Thermax Ltd Directors Report.

Dear shareholder,

Your directors are pleased to present the Thirty-Eighth Annual Report, together with the audited financial statements of your company for the year ended March 31, 2019.

Financial Results

(Rupees in crore)




2018-19 2017-18 2018-19 2017-18
Total revenue 3663.90 2845.53 6123.05 4602.03
Profit before finance cost, depreciation and tax 373.52 338.43 607.32 517.33
Finance cost & depreciation 55.39 53.39 106.34 95.29
Profit before tax & exceptional items 318.13 285.04 500.98 422.04
Exceptional items (47.85) (25.00) (89.54) -
Profit before tax but after exceptional items 270.28 260.04 411.44 422.04
Provision for taxation (incl. deferred tax) 109.26 98.90 84.94 165.75
Share of profit/(loss) on joint venture NA NA (1.07) (25.19)
Profit after tax from continuing operations 161.02 161.14 325.43 231.10
Profit after tax from discontinuing operations 114.22 77.11 NA NA
Other comprehensive income (20.82) 3.59 (21.72) 27.03
Total comprehensive income 254.42 241.84 303.71 258.13
Total equity 2735.85 2565.56 3014.29 2714.74
Earnings Per Share (EPS) (द) face value per share द 2/- from continuing operations 13.51 13.52 28.90 20.61
Earnings Per Share (EPS) (द) face value per share द 2/- from continuing and discontinuing operations 23.10 19.99 28.90 20.61

The current years revenue is exclusive of Goods and Service Tax (GST), while last years revenue includes excise duty, and hence, they are not comparable. Further, the results of B&H business have been classified as discontinued operations in the standalone financial statements. However, this will not impact the consolidated group accounts.

Annual Performance

Your company posted a total revenue of द 3,664 crore for the financial year 2018-19, against last years revenue of द 2,846 crore. On a consolidated level, the group revenue was at द 6,123 crore (द 4,602 crore).

The energy segment contributed 80.3% (78%) to the groups operating revenues in FY 2018-19.

On a standalone basis, revenue from exports have gone up by 54.4% to द 1,061 crore (द 687 crore) and the group international business was higher by 46.9% at द 2,636 crore (द 1,794 crore). This was due to a large refinery order in Africa and opportunities in the Middle East and South East Asia.

Consolidated order booking for FY 2018-19 reduced by 11.7% to द 5,633 crore (Rs. 6,380 crore) with standalone order booking from continuing operations at द 3,325 crore, a decrease of 8.5% over the previous year (द 3,634 crore). Order booking in international markets at Rs.1,984 crore was lower by 27.8% and accounted for 35.2% of the consolidated figure as compared to द 2,748 crore last year (43.4%).

On a standalone basis, the exceptional item of expenditure of द 48 crore (द 25 crore) represents an impairment of investment in subsidiary companies, Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited (TZL), First Energy Pvt. Ltd. (FEPL), Thermax SPX Energy Technologies Limited and Thermax Netherlands B.V., and after considering reversal of impairment of investments made in earlier years in Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES). Profit after tax and exceptional items from continuing operations stood at द 161 crore, same as the previous year. EPS were at द 13.51 (द 13.52).

During the year, both global and domestic economies witnessed a slowdown in growth, impacting investor sentiments. Amidst the prevailing challenges globally, Thermax continued to focus on its strategy of selective internationalisation to combat volatility in the domestic CapEx cycles. Your company stabilised its new manufacturing facilities, both at Dahej, Gujarat and Indonesia apart from commencing commercial production at Sri City, Andhra Pradesh. Though the operations of Danstoker in Europe encountered di_culties during the year, the activities in its new Poland facility picked up and positioned the business to leverage the capacity building process of Eastern Europe. The localisation process in Thermaxs new facility in Indonesia witnessed an encouraging response from the market.


The directors have recommended a dividend of द 7/- (350%) per equity share of the face value द 2/-. The dividend, if approved by the shareholders, will translate in a payout of द 101 crore, including dividend distribution tax of द 17 crore.

Share Capital

The paid-up equity share capital of the company was द 23.83 crore as on March 31, 2019. There was no public, rights, preferential or bonus issue during the year. The company has neither issued any shares with differential voting rights, sweat equity shares, nor has it granted any stock options.


Annual accounts of the subsidiary companies and related detailed information are available to the shareholders of the holding and subsidiary companies as well as to the statutory authorities. On request, these documents will be made available for inspection at the companys corporate office.

The company does not have any material subsidiary whose income or net worth exceeds 20% of the consolidated income or net worth, of the listed entity and its subsidiaries in the immediately preceding accounting year.

The report on the growth trends and outlook of those subsidiaries which impact your companys performance reasonably are captured in the Management Discussion and Analysis section of this Report. Comprehensive details on each subsidiary including their financial performance and contribution to the overall performance of the company during the year are available in AOC-1, on page no. 274.

Information on Newly Incorporated Subsidiaries and Acquisition during the Year

The company, has set up a step-down subsidiary company in Nigeria (through Wholly Owned Subsidiary (WOS) of the company, Thermax Engineering Construction Company Limited), named Thermax Engineering Construction FZE, which was incorporated on August 31, 2018, as a prerequisite for executing projects in the region.

During the year, the company has acquired 100% equity stake in the erstwhile joint venture, TBWES, which has now become a WOS of Thermax. This was done by way of purchase of shares from Babcock & Wilcox India Holdings Inc., the joint venture partner.

The company has also acquired 100% equity stake of Thermax SPX Energy Technologies Limited (TSPX) on April 11, 2019 by purchasing shares from Mutares Holding-24 AG Germany (23%) and Balcke Duerr, Germany (26%) the joint venture partners. TSPX has now become a WOS of the company.

Management Discussion and Analysis

The Management Discussion and Analysis section, highlighting the performance and prospects of the companys energy, environment and chemical segments, including details of subsidiaries, information on companys health, safety and environment measures, human resources, risk management and internal controls, is attached as Annexure 1 on page no. 26.

Corporate Governance Report

A detailed Corporate Governance Report regarding SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 which also includes disclosures required as per Sections 134 and 177 of the Companies Act, 2013, is attached as Annexure 3 on page no. 42.

A certificate from the statutory auditors of the company regarding compliance with the conditions of corporate governance as required under Schedule V of the Listing Regulations is a part of this report.

Secretarial Standards

The company has complied with the revised Secretarial Standards on meetings of the Board of directors (SS-1) and Secretarial Standards on general meetings (SS-2).

Business Responsibility Report

In terms of the Listing Regulations, Business Responsibility Report describing the initiatives taken by the company from environmental, social and governance perspectives are enclosed as Annexure 4 on page no. 62.

Vigil Mechanism/Whistle Blower Policy

The company has a vigil mechanism named ‘Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The details of the policy are provided in the Corporate Governance Report and also posted on the website of the company,

Employee Strength

The total number of permanent employees on the rolls of the company as on March 31, 2019, were 4,110 compared to 3,664 employees in the previous year.

Industrial Relations

The overall Industrial Relations at all locations were amicable. The wage settlement signed with the unions at Savli, Chinchwad and Paudh works were implemented as per agreed terms.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, duly amended, in respect of employees of the company, will be provided upon request. In terms of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members and others entitled to receive it. Any shareholder interested in obtaining such particulars may write to the company secretary at the corporate office of the company. The information is also available for inspection at the corporate office during working hours up to the date of the Annual General Meeting.

Details of Trusts for the Benefit of Employees

a) ESOP and Welfare Trust

The company has a Thermax Employees ESOP and Welfare Trust which holds 29,06,250 equity shares of द 2/- each of the company.

The Trust has not entered into any transaction of buying or selling of shares in the secondary market.

The company, at present, does not have any ESOP scheme under this Trust.

b) Employee Welfare Trusts

The company has various Employee Welfare Trusts primarily for providing medical and educational aid to its employees and their families. These trusts presently hold 36,35,190 equity shares of द 2/- each of the company. None of the trusts had any dealings in the secondary market.

The relevant disclosures as required under the SEBI (Share-based Employee Benefits) Regulations, 2014 on Employee Welfare Trusts will be made available on the companys website:

Disclosure: Anti-Sexual Harassment Policy

The company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary and trainees) are covered under this policy. To build awareness in this area, the company has been carrying out induction/refresher programmes in the organisation on a periodical basis.

An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment under the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

The following is a summary of sexual harassment complaints received and disposed of during the year 2018-19:

• Number of complaints received - Nil

• Number of complaints disposed of - NA

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on the conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as Annexure 5 on page no. 76.

Corporate Social Responsibility Initiatives

As a part of its initiatives under ‘Corporate Social Responsibility (CSR), the company has undertaken projects mainly in the area of education. The projects are largely in accordance with Schedule VII of the Companies Act, 2013. Since 2007, the CSR initiatives have been undertaken through the Thermax Foundation. The detailed report on CSR is provided as Annexure 2 on page no. 38.

The details of the CSR committee and CSR policy are available on the companys website:

The Annual Report on CSR activities and CSR policy is provided as Annexure 6 on page no. 78.


All independent directors of the company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 (the Act) and the Listing Regulations.

The company has formulated a policy on familiarisation programme for independent directors which is available on the companys website:

In accordance with the provisions of the Companies Act, 2013 and the companys Articles of Association, M.S. Unnikrishnan retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment as a director.

Rajani Kesari has been inducted on the Board of your company as an additional director on November 14, 2018 in the category of non-executive independent director to hold office up to the ensuing 38th AGM in accordance with the provisions of Section 161 of the Act. In terms of Section 149 and other applicable provisions of the Act, she is proposed to be appointed as an independent director of the company for five consecutive years, up to November 13, 2023. The requisite notice has been received pursuant to Section 160 of the Act, proposing her as a director of the company. A resolution appointing her as an independent director has been set out in the notice of the ensuing AGM for the approval of shareholders.

The Nomination & Remuneration Committee of the company has recommended the appointment of Dr. Jairam Varadaraj and Nawshir Mirza, as independent directors from July 22, 2019 up to July 21, 2024 and Dr. Valentin A.H. von Massow, as independent director from July 22, 2019 up to July 21, 2022. These appointments would be placed before the shareholders for their approval at the ensuing Annual General Meeting.


A calendar of meetings is prepared and circulated in advance to the directors.

During the year, six Board meetings were convened and held, the details of which are given in the Corporate Governance Report.

Remuneration Policy

The Remuneration Policy details for selection, appointment and remuneration of directors and senior management is given in the Corporate Governance Report and the said policy is available on the companys website

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out an annual evaluation of its performance. The details of the Board/Committee evaluations are given in the Corporate Governance Report.

Directors Responsibility Statement

In terms of Section 134 (3)(c) of the Companies Act, 2013, your directors, to the best of their knowledge and belief and according to the information and explanations obtained by them in the normal course of their work, state that, in all material respects;

a) In the preparation of the annual financial statements for the year ended March 31, 2019, the applicable accounting standards have been followed; b) Appropriate accounting policies have been selected, applied consistently and judgement and estimates have been made that are reasonable and prudent to give a true and fair view of the state of affairs of the company as on March 31, 2019, and of the profit of the company for the year ended on that date;

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The annual financial statements have been prepared on a going concern basis;

e) Proper internal financial controls were in place and the financial controls were adequate and operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Please also refer to section H. of MDA for further details.

Related Party Transactions

All related party transactions entered into during the financial year were at an arms length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the company at large.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee/Board is obtained on a quarterly basis for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all related party transactions are placed before the Audit Committee for their approval on a quarterly basis. The company has developed a Related Party Transactions Manual and Standard Operating Procedures for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is available on the companys website:

None of the directors has any pecuniary relationships or transactions vis--vis the company except as disclosed under Sr. No. 2 A of the Corporate Governance Report.

Standalone and Consolidated Financial Statements

The financial statements for the year ended

March 31, 2019, have been prepared as per Schedule III to the Companies Act, 2013. The consolidated financial statements of the group are prepared in compliance with the Accounting Standards and Listing Regulations as prescribed by SEBI. The cash flow for the year is attached to the balance sheet. A separate statement containing the salient features of subsidiaries and joint ventures in the prescribed Form (AOC-1) is also attached.

Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the regulators/courts which would impact the going concern status of the company.

Public Deposits

The company had no unpaid/unclaimed deposit(s) as on March 31, 2019. The company has not accepted any fixed deposits during the year.

Particulars of Loans, Guarantees or Investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013, are given in the notes to the financial statements.

Material Changes and Commitments

There have been no material changes and commitments, affecting the financial position of the company, which have occurred between the end of the financial year and the date of this Report.

Committees of the Board

The details of all committees and their terms of reference are set out in the Corporate Governance Report.


Statutory Auditors

M/s. SRBC & Co. LLP, Chartered Accountants, was appointed as the Statutory Auditors for a period of five years commencing from the 34th AGM until the conclusion of the 39th AGM.

In accordance with the Companies Amendment Act, 2017, enforced on May 7, 2018, by the Ministry of Corporate Affairs, the appointment of statutory auditors is not required to be ratified at every Annual General Meeting.

As required under the Listing Regulations, M/s. SRBC & Co. LLP, the auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

In terms of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Amendment Rules, 2014, M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune have been appointed as the Cost Auditors of the company for FY 2019-20.

Secretarial Audit

In accordance with the provisions of Section 204 of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the company has appointed M/s. SVD & Associates, Company Secretaries, Pune, to undertake the Secretarial Audit of the company for FY 2019-20. The Secretarial Audit Report for FY 2018-19 is annexed as Annexure 7 on page no. 81.

The observations of the secretarial auditors in their report are self-explanatory and therefore, the directors do not have any further comments to offer on the same.

Annual Return

The details forming a part of the annual return in Form No. MGT-9 is annexed herewith as Annexure 8 on page no. 85. Copy of the annual return is also available on the companys website:

Awards and Recognition

Your company is proud to have received the following awards during the year:

• Thermax was awarded as the ‘Outstanding Engineering Solution Provider at the CNBC Awaaz CEO Awards organised in Raipur on July 7, 2018, in association with the Government of Chhattisgarh. M.S. Unnikrishnan, MD & CEO of Thermax received the award from Dr. Raman Singh, Chief Minister of Chhattisgarh.

Thermaxs Steam Engineering Groups High-Pressure High Temperature Condensate Recovery System (HPCRS) was recognised as an ‘Innovative Energy Saving Product and has bagged the 19th National Award for Excellence in Energy Management at the Energy Efficiency Summit organised by CII in Hyderabad.

M.S. Unnikrishnan received the ‘Power 100 2018 Award at the Renewable Energy India Expo, where Indias 100 most powerful solar industry business leaders were recognised.

• Thermax has won the ‘REFCOLD Emersion Award in the Industrial Refrigeration category for two of its innovative products - hybrid chiller and ultra low-pressure absorption chiller at REFCOLD India 2018. The award was conferred on Thermax Ltd. on 22nd November, 2018 in Gujarat.

Dr. R.R. Sonde, head of Research & Innovation at Thermax received the Global Excellence Awards-2019 in the gas sector conferred by the Energy & Environment Foundation under the aegis of the Petroleum & Natural Gas, Coal and Power ministries, Government of India on February 15, 2019.

Thermax received the ‘EQ Tamil Nadu State Solar Award on February 27, 2019 as the rooftop solar EPC company of the year in the Industrial category.

Thermax won the ACREX Award of Excellence 2019 in the Energy Saving category for its hybrid heat pump and bagged the runners up in the Innovation category for sub-zero absorption chiller at ACREX2019 in Mumbai on February 28, 2019.

Celebrating womens excellence in business and innovation at the inaugural edition of the ET Prime Women Leadership Awards held on March 29, 2019, Anu Aga was presented with the Lifetime Achievement Award for her leadership role at Thermax and her philanthropic work.

On the occasion of their Foundation Day in February 2019, the Army Institute of Technology (AIT), Pune presented the Lifetime Achievement Award to M.S. Unnikrishnan, for his contribution to green technologies, inventive thinking in business and an outstanding stint at reputed industry houses.


Your directors place on record their appreciation for the continued support extended during the year by the companys customers, business associates, suppliers, bankers, investors, government authorities and joint venture partners. They also place on record their appreciation for the dedication and value-added contributions made by all the employees.

Your directors would also like to thank all the shareholders for continuing to repose faith in the company and its future.

For and on behalf of the Board

Meher Pudumjee

Chairperson (DIN: 00019581)

Pune: May 22, 2019