In what seems to be indicative of Blue Star's exit from the industrial projects business, the chairman and chief executive Ashok Advani has announced that the company will not bid for new industrial projects, but would concentrate on its core businesses of air-conditioning, refrigeration and distribution of professional electronics.

Addressing shareholders, Mr Advani said the company will not bid for new projects in industrial engineering and project management once the existing projects are completed. "Experience has shown that the sheer diversity of projects with demanding technical requirements combined with adverse contractual and financial terms tied up substantial financial and manpower resources without producing adequate returns. The funds released from existing projects can significantly reduce borrowings, while the engineering manpower can be profitably deployed in the air-conditioning and refrigeration field," says Mr Advani.

The industrial projects business contributed 8 per cent to the total revenue of the company, slightly more than the software business but less than commercial equipment sales (11 per cent) and electronics (9 per cent).

Blue Star's air-conditioning business remains its mainstay, generating 65 per cent of the company's Rs 476.5 crore sales in the year ended March 1999. According to the company's annual report, Blue Star holds 38 per cent of the Rs 365-crore central air-conditioning market in India, 33 per cent of the ducted systems (5 to 10 tons) market, and 9 per cent of the mini split air-conditioner market.
The company has signed a technology tie-up with York International for manufacturing centrifugal and screw chillers, which will be introduced in India by September-end 1999. Besides this, the company also makes double skin air handling units with technology from Climatrol and markets vapour absorption chillers of LG Cable and Machinery Ltd in India.

Blue Star's air-conditioner business mix

Blue Star's commercial equipment business contributes 11 per cent and comprises of refrigeration and non-refrigeration equipment. In the refrigeration equipment segment, the company markets deep freezers of Verfrost, Denmark, pre-fabricated cold rooms with PUF panels of Kolpak USA, refrigeration units for cold rooms from Heatcraft, USA and ice cube making machines of Manitowoc, USA. In the water cooler segment, Blue Star holds 35 per cent market share.

In the non-refrigeration segment, Blue Star has tied up with Electrolux Foodservice, Sweden for commercial kitchen equipment; with Electrolux Wascator, Sweden for commercial laundry equipment; with Donini International SpA, Italy for drycleaning equipment; and with Pony SpA, Italy for finishing equipment.

The electronics division, which account for 9 per cent of the company's turnover, offers products such as material testing machines, industrial products and systems, commercial equipment and instruments, analytical instruments, medical electronics and customer service. The business mix is detailed in the following table: