Thermax Ltd Directors Report.

Dear shareholder,

Your directors are pleased to present the Thirty-Ninth Annual Report, together with the audited financial statements of your company for the year ended March 31, 2020.

Financial Results

(Rupees in crore)

Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Total Income 3,319.48 3,663.90 5,831.31 6,123.05
Prot before finance cost, depreciation and tax 317.88 373.52 506.18 607.32
Finance cost & depreciation 67.84 55.39 131.65 106.34
Prot before tax & exceptional items 250.04 318.13 374.53 500.98
Exceptional items (14.89) (47.85) - (89.54)
Prot before tax but after exceptional items 235.15 270.28 374.53 411.44
Provision for taxation (incl. deferred tax) 73.76 109.26 162.08 84.94
Share of profit/(loss) on joint venture NA NA - (1.07)
Prot after tax from continuing operations 161.39 161.02 212.45 325.43
Prot after tax from discontinuing operations 52.60 114.22 NA NA
Other comprehensive income (13.16) (20.82) (8.78) (21.72)
Total comprehensive income 200.83 254.42 203.67 303.71
Total equity 2,737.49 2,735.85 3,027.90 3,014.29
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing operations 13.54 13.51 18.87 28.90
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing and discontinuing operations 17.95 23.10 18.87 28.90

Annual Performance

Your company posted total income of Rs. 3,319 crore for the financial year 2019-20, against last years income of Rs. 3,664 crore. On a consolidated level, the group income was at Rs. 5,831crore (Rs. 6,123 crore).

The energy segment contributed 80.4% (79.4%) to the groups operating revenues in FY 2019-20.

On a standalone basis, revenue from exports was down by 28.5% at Rs. 759 crore (Rs. 1,061 crore) and the group international business was lower by 25.3% at Rs. 1,969 crore (Rs. 2,636 crore).

Consolidated order booking for FY 2019-20 reduced by 2.4% at Rs. 5,498 crore (Rs. 5,633 crore) with standalone order booking from continuing operations at Rs. 4,058 crore, an increase of 22.1% over the previous year of Rs. 3,325 crore. Group order booking in international markets at Rs. 1,470 crore was lower by 25.9% and accounted for 26.7% of the consolidated gure as compared to Rs. 1,984 crore last year (35.2%).

On a standalone basis, the exceptional item of expenditure of Rs. 15 crore (Rs. 48 crore) represents an impairment of investment in the subsidiary companies, Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited (TZL) and First Energy Pvt. Ltd. (FEPL). Prot after tax and exceptional items from continuing operations stood at Rs. 161 crore, same as the previous year. EPS were at Rs. 13.54 (Rs. 13.51).

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 capital expenditure cycle. New manufacturing facilities both, in Dahej, Gujarat and in Indonesia were stabilised. It also stabilised its operations at Sri City, Andhra Pradesh which was inaugurated in January 2019. Though the operations of Danstoker in Europe encountered di culties during the year, the activities in its new Poland facility, after initial challenges, have recently picked up and positioned the business to capitalise on opportunities in Eastern Europe. The localisation process in Thermaxs new facility in Indonesia witnessed an encouraging response from the market.


In the last month of the scal, there was an exponential surge in the Covid-19 cases in many countries dominated by the US, forcing the Government to impose national lockdown in India. The safety of employees was paramount in all the decisions taken by your company to continue or restart operations. The company is also using innovative methods to support its customers during this crisis. The spread of this virus has compelled your company to revisit its ways of working, including working from home.

Based on the available information and the business projections by management, which appear reasonably conservative, the Board is satised that no material adjustments are required to the financial statements for 2019-20.


During the year, the directors have approved payment of interim dividend of Rs. 7/- (350%) per equity share of face value Rs. 2/- each for distribution of the prots of the company for the quarter and nine months ended December 31, 2019, which had resulted in a payout of Rs. 101 crore including dividend distribution tax of Rs. 17 crore.

In view of the above, the Board did not recommend Final dividend for FY 2019-20.

Transfer to Reserve

The closing balance of the retained earnings of the company for FY 2019-20, after all appropriation and adjustments was Rs. 2171.10 crore. During the year, the company has not transferred any amount to General Reserve.

Share Capital

The paid-up equity share capital of the company was Rs. 23.83 crore as on March 31, 2020. There was no public, rights, preferential or bonus issued during the year. The company has neither issued any shares with di erential 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 o ce.Subsequent to the transfer of Boiler & Heater ("B&H") business of the company by way of a slump sale as ‘going concern to Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES), a Wholly Owned Subsidiary (WOS) of the company, TBWES has become a material subsidiary.

Post acquisition of the entire stake in Thermax SPX Energy Technologies Limited, its name has been changed to Thermax Cooling Solutions Limited.

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 Comapny during the year are available in AOC-1 on page no. 298.

Information on Newly Incorporated Subsidiaries and Acquisition During the Year

The company has set up a step-down subsidiary company in Tanzania (through WOS of the company, Thermax Engineering Singapore PTE Ltd.) named Thermax International Tanzania Limited, which was incorporated on December 7, 2019, as a pre- requisite for supervision of project business.

During the year, the company has also set up a WOS in Thailand named Thermax (Thailand) Limited, which was incorporated on March 9, 2020.

Management Discussion and Analysis

The Management Discussion and Analysis section, highlighting the performance of the companys energy, environment and chemical segments, including details of select subsidiaries, information on companys health, safety and environment measures, human resources, risk management and internal controls is on page no. 18.

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 1 on page no. 68.

A certicate 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.

Integrated Report

The company has voluntarily decided to publish an Integrated Report from this year, which encompasses both financial and non-financial information to enable its diverse stakeholders to take well informed decisions and have a better understanding of the companys long term perspective. Integrated Report is attached on page no. 1.

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 is enclosed as Annexure 2on page no. 87.

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, 2020, was 3,325 compared to 4,110 employees in the previous year. The signicant reduction in number of employees is due to transfer of employees to subsidiaries of the company.

Industrial Relations

The overall Industrial Relations at all the locations were amicable. The company has signed three years wage settlement with the union at Chinchwad on November 12, 2019 for the period May 1, 2019 to April 30, 2022. The wage settlement with the union at Paudh ended on June 30, 2019 and negotiations for the subsequent settlement are in progress. The wage settlement at Savli plant is in force as per terms of agreement.

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 o ce of the company. The information is also available for inspection at the corporate o ce 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 Rs. 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 Rs. 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 Benets) Regulations, 2014 on Employee Welfare Trusts are 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 2019-20:

? 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 3 on page no. 92.

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 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 in the Social and Relationship Capital on page no. 44.

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 4 on page no. 94.

Directors and Key Managerial Personnel

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, Mr. Pheroz Pudumjee retires by rotation at the ensuing AGM and being eligible, o ers himself for re-appointment as a director.

The company has announced the appointment of Mr. Ashish Bhandari as the Joint Managing Director of the Company, e ective April 7, 2020. Mr. M.S. Unnikrishnan, Managing Director & CEO will retire on August 31, 2020 following which Mr. Bhandari will move into the role of Managing Director & CEO.

During the year, Mr. Amitabha Mukhopadhyay, Group CFO of the company has resigned w.e.f. May 31, 2019 and Mr. Rajendran Arunachalam took charge as the Group CFO of the company w.e.f June 1, 2019.


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

During the year, ve 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 evaluations are given in the Corporate Governance Report.

Board Diversity

The company recognises and embraces the importance of a diverse Board in its success. It believes that a truly diverse Board will leverage di erences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical backgrounds, age, ethnicity, race and gender that will help in retaining its competitive advantage. The Board Diversity Policy adopted by the Board sets out its approach to diversity. The policy is available on the Companys website,

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, 2020, 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 a airs of the company as on March 31, 2020, and of the prot 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 refer to Internal Controls section of the

Management Discussion and Analysis 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. During the year, Mr. Zahaan Pudumjee, a relative of the promoters, was appointed as Head - Operations in Thermax Onsite Energy Solutions Limited (TOESL), a WOS of the company. Since his appointment was to a place of prot, necessary approval of the Board of Directors of the company was obtained. 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 conict with the interest of the company at large.

All related party transactions are placed before the Audit Committee. Prior / omnibus approval of the Audit Committee/Board is obtained annually for transactions which are foreseeable and repetitive. 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 its 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-a-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, 2020, 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, refer page no. 298.

Significant and Material Orders

Passed by the Regulators or Courts

There are no significant material orders passed by the regulators and 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, 2020. 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, a ecting the financial position of the company, which have occurred between the end of the financial year and the date of this report.

Internal Financial Control Systems and their Adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.

Risk Management

The Board of Directors of the company has formed a Risk Management Committee to assess the risks facing the business and the mitigation measures taken thereof. The committee is responsible for assisting the Board in understanding existing risks and reviewing the mitigation and elimination plans for those. The Audit Committee has additional oversight in the area of financial risks and controls. T he major risks identied by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

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, were appointed as the Statutory Auditors for a period of have years commencing from the 34th AGM until the conclusion of the 39th AGM.

The Board of Directors at its meeting held on June 18, 2020 has recommended re-appointment of M/s. SRBC & Co LLP, Chartered Accountants as the Statutory Auditors of the company for further term of have years for the approval of the shareholders of the company.

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 2020-21.

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 2020-21. The Secretarial Audit Report for the company and its material subsidiary for FY 2019-20 is annexed as Annexure - 5(a) & 5(b) on respectively on page nos. 98.

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

Annual Return

The details forming a part of the annual return in Form No. MGT-9 is annexed herewith as Annexure 6 on page no. 106. Copy of the annual return is also available on the companys website:

Awards and Recognition

Your company is proud to have received various awards during the year. Details of the awards received during the year are given on page no. 4.


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 other stakeholders. 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, June 18, 2020