the Act and regulation 2(zb) of the Listing regulations. Because of this, disclosure in Form AoC-2 has not been provided. The details of transactions with the related parties are provided in the standalone financial statement in Note 39.

A policy governing the related party transactions was amended by the Board at its meeting held on February 2, 2022, in line with amendments in the Listing regulations, and the same has been uploaded on the Company's website at https://www.bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf

HUMAN RESOURCES

The Company made a concerted effort in acquiring the right talent in a timely manner across its businesses which was the pronounced need of the hour. opportunities for talent mobility ensured that employees are able to experience cross-functional roles with the expected growth avenues. Enhanced employee experience through upskilling, avenues for free-flowing exchange of ideas across departments and competency-based training of managers helped in more meaningful engagement of the staff in their respective roles, fueling innovation in some quarters. High potential employees were mapped for succession for aligned opportunities and application-based training in the right skill-sets, resulting in higher responsiveness to meet the pressing business challenges. skill-based training through a learning management system, iLearn as well as through the Academy of Technical & Functional excellence was a focus across management levels through the year under review. Business-aligned training initiatives with well-designed outcomes helped talent to rise to the occasion to meet business requisites in a highly challenging market environment.

Work profiles have been mapped to a methodical work plan in line with the environment in which maximum time required to be spent for optimal delivery of the work profile. These include Work from Establishment, Work from Field, Work from site and Work from Home; and work executed in this planned manner ensured meeting the deliverables well. thus, this resulted in enhanced employee productivity. there is more flexibility weaved in the work routine in the Company to meet better work-life integration and this was highly appreciated by employees. the Company stayed invested in employee listening which led to roll out of employee-friendly policies and processes, aided by the use of the right technology. More transparency, measurement, analytics, and reporting by HR was pursued during the year. Many employee engagement initiatives focused on holistic well being of employees, including a portal for mental well being- MindMatters- which is a medium to seek online support from trained mental health professionals anonymously as per one's comfort and ease. the Company was certified as a Great place to Work for the second time with an enhanced trust Index. For the year under review, the 'Most preferred Manufacturing Workplace' Award was received from team Marksmen, and also, as per Glassdoor review, the Company remained in the top position for the last two quarters in a row against competition. Gender diversity has been a subject of much prominence with avenues built in the organisation for professional training, development and systematic growth of deserving women professionals. HR professionals were put through a well crafted development programme to remain data driven, experience led, and business focused, further building their competencies in their crucial roles. All these systematic People initiatives helped the Company stay ahead of the curve despite the myriad of continuous, external market challenges.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are required to be annexed to the Board's Report. the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining the said particulars may write to the Company Secretary of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

the Company has zero-tolerance for sexual harassment at the workplace and has adopted a policy on prevention, prohibition, and redressal of the same, in line with the provisions of the

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and the Rules thereunder.

All employees (permanent, contractual, temporary, and trainees) are covered under this Policy.

the Company has duly constituted Internal Complaints Committees in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to redress complaints received regarding sexual harassment. the Company organises workshops and awareness programs at regular intervals for sensitising the employees with the provisions of the said Act. the Company received 1 (one) complaint and disposed of 1 (one) complaint during the year 2022-23.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

the Company incurred a total expenditure of ? 73.89 crores on research and development for the year as against ? 67.21 crores in the previous year.

During the year, the Company recorded foreign exchange earnings from the export of its products, commission, and other income, aggregating to ? 280.07 crores as against ? 242.34 crores in the previous year.

the foreign exchange outflow stood at ? 1,599.99 crores as compared to ? 1,354.66 crores in the previous year.

the information on Energy Conservation, technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 1.

MANAGEMENT DISCUSSION AND ANALYSIS

the Management Discussion and Analysis for the year under review, as stipulated under Regulation 34 of Listing Regulations, forms a part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In compliance with Regulation 34 of the Listing Regulations, the Business Responsibility and Sustainability Report describing sustainability initiatives undertaken by the Company during the year under review is provided in a separate section forming part of this Annual Report.

INTEGRATED REPORTING

Your Company is amongst the top 500 listed companies in the country in terms of market capitalisation and has accordingly adopted Integrated Reporting describing initiatives undertaken

by the Company for enhancing stakeholders' value in the long term. The report on Integrated Reporting is provided in a separate section forming part of this Annual Report.

STATUTORY AUDITORS

The Company's existing Statutory Auditors, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed by the Members at the 70^th Annual General Meeting (AGM) of the Company, for a period of 5 years, to hold office until the conclusion of the 75^th AGM to be held for FY 2022-23. The period under review was the fifth year of the audit by M/s Deloitte Haskins & Sells LLP in the Company.

The Board of Directors at its meeting held on May 4, 2023, has recommended re-appointment of M/s Deloitte Haskins & Sells LLP as Statutory Auditors of the Company for a second term of five consecutive years from conclusion of the 75^th AGM until the conclusion of the 80^th AGM of the Company to be held for FY 2027-28.

AUDITOR'S REPORT

The Board has duly reviewed the Statutory Auditor's Report on the financial statements. There is no qualification, reservation, or adverse remark given by the Auditors in their report.

COST AUDITORS

In terms of the provisions of Section 148 of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors had, on the recommendation of the Audit Committee, appointed M/s Narasimha Murthy & Co, Cost Accountants, Hyderabad, as the Cost Auditors, to conduct the cost audit for the financial year ended March 31,2023.

As required under the Act, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members' ratification for the remuneration payable to Cost Auditors, forms part of the Notice convening the Annual General Meeting.

SECRETARIAL AUDITORS

In terms of the provisions of Section 204 of the Act, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s N L Bhatia & Associates, Practicing Company Secretaries, as the Secretarial Auditor of the Company for conducting the secretarial audit of your Company for the financial year ended March 31,2023.

The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries, has been provided in Annexure 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark. Further, as

required under Regulation 24A of the Listing Regulations, the Secretarial Audit Report of Blue Star Engineering & Electronics Limited, the material unlisted Subsidiary, is also provided in Annexure 3A to this Report.

INTERNAL AUDITORS

In terms of the provisions of Section 138 of the Act read with Companies (Account) Rules, 2014, the Company has appointed M/s Grant Thornton Bharat LLP, Chartered Accountants, as the internal auditors.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, none of the auditors, viz., statutory auditors, cost auditors, and secretarial auditors, have reported to the Audit Committee, under Section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board's Report.

ANNUAL RETURN

The annual return of the Company has been uploaded on the Company's website at: https://www.bluestarindia.com/ media/335106/fy23-mgt-7-annual-return.pdf

RESERVES

During the financial year, there was no amount proposed to be transferred to the reserves.

PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

There are no proceedings, either filed by the Company or against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before the National Company Law Tribunal or other Courts as on March 31,2023.

OTHER DISCLOSURES

• The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India, relating to Meetings of the Board, Committees, and General Meetings which have mandatory application.

• Except as provided in the Report, no material changes, and commitments affecting the financial position of the Company, have occurred between the end of the financial year under review and the date of this report.

• The Company has prepared and maintained the cost accounts and records as specified by the Central Government under Section 148(1) of the Act.

• There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern

status of your Company and its operations in the future.

• Your Company has not issued any Employee Stock Options.

• Your Company has listed its Commercial paper on National stock exchange of India Ltd.

• Your Company has not issued any sweat equity shares.

• There has been no change in the nature of business of your Company.

• the Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions, and hence the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

• there was no revision of financial statements and Board's Report of the Company during the year under review.

ACKNOWLEDGEMENTS

the Directors place on record their sincere appreciation for the assistance, guidance, and co-operation provided by the Government of India and other regulatory authorities. the directors thank the financial institutions and banks associated with the Company for their support as well. the employees are instrumental for the Company scaling new heights year after year, and their commitment and contribution are deeply acknowledged. shareholders' involvement is greatly valued. the directors look forward to your continuing support.