To the Members,

The Directors are pleased to present the 77^th Annual Report, together with the audited financial statements for the financial year ended March 31, 2025.

Your Company offers one of India's widest ranges of room air conditioning and commercial refrigeration & air-conditioning products, as well as a comprehensive range of air purifiers, air coolers, storage water 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.

Your 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.

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, 2025, are summarised as follows:

(RS in crores)

On the back of exceptional performance in previous financial year, your Company concluded this year also on a strong note, driven by sustained demand for its existing offerings, successful launches of new products across key segments, and a healthy carried-forward order book. It continues to maintain focus on long-term growth through investments in manufacturing capacity, research and development, sales and distribution expansion, digital transformation, talent development, and capability building. Reaffirming its strategic priorities, the Company remains committed to strengthening its market position through consistent investment in innovation, operational scalability, and organizational excellence.

On a consolidated basis, revenue from operations for the current financial year grew 23.6% to H 11,967.65 crores as compared to H 9,685.36 crores in the previous financial year. Your Company's consolidated Total Income in the current financial year crossed H 12,000 crores. Net profit (including share of profit of Joint Venture) before exceptional items and tax for the current financial year, grew 38.6% to H 772.42 crores as compared to H 557.16 crores in the last financial year whereas, net profit after exceptional items and tax grew 42.7% to H 591.28 crores as compared to H 414.31 crores in the last financial year.

On a standalone basis, revenue from operations of the Company grew 25.9% to H 11,325.75 crores as compared to H 8,998.88 crores in the previous year. Your Company's

standalone net profit before exceptional items and tax for the current financial year, grew 32.2% to H 649.93 crores as compared to H 491.69 crores in the last financial year whereas, net profit after exceptional items and tax grew 31.9% to H 484.90 crores as compared to H 367.50 crores for the previous year.

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 stated below:

The year saw strong order finalizations, particularly from the factory and data center segments. In contrast, demand from commercial real estate and infrastructure remained subdued. The Company continues to prioritize timely project execution with a focus on maintaining healthy profitability and robust cash flows. With rising investments in data centers and a growing emphasis on manufacturing, the outlook for FY26 appears promising. The carried-forward order book stood at H4,755 crores as of March

31, 2025, reflecting a 9.5% increase from H4,344 crores a year earlier. b. Commercial Air Conditioning Systems

The Commercial Air Conditioning business delivered a robust performance during the year, reinforcing its market leadership and achieved improved profitability. This growth was largely supported by sustained demand from the Healthcare, Hospitality, and Education sectors, reflecting continued infrastructure expansion and increased investments in these areas. While the Industrial and BFSI sectors exhibited a more cautious stance, with demand remaining muted, last quarter of the year witnessed early signs of recovery in Government procurement activity—an encouraging indicator for future momentum. Your Company continues to maintain its No.1 position in Ducted Systems and second position in VRFs and Screw Chillers.

In FY25, your Company developed products for three Original Equipment Manufacturers (OEMs) in the US and Europe, with commercial shipments commencing post successful field trials. Although global trade volatility has caused some slowdown, enquiry levels remain strong—driven by expectations of an India-US trade deal and ongoing supply chain de-risking by these OEMs. While international business gained some traction this year, we are still in start-up mode. The improved enquiry levels give us confidence and we continue to remain optimistic about the future prospect of this business.

Revenue in this segment for the year grew by 27.2% to H 5,997.99 crores as against H 4,715.46 crores in the previous year. The segment result grew 43.9% to H 490.88 crores as compared to H 341.09 crores in the previous year.

Building on the strong performance of the previous financial year, FY25 saw robust demand growth, resulting in outstanding overall business performance. Strong demand for Air Conditioning products helped the Company to maintain the growth momentum during this financial year. Market share during the year improved and is estimated to be close to 14% compared to 13.75% in FY24. With an expanded product portfolio, enhanced distribution network and supportive weather conditions, this growth momentum is expected to sustain in the coming years. b. Commercial Refrigeration Business

The Commercial Refrigeration business faced headwinds in H1FY25 due to regulatory changes, supply chain issues, and an FMCG slowdown impacting demand for deep freezers. However, the later half of the year saw a revival driven by recovering demand in ice creams, frozen foods, and the expansion of quick commerce platforms, supporting a positive outlook ahead. The Company continued to maintain leadership position in Deep Freezers, Storage Water Coolers and Modular Cold Rooms.

Improved consumer sentiment and a holistic demand recovery drove a 22.4% revenue growth in this segment, reaching H5,621.11 crores in FY25, up from

H4,592.20 crores in the previous year. Segment results also strengthened to H471.26 crores, compared to H360.31 crores in FY24.

The year had been a challenging one for this Segment. The healthcare business faces challenges due to regulatory developments related to refurbished equipments, leading to a decline in both revenue and profitability. Also, the data security business continued to face headwinds with customers moving from on-premises IT infrastructure to the cloud. While the non-destructive testing business is going well, it has not been able to offset the shortfall from the other businesses.

The segment revenue for the year de-grew by 7.7% to H 348.55 crores as against H 377.70 crores in the previous year. The segment result stood at H 29.72 crores as compared to H 51.50 crores in the previous year.

The Board at its meeting held on May 7, 2025, has recommended a final dividend of H 9 per Equity Share of face value of H 2 each for the financial year ended March 31, 2025. This dividend will be paid subject to the approval of the members at the Annual General Meeting to be held on August 6, 2025, to those members whose names appear in the list of Beneficial Owner/Register of Members as on the record date, i.e. July 18, 2025.

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-policy.pdf

During this year, the finance cost on a consolidated basis reduced to H 48.80 crores as compared to H 58.08 crores in the previous year due to reduced average borrowings levels.

The Company's forex cost was H 11.83 crores for the year as compared to H 3.74 crores in the previous year. The heightened currency volatility, especially in second half of FY25 led to increase in forex cost. Your Company monitors foreign currency exposure and takes appropriate actions as guided by Foreign Exchange Risk Management Policy.

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.

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), forms part of this Annual Report.

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

Blue Star Engineering & Electronics Limited (‘Blue Star E&E') is a wholly owned subsidiary of the Company. Blue Star E&E provides advanced technology products to the BFSI and Healthcare sectors as well as turnkey engineering solutions that cater to the Industrial sector. It is an exclusive distributor and system integrator 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 E&E for the year ended March 31, 2025, was H 353.66 crores, as against its previous year's revenue of H 383.01 crores. The subsidiary achieved a net profit of H 40.17 crores for the year under review, as against last year's net profit of H 46.35 crores. b) Blue Star Climatech Limited

Blue Star Climatech Limited is as a wholly owned subsidiary of the Company. It is a material subsidiary as per the thresholds laid down under the Listing Regulations for financial year 2024-25. Blue Star Climatech is a manufacturer of all kinds of air conditioners, commercial refrigeration equipment, cooling appliances and other related products.

Blue Star Climatech's state-of-the-art manufacturing facility in Sri City, Andhra Pradesh, has an annual capacity of 9.6 lakh units. This automated, smart factory incorporates advanced automation techniques across its assembly lines and material handling systems, with extensive integration of IoT and digitalisation. Committed to sustainability, Blue Star Climatech has implemented several green initiatives, including an advanced effluent treatment plant, rainwater harvesting, and solar power installations.

Revenue from operations of Blue Star Climatech for the year ended March 31, 2025, was H 1,484.24 crores as compared to last year's revenue of H 718.75 crores. The subsidiary achieved a net profit of H 61.52 crores for the year under review, as against last year's net profit of H 22.72 crores. 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 in Middle East and Africa (MEA) regions.

This company primarily promotes the export of Blue Star's air conditioning and commercial refrigeration products and systems.

The consolidated revenue from operations and net profit of this company for the year ended March 31, 2025, was 331.48 crores and 5.89 crores as compared to 386.13 crores and 9.67 crores in the previous financial year. On a standalone basis, revenue from operations and net profit of this company for the year ended March 31, 2025, was 155.51 crores and 4.52 crores as compared to 352.01 crores and 14.58 in the previous financial year. d) Blue Star MEA Airconditioning LLC

Blue Star MEA Airconditioning LLC (Formerly ‘Blue Star Systems and Solutions LLC') 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.

During the year, this subsidiary changed its name to Blue Star MEA Airconditioning LLC in order to represent the brand visibility better in the market.

Revenue from operations of this company for the year ended March 31, 2025, was H 173.88 crores as compared to last year's revenue from operations of H 30.06 crores. This company has generated a net profit of H 2.70 crores for the year ended March 31, 2025, as compared to a net loss of H 5.06 crores in the last year. e) Blue Star Qatar W.L.L.

Blue Star Qatar W.L.L., a 49:51 joint venture between the Company and Al Malki Trading and Contracting W.L.L., Blue Star Qatar 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 Blue Star Qatar.

Revenue from operations of Blue Star Qatar for the year ended March 31, 2025, was H67.31 crores as compared to H121.35 crores in the previous financial year. Net profit for the year ended March 31, 2025, was H 0.80 crores as compared to net loss of H 12.78 crores in the previous year. f) BSL AC&R (Singapore) Pte. Ltd.

BSL AC&R (Singapore) Pte. Ltd., was incorporated 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.

Revenue from operations of this subsidiary for the year ended March 31, 2025, was H 2.09 crores as compared to last year's revenue of H 4.06 crores. This subsidiary incurred a net loss of H 0.09 crores for the year ended March 31, 2025, as compared to net profit of H 0.15 crores in the previous financial year.

Blue Star North America Inc., was incorporated in the State of Delaware, as a wholly owned subsidiary of the Company. It is currently engaged in the business of Custom Design

& Manufacturing (CDM) of air conditioning, heating and refrigeration equipment for OEM brands in the United States, Canada, and Latin American markets.

Revenue from operations of this subsidiary for the year ended March 31, 2025, was H 333.10 crores as compared to last year's revenue of H19.45 crores. Net profit for the year ended March

31, 2025 was of H 15.34 crores as compared to net loss of H 5.51 crores in the previous financial year. h) Blue Star Europe B.V.

Blue Star Europe B.V., was incorporated in Netherlands, Europe, as a wholly owned subsidiary of the Company. It is currently engaged in the business of Custom Design

& Manufacturing (CDM) of air conditioning, heating and refrigeration equipment for OEM brands in the European market.

Revenue from operations of this subsidiary for the year ended March 31, 2025, was H 7.73 crores as compared to nil revenue of last year. This subsidiary incurred a net loss of H 10.23 crores for the year ended March 31, 2025, as compared to net loss of H 10.12 crores in the previous financial year i) Blue Star Innovation Japan LLC

Blue Star Innovation Japan LLC, was incorporated 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.

Revenue from operations of this subsidiary for the year ended March 31, 2025, was H 7.55 crores as compared to nil revenue of last year. Net profit for the year ended March 31, 2025 was H 0.27 crores as compared to net loss of H 2.92 crores in the previous financial year.

Blue Star International FZCO, wholly owned subsidiaryoftheCompany,hadincorporatedBlue Star Air Conditioning & Refrigeration (U) Limited as its wholly owned subsidiary, at Uganda. This subsidiary is incorporated for the purpose of carrying manufacture, sale and distribution of all kinds of air conditioning and commercial refrigeration products and systems and fabrication and repair of air conditioning system. This subsidiary has generated nil revenue from operations for the financial year ended March 31, 2025 and March 31, 2024. It incurred a net loss of H 1.26 crores for the year ended March 31, 2025, as compared to no profit or loss in the previous financial year.

Blue Star M & E Engineering Sdn Bhd, a 49:51 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.

This company's total income for the year ended March 31, 2025, was H 62 crores as compared to H 83.31 crores in the previous financial year.

It incurred a net loss of H 4.4 crores for the year ended March 31, 2025, as compared to net profit of H 1.23 crores in the previous year. b) Blue Star Oman Electro-Mechanical Company LLC

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

Owing to certain disputes with the joint venture partners, the Board of Directors of the Company had approved a proposal to exit this Joint Venture in FY19 subject to regulatory and other compliances as may be applicable. The Company, in the year 2020, 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. The approval from Reserve Bank of India is awaited.

W J Towell & Co LLC initiated arbitration proceeding with International Chamber of Commerce against the Company for the ongoing dispute. Initially, the claim was filed for OMR 103,18,000 (approx. 223.60 crores) which at the filing stage was subsequently revised to OMR 211,80,748 (approx. 461.74 crores). The Company has filed its response contesting the claim raised by WJT and the matter is at advance stage.

No company became or ceased to be a Subsidiary / Associate / Joint Venture company of the Company during the year under review.

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 at the registered office of the Company during business hours up to the date of the Annual General Meeting.

A statement containing the salient features of the financial statements of the subsidiaries and joint venture companies in Form AOC-1, as required under Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Consolidated Financial Statements.

Demonstrating its commitment to innovation and customer-focused growth, your Company continued to strengthen its product portfolio and operational capabilities during the year. It successfully launched several new products, including centrifugal chillers, data centre chillers, brine chillers, and VRF Lite systems. Additionally, a new range of scroll and screw chillers was introduced. The Company also unveiled an extensive range of air conditioners, including a premium flagship series designed to cover all consumer segments and price points. This range featured energy-efficient 3-star and 5-star models across capacities from 0.8 TR to 4 TR, with many models equipped with advanced features. The Company also designed and manufactured Air-to-Air Heat Pumps and Air-to-Water Heat Pumps for its OEM customers in the North America and European Markets.

In FY25, Blue Star also introduced a broad portfolio of energy-efficient deep freezers with cooling capabilities down to -26?C, available in capacities ranging from 60 to 600 litres. All commercial refrigeration products are manufactured at the Company's Wada and Ahmedabad plants, in alignment with its ‘Make in India, Make for the Globe' vision. The Company is also expanding its cold chain solutions portfolio to serve a wide array of industry sectors.

Blue Star has also undertaken several initiatives focused on technology-led digitalisation of key business processes, employee engagement, the adoption of sustainable technologies, and the integration of internet-enabled automation across its products and services. For more information on the products launched during the year, please refer to the Intellectual Capital section of the Integrated Report.

During the year under review, the Company and its group entities were felicitated with many prestigious awards for excellence in its areas of business, which are as under:

Blue Star was honoured with the prestigious ‘Adam Smith Award for Best Emerging Technology Solution' in Singapore.

BlueStar'sregionalofficelocatedatSakinaka,Mumbai, won the Net Zero Green Energy Platinum Award.

Blue Star's ‘Garmi Ki Chhutti' summer campaign 2024 won Gold at the Indian Marketing Awards for ‘Best Use of Technology'.

Blue Star's Indirect Tax team honoured with the ‘Innovation in Litigation Management Award' at the 8^th Edition of the Tax Strategy & Planning Summit & Awards 2024.

Blue Star was awarded the ‘Best Warehousing Company of the Year' in the Consumer Appliances category at the prestigious 3^rd Annual Warehouse and Supply Chain Leadership Awards.

Blue Star's Direct Tax team was honoured with the prestigious ‘Best Innovation in Tax Technology Award' at the NXTGEN Tax Innovation Confex & Awards 2024.

Blue Star's Ecommerce Marketing team was awarded the Gold Award in the ‘Best Performance Marketing Campaign' category at the 15^th Edition of the Indian Digital Marketing Awards.

Blue Star was honoured with seven Brandon Hall HCM Excellence Awards at the HCM Excellence Conference.

Blue Star's HP Plant won Gold at the QCFI Offshore Convention on Quality Concepts.

Blue Star's HP Plant received Gold Award at the Quality Circle Forum of India.

Blue Star won Gold Award at the National Competitiveness Cluster Summit.

Blue Star's Commercial team bags the Digital Customer Experience Award at the Retail, Distribution and Ecommerce Summit.

Blue Star's Wada Plant won the Excellence Award for Rooftop Solar at CII 2024.

Blue Star E&E's Non-Destructive Testing team won the ‘Best Performance Award' at the 20^th World Conference on Non-Destructive Testing.

Blue Star was honoured with the ‘Best Use of Technology in CX' award at the 8^th Service Quality Excellence India Summit and Awards.

Blue Star received the NSCI Safety Award for its project in Pune.

As on March 31, 2025 and the date of this Report, the Board of the Company consists of twelve Directors comprising of six Independent Directors, three Non-Executive Non-Independent Directors and three Executive Directors. The Board comprised two women Directors, one Independent Director and one Non-Executive Non-Independent Director.

In accordance with the provisions of the Act, Dinesh Vaswani (DIN: 00306990), retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends his reappointment at the ensuing Annual General Meeting. A brief profile of Dinesh Vaswani is annexed to the notice convening Annual General Meeting.

The Board of Directors, based on the recommendations of the Nomination and Remuneration Committee and subject to approval of members, had approved the appointment of Ponnada Venkata Rao (DIN: 09177075), as an Additional Director designated as an Executive Director - Projects, Solutions & International and Key Managerial Personnel of the Company with effect from August 7, 2024, liable to retire by rotation. Subsequently, the Members of the Company vide special resolution passed through postal ballot on September 25, 2024 had approved the appointment of Ponnada Venkata Rao as an Executive Director - Projects, Solutions & International for a period commencing from August 7, 2024 to July 31, 2028.

Considering Vir S Advani's current term set to conclude this fiscal year, the Nomination and Remuneration Committee (NRC) and the Board of Directors, after detailed assessment and in line with NRC Policy, recommended re-appointment of Vir S Advani (DIN: 01571278), as the Chairman & Managing Director of the Company for a term of five years commencing from April 1, 2026 and ending on March 31, 2031, for approval of the Members at the ensuing AGM.

The Notice convening the ensuing AGM sets out the brief profile, other details and disclosures with respect to re-appointment of Vir S Advani as the Chairman & Managing Director.

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. The declarations also confirm compliance with sub rule 3 of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

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:

Pursuant to the recommendations of the Board of Directors at its Meeting held on August 6, 2024 and approval of shareholders by way of Postal Ballot vide Special Resolution dated September 25, 2024, your Company has implemented the Blue Star Employees Stock Option Scheme 2024 (‘ESOP 2024').

ESOP 2024 was introduced by the Company in order to motivate the employees of the Company and its subsidiary companies for their contribution towards the growth of the Company, to foster a spirit of entrepreneurial mindset, and to retain them for ensuring sustained growth. It enables the alignment of personal goals of the employees with organisational objectives by allowing their participation in the ownership of the Company.

Under ESOP 2024 the Company can grant maximum of 5,00,000 Stock Options to Eligible Employees. Each Stock Option shall be convertible into one equity share of face value of H 2/- (Rupees Two Only) each fully paid-up. ESOP 2024 is administered through Blue Star ESOP Trust.

ESOP 2024 has been implemented in accordance with the provisions of the Act and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force) (‘SEBI SBEB Regulations'). The certificate from the Secretarial Auditors on the implementation of the ESOP 2024 in accordance with the SEBI SBEB Regulations and the resolution passed by the members of the Company, has been uploaded on the website of the Company at: https://www.bluestarindia. com/investors/annual-report

The details of the Stock Options granted under the ESOP 2024 and the disclosures in compliance with SEBI SBEB Regulations are available on the website of the Company at: https://www.bluestarindia.com/investors/other-updates

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, 2025, 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, 2025, and of the profit of the Company for the period April 1, 2024 to March 31, 2025;

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, 2025, 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.

During the year under review, 5 (five) 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.

Your Company has in place all the Committees as mandated under the provisions of the Act and Listing Regulations as mentioned below:

Audit Committee

Nomination and Remuneration Committee

Investor Grievance cum Stakeholders' Relationship Committee

Risk Management Committee

Corporate Social Responsibility and Environmental, Social & Governance Committee

Additionally, there are following Committees constituted for operational and administrative affairs:

Share Transfer Committee

Executive Management Committee

As on March 31, 2025, the Audit Committee comprises three Independent Directors viz. Anil Harish (Chairman), Arvind K Singhal and G Murlidhar and one Executive Director, 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.

As on March 31, 2025, the Nomination and Remuneration Committee comprises two Independent Directors viz. Sam Balsara (Chairman) and Anita Ramachandran and one Non-Executive Director, Dinesh N Vaswani.

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 part of this Annual Report.

As on March 31, 2025, the Investor Grievance cum Stakeholders' Relationship Committee comprises one Independent Director, Arvind K Singhal (Chairman) and two Non-Executive Directors viz. 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.

As on March 31, 2025, the Risk Management Committee comprises two Executive Directors viz. Vir S Advani (Chairman) and B Thiagarajan, one Non-Executive Director, Rajiv R Lulla and one Independent Director, 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 No. 42.

As on March 31, 2025, the Corporate Social Responsibility and Environmental, Social & Governance (CSR & ESG) Committee comprises one Executive Director, B Thiagarajan (Chairman), one Independent Director, Anita Ramachandran, and one Non-Executive Director, Sunaina Murthy.

During the year under review, the Company's total CSR obligation was H 7.04 crores i.e., two percent of its average net profits made during the three immediately preceding financial years. The Company has spent an amount of H 7.39 crores 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 H 0.35 crores towards CSR obligation of FY26. An amount of H 0.13 crores in respect of ongoing project, viz. for empowering youth through Skill-based training through its implementing partner ‘Confederation of Indian Industry (CII) Foundation', has been transferred to the Unspent Corporate Social Responsibility Account opened by the Company in accordance with the provisions of Section 135(6) of the Companies Act, 2013.

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/343680/csr-policy.pdf

Details of the other Committees of the Board including details of the meetings and attendance of all Committees are provided in the Corporate Governance Report, which forms part of this Annual Report.

The Nomination and Remuneration Committee at its meeting held on January 28, 2025, and the Board at its meeting held on January 29, 2025, 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 on various parameters including structure and composition of the Board and Committees, quality of Board processes, Board culture and dynamics, effectiveness vis-?-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 26, 2025. 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 Chairman, 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 30, 2025, and by the Board of Directors at its meeting held on May 7, 2025. 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. Additional details on the Board Evaluation is provided in the relevant section of the Corporate Governance Report, which forms part of this Annual Report.

The Nomination and Remuneration Policy has been adopted with the objective to provide a broad framework for the Board of Directors of the Company on appointment, removal, retirement, remuneration of the Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP); and Board diversity.

It is designed to foster a high-performance culture that enables the Company to attract, retain and motivate the Directors/KMPs/SMPs to achieve results. As part of the Policy, the Nomination and Remuneration Committee has to ensure that the appointment of the candidate for the position of Directors/KMPs/SMPs possess the requisite skills, competencies, expertise, optimum talent mix, independence and their remuneration structure/ payouts is decided based on the adequacy of the level and composition of remuneration, well defined performance parameters, appropriate balance between fixed and variable incentives, share-based and other compensation plans, Company's performance against the annual budget, and individual performance against the key result areas, compensation and benefits survey based on industry benchmarks and current trends. The performance of the Directors/KMPs/SMPs was evaluated and reviewed by the Nomination and Remuneration Committee.

During the year, in line with amendment in Listing Regulation, the definition of SMPs and role of Compliance Officer was amended in the Nomination and Remuneration Policy of the Company. The Nomination and Remuneration Policy is uploaded on the Company's website at: https://www.bluestarindia.com/media/217800/blue-star-nrc-policy.pdf

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 details of the remuneration of Non-Executive Directors are provided in the Corporate Governance Report, which forms part of this Annual Report.

The Company is committed in 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 Secretarial Auditors of the Company, confirming compliance with corporate governance norms as stipulated in the Listing Regulations, forms a part of this Annual Report.

Your Company is committed to conduct 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 your Company is based on the COSO 2017 ERM framework and COSO 2013 internal control-integrated 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 Stakeholders to

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.

Continuous control review mechanism in place to check adequacy of the established internal controls.

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, 2025.

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).

Details of loans, guarantees, investments and security provided as covered under the provisions of Section 186 of the Act, as may be applicable are given in the standalone financial statements as Note No. 9-11.

The Company has in place a process for approval of Related Party transactions and dealing with related parties. All 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 and hence disclosure in Form AOC-2 has not been provided.

The details of transactions with the related parties as per Indian Accounting Standards are provided in the standalone financial statements in Note No. 38.

A policy governing the related party transactions has been uploaded on the Company's website at: https://www. bluestarindia.com/media/78799/policy-for-transaction-with-related-parties.pdf

The Company continues to invest systematically in fostering a high-trust, performance-oriented culture across all levels of the organisation. During the year under review, efforts were intensified to strengthen employee engagement and development, with a focus on Gen-Z, thereby reinforcing the Company's position as an employer of choice in the markets it operates in.

The voice of employees remained central to the Company's people strategy. Inputs gathered through structured feedback mechanisms were meticulously analysed and translated into actionable enhancements in HR policies and processes. This approach enabled the organisation to remain agile and aligned with employee expectations, while maintaining benchmarked people practices. Employee engagement continued to be a vital pillar of the people agenda. The Company designed and implemented numerous initiatives aimed at strengthening bonds with the operator workforce and their families. These efforts not only improved workplace inclusivity but also helped deepen trust across this workforce.

A key priority for Blue Star has been building a future-ready, agile workforce. The Company's continued focus on aligning individual aspirations with organisational growth was evident through targeted learning and development initiatives. The Star Lead program, a flagship leadership pipeline initiative, has gained significant momentum. It is designed to nurture young managers by equipping them with critical competencies such as a growth and strategic mindset, intrapreneurial thinking, organisation-building capabilities, and customer centricity. This structured developmental intervention is a cornerstone of the Company's leadership-building philosophy.

In a move to foster a more inclusive and diverse leadership pipeline, customised development programmes and support groups were launched for women managers. These initiatives were designed to create an enabling environment for career advancement and peer learning.

During FY25, several business-aligned learning programmes were deployed across the organisation. Capability development for both individual contributors and people managers remained a focus area, with curated learning journeys and mentoring support by internal middle management. In parallel, the Company scaled up technical and functional capability-building initiatives. A key milestone was the establishment of a state-of-the-art Learning Centre in Chennai. Complementing this, ‘Training-on-Wheels' facility continued to enhance skill development for the channel partners' workforce across regions.

Digitalisation of HR processes progressed significantly, with enhanced user experience through customised platforms. This has streamlined transactions and improved access to services, aligning with the Company's broader digital transformation agenda.

Looking ahead, the Company will continue to prioritise capability development, digital enablement, and leadership pipeline building. Future initiatives will focus on data-driven workforce planning, expansion of diversity and inclusion strategies, and leveraging emerging technologies to enhance employee experience, ensuring that the human capital remains a strong driver of growth for the Company.

Details of employee remuneration as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be made available during 21 days before the Annual General Meeting upon request in writing made by the shareholder to the Company Secretary of the Company.

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. During the year, the Company received two complaints of which one complaint was disposed of and one complaint which was pending as on March 31, 2025, was resolved after the close of the financial year.

The Company incurred a total expenditure of H 139.50 crores on research and development for the year as against H 143.47 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 H 530.26 crores as against H 267.17 crores in the previous year. The foreign exchange outflow stood at H 1,848.63 crores as compared to H 1,555.43 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.

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.

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.

Your Company has 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.

The Company's existing Statutory Auditors, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were reappointed by the Members at the 75^th Annual General Meeting (AGM) of the Company held on August 3, 2023, for a period of 5 years, to hold office until the conclusion of the 80^th AGM to be held for FY 2027-28 at such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the Auditors.

The Audit Committee and the Board have 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.

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, 2025.

As per 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 M/s Narasimha Murthy & Co forms part of the Notice convening the Annual General Meeting.

As per Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts and records are maintained.

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, 2025.

The Secretarial Audit Report given by M/s N L Bhatia & Associates, Practicing Company Secretaries, has been provided in Annexure 3 to this Report.

As required under Regulation 24A of the Listing Regulations, the Secretarial Audit Report of Blue Star Climatech Limited, the material unlisted subsidiary, given by M/s Ashish Bhatt & Associates is also provided in Annexure 3A to this Report.

The Secretarial Audit Report of the Company and Blue Star Climatech Limited as mentioned above does not contain any qualification, reservation, or adverse remark.

In compliance with Regulation 24A of the amended Listing Regulations and Section 204 of the Act, the Board at its meeting held on March 18, 2025, based on recommendation of the Audit Committee, has approved the appointment of M/s MMJB & Associates LLP, Practising Company Secretaries, a peer reviewed firm (ICSI UIN: L2020MH006700) as Secretarial Auditors of the Company for a period of 5 (five) consecutive years commencing from the conclusion of upcoming 77^th Annual General Meeting (‘AGM') till the conclusion of 82^nd AGM to be held in the year 2030, to conduct Secretarial Audit for the period from April 1, 2025 till March 31, 2030, subject to approval of the members at the ensuing AGM.

The Board places on record its sincere appreciation and gratitude to M/s N L Bhatia & Associates, Practicing Company Secretaries, for their dedicated and professional services as Secretarial Auditors of the Company over the past 10 years.

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.

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.

The annual return of the Company has been uploaded on the Company's website at: https://www.bluestarindia. com/investors/annual-returns

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

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, 2025.

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.

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 Equity Shares with differential rights as to dividend, voting or otherwise.

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.

In terms of Regulation 34(3) read with Para A of Schedule V of the Listing Regulations, the Company, during the financial year, has not entered into any transaction with person or entity belonging to the promoter/promoter group holding 10% or more shareholding in the Company.

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

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.

Information under Rule 8 of Companies (Accounts) Rules, 2014

Details regarding conservation of energy in relation to Plants & Offices are provided in the Natural Capital section of Integrated Report.

The Company has spent an amount of 6.6 crores as capital investment towards energy conservation measures across various Plants & Offices.

a) The Company intends to increase its global footprint in the US and Europe markets.

The US residential ducted split HVAC market is undergoing a significant shift toward heat pump adoption, driven by energy efficiency goals and decarbonization efforts. Heat pumps offer both heating and cooling, making them ideal for year-round comfort and reducing reliance on fossil fuels. Simultaneously, American Innovation and Manufacturing (AIM) Act has mandated transition to low GWP refrigerants starting January 1, 2025. R-454B, a mildly flammable A2L refrigerant, is emerging as the preferred replacement for R-410A due to its lower global warming potential and similar performance characteristics. In line with the regulatory changes, the design and development of R-454B based inverter outdoor unit was taken up. The shift to R-454B requires updated safety protocols, equipment redesigns, and technical documentation. System design was finalized using virtual thermal simulation tools. R&D worked extensively with compressor suppliers and electrical component suppliers to cover the safety aspect in unit design. Third party testing agency was engaged to carry out safety testing and ETL certification. Performance testing of the products was conducted in accordance with AHRI-210/240 standard.

b) Efficiency standards are expected to be more stringent in near future. This means that the portfolio of variable speed (inverter-based) products is going to increase substantially.

The Company has decided to develop a capability to design and develop inverter drives to de-risk the supply chain. During the year, the Company developed a 1-phase inverter drive for compressors used in residential air conditioners and heat pumps. R&D engineers worked with experts in the field of power electronics to develop the drive. The new design drive qualifies for the CE certification requirement in Europe.

a) The Company will be able to address growing demand of heat pumps in the US market in the form of newly developed R-454B based inverter outdoor unit. The product has been well received by the customer for its superior heating performance, build quality and lower sound level.

b) In-house design of 1-phase drive has been designed with latest technology and safety features. The newly acquired design capability will reduce dependence on imports and provide supply chain flexibility. Since the IP is owned by the Company, the design can be customized for a wide range of residential air conditioners and heat pumps.

No technology has been imported by the Company in the last 3 years.