According to the company, it has retained the number one position in the central airconditioning segment despite subdued market conditions and a general liquidity crunch in the economy.

"In a difficult year, this has been a satisfactory performance. While we do not expect a quick turnaround in general business conditions, we are optimistic about the performance during 1998-99," said chairman and chief executive Ashok M Advani.

Blue Star's software exports business registered an impressive 47 per cent growth over last year to Rs 25.6 crore. Income from other areas like water- coolers and AC&R projects jumped 96 per cent to 16.9 crore.

During the year, the company launched a voluntary retirement scheme for surplusmanpower to reduce costs, both in the management and worker categories.

The company's newly set up plant at Dadra in collaboration with Rheem Manufacturing company of the US commenced commercial production in July, 1997. The factory produces ducted splits and packaged units as well as new mini-splits and window-airconditioners. An expenditure of Rs 30 crore incurred for the plant was capitalised during the year.

Besides, Blue Star strengthened its relationship with York International Corporation of the US. It also entered into new technology tie-ups with Kolpak of the US for cold rooms, Bohn of the US for heating units and with Climatrol of Italy for double skinned air handling units. These products will be manufactured at the company's Thane and Bharuch plants.

INSIGHT -- Intact market share is only good news

Blue Star's revenue growth of barely 2 per cent in 1997-98 compares very unfavourably to the 30 per cent growth that Carrier Aircon has shown in the last one year. This is a relevantcomparison even though Blue Star is a diversified company as the bulk of the revenues come from air-conditioning (central, split, windows). The only good sign so far is that it has not lost its 40 per cent market share in the central airconditioning business.In a year that saw the company take shelter under tax benefits owing to both higher depreciation as well as the commencing and stabilisation of its plant at Dadra (which provides it with backward area benefits under section 80-IA) as well as increased export revenues (weighted average growth of software and other products was 66 per cent); the profit after tax crept up by just 5 per cent to Rs 15.51 crore (while tax provision has dropped by 70 per cent). Operating margins were better in the second half.The paltry growth of 2 per cent however required an incremental capital inflow of Rs 42.5 crore (an increase of 31 per cent); which only further served to reduce the return on capital from 14.6 per cent to 12 per cent.