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Thermax Ltd.

BSE: 500411 Sector: Engineering
BSE 00:00 | 05 Aug 2061.80 -11.95






NSE 00:00 | 05 Aug 2064.75






OPEN 2075.00
52-Week high 2347.00
52-Week low 1288.35
P/E 119.73
Mkt Cap.(Rs cr) 24,566
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2075.00
CLOSE 2073.75
52-Week high 2347.00
52-Week low 1288.35
P/E 119.73
Mkt Cap.(Rs cr) 24,566
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Thermax Ltd. (THERMAX) - Director Report

Company director report

Dear Shareholder

Your directors are pleased to present the Fortieth Annual Report together with theaudited financial statements of your company for the year ended March 31 2021.

Financial Results

(Rs. in crore)



FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Total revenue 3131.00 3215.00 4791.00 5731.00
Profit before finance cost and depreciation and tax 358.51 317.88 462.93 506.18
Finance cost and depreciation 72.56 67.84 135.21 131.65
Profit before tax and exceptional items 285.95 250.04 327.72 374.53
Exceptional items (103.03) (14.89) (52.53) NIL
Profit before tax but after exceptional items 182.92 235.15 275.19 374.53
Provision for taxation (incl. deferred tax) 41.90 73.76 68.61 162.08
Profit after tax from continuing operations 141.02 161.39 206.58 212.45
Profit after tax from discontinuing operations - 52.60 NA NA
Other comprehensive income 0.87 (13.16) 16.91 (8.78)
Total comprehensive income 141.89 200.83 223.49 203.67
Total equity 2879.38 2737.49 3251.39 3027.90
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing operations 11.83 13.54 18.34 18.87
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing and discontinuing operations 11.83 17.95 18.34 18.87

Annual Performance

Your company on a standalone basis posted a revenue of Rs. 3131 crore for thefinancial year 2020-21 against last year's revenue of Rs. 3215 crore. Revenue fromexports was up 3% at Rs. 791 crore (Rs. 759 crore). Order booking from continuingoperations stood at Rs. 3079 crore lower by 24% as compared to Rs. 4058 crore in theprevious year.

On a consolidated level the group revenue was at Rs. 4791 crore (Rs. 5731 crore).The group's international business was lower by 15% at Rs. 1675 crore (Rs. 1969 crore).Consolidated order booking for FY 2020-21 reduced by 13% to Rs. 4784 crore (Rs. 5498crore).

Order booking in international markets at Rs. 1363 crore was lower by 7% and accountedfor 28.5% of the consolidated figure as compared to Rs. 1470 crore last year (26.7%).

Considering the market condition and performance of step-down subsidiaries animpairment of Rs. 97.17 crore has been recorded for Danstoker A/S (Denmark) subsidiary ofThermax Netherlands B.V (Rs. 74.68 crore) and PT Thermax International Indonesiasubsidiary of Thermax Engineering Singapore PTE. Ltd. (Rs. 22.49 crore) - the same havebeen shown as exceptional items in the standalone results. During the year the companyannounced a Voluntary Retirement Scheme for employees an expense of Rs. 5.86 crore hasbeen accounted as an exceptional item. Profit after tax and exceptional items fromcontinuing operations stood at Rs. 141 crore compared to Rs. 161 crore in the previousyear. EPS was at Rs. 11.83 (Rs. 13.54).


Measures taken by the company for COVID relief are covered in the Integrated Report.


The Board of Directors has recommended a dividend of Rs. 7/- (350%) per equity share offace value of Rs. 2/- each for the year ended March 31 2021. The dividend is subject tothe approval of members at the ensuing annual general meeting. In view of the changes madeunder the Income-tax Act 1961 by the Finance Act 2020 dividends paid or distributed bythe Company shall be taxable in the hands of the Shareholders. Your company shallaccordingly make the payment of the dividend after deduction of tax at the source.

Transfer to Reserve

The closing balance of the retained earnings of the company for FY 2020-21 after allappropriation and adjustments was Rs. 2313 crore. During the year the company has nottransferred any amount to General Reserve.

Share Capital

The paid up equity share capital of the company was Rs. 23.83 crore as on March 312021. There was no public/preferential rights or bonus issued during the year. The companyhas neither issued any shares with differential voting rights sweat equity shares norhas it granted any stock options.


Annual accounts of the subsidiary companies and related detailed information areavailable to the shareholders of the holding and subsidiary companies as well as to thestatutory authorities. On request these documents will be made available for inspectionat the company's corporate office.

The report on the growth trends and outlook of those subsidiaries which impact yourcompany's performance reasonably are captured in the Management Discussion and Analysissection of this report.

Information on Newly Incorporated Subsidiaries and Acquisition during the Year

The company has set up a step-down subsidiary company through a wholly owned subsidiaryof the company Thermax Onsite Energy Solutions Limited (TOESL) named Enernxt PrivateLimited which was incorporated on January 5 2021 for starting the Bio-CNG business ofTOESL.

During the year the company has acquired the remaining 24% stake in First EnergyPrivate Limited (FEPL) effective December 21 2020. Accordingly the equity shareholdingof the company in FEPL stands increased from 76% to 100%. Post this acquisition FEPL is awholly owned subsidiary of the company.

During the year the company has approved the voluntary liquidation of ThermaxSustainable Energy Solutions Limited (TSES) a wholly owned subsidiary of the companyunder the Insolvency and Bankruptcy Code 2016 which commenced on April 5 2021.

The company has approved the liquidation and writing off of investments in itsstep-down wholly owned subsidiaries Thermax Hong Kong Limited (THKL) and Thermax(Zhejiang) Cooling and Heating Engineering Company Ltd. (TZL China) on March 17 2021.

Management Discussion and Analysis

The Management Discussion and Analysis section highlighting the performance of thecompany's energy environment and chemical segments including details of selectsubsidiaries information on the company's health safety and environment measures humanresources risk management and internal controls is on page no. 20.

Corporate Governance Report

A detailed Corporate Governance Report regarding SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 which also includes disclosures required as perSections 134 and 177 of the Companies Act 2013 is attached as Annexure 1 on page no. 72.

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

Integrated Report

An Integrated Report encompassing both financial and non-financial information enablingthe company's diverse stakeholders to make well informed decisions and have a betterunderstanding of the company's long term perspective is on page no. 1.

Secretarial Standards

The company has complied with the revised Secretarial Standards on meetings of theBoard 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 theinitiatives taken by the company from environmental social and governance perspectives isenclosed as Annexure 2 on page no. 91.

Vigil Mechanism/Whistle Blower Policy

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

Employee Strength

The total number of permanent employees on the rolls of the company as on March 312021 was 3034 compared to 3325 employees in the previous year. At group level thetotal number of permanent employees are 3627 compared to 3601 employees in the previousyear.

Industrial Relations

The overall industrial relations at all the locations were amicable. The company hassigned three years wage settlement with the union at Chinchwad which is up to April 302022. The discussion on wage settlement with the union at Paudh is under discussion. Thewage settlement at the Savli plant was signed for five years and it will be in force upto March 31 2022. During last year's COVID period the union at Chinchwad came forwardand offered salary cut of 4% for four months. Similarly the union at Savli also deferredtheir settlement benefit by two months. This was a unique and rare gesture on the part ofthe union in any manufacturing set up.

During the year the company approved a Voluntary Retirement Scheme for all eligibleemployees of the group who have completed 10 years of service with the company or agedmore than 40 years. 46 employees opted for the Voluntary Retirement Scheme of the companyinvolving a total payout of Rs. 10.96 crore over a period of five years.

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 inrespect of employees of the company will be provided upon request. In terms of Section136 of the Act the Annual Report excluding the aforesaid information is being sent to allthe members and others entitled to receive it. Any shareholder interested in obtainingsuch particulars may write to the company secretary.

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 2906250 equityshares of Rs. 2/- each of the company.

The trust has not entered into any transaction of buying or selling of shares in thesecondary 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 andeducational aid to its employees and their families. These trusts presently hold 3635190equity shares of Rs. 2/- each of the company. None of the trusts had any dealings in thesecondary market.

The relevant disclosures as required under the SEBI (Share based Employee Benefits)Regulations 2014 on Employee Welfare Trusts are available on the company's

Disclosure: Anti-Sexual Harassment Policy

The company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. All employees (permanent contractual temporary and trainees) arecovered under this policy.

To build awareness in this area the company has been carrying out onlineinduction/refresher programmes across the organisation on a periodical basis.

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

The following is a summary of sexual harassment complaints received and disposed ofduring the year 2020-21:

• 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 foreignexchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is provided as Annexure 3 onpage no. 96.

Corporate Social Responsibility Initiatives

As a part of its initiatives under Corporate Social Responsibility (CSR) the companyhas undertaken projects mainly in the area of education. The projects are in accordancewith Schedule VII of the Companies Act 2013. Since 2007 CSR initiatives have beenundertaken through Thermax Foundation. The detailed report on CSR is provided in theSocial and Relationship Capital on page no. 48.

The details of the CSR Committee and CSR Policy are available on the company's

The Annual Report on CSR Activities and CSR Policy is provided as Annexure 4 on pageno. 98.

Directors and Key Managerial Personnel

The Board of Directors of the company as on March 31 2021 comprised nine directors ofwhich six are independent directors. All independent directors of the company have givendeclarations 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.

All independent directors except Dr. Valentin von Massow have obtained registrationcertificates pursuant to provisions of section 150(3) of the Companies Act 2013 readwith Rule 6 of the Companies (Appointment and Qualification of Directors) Amendment Rules2020 from the Indian Institute of Corporate Affairs. Necessary application has been madeto the MCA for condonation of delay for registration of Dr. Valentin von Massow with theID databank.

Pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualificationsof Directors) Rules 2014 every individual whose name is included in the data bank shallpass an online proficiency self-assessment test. However an individual who has fulfilledthe criteria prescribed in Rule 6(4) of the said Rules is exempted from passing theonline proficiency self-assessment test. In view of the same none of the independentdirectors was required to take the proficiency self-assessment test. The Board at itsmeeting held on May 12 2021 has reviewed the declarations received from all theindependent directors and has confirmed that the independent directors fulfil the criterialaid down by requisite regulations and are independent of the management. Based on thesedisclosures and confirmations the Board is of the opinion that the directors of thecompany are eminent persons with integrity and have the necessary expertise and experienceto continue to discharge their responsibilities as directors of the company.

Further pursuant to the provisions of the Companies Act 2013 the shareholders in the36th AGM of the company held on August 8 2017 appointed Harsh Mariwala (DIN:00210342) asan independent director of the company to hold office for five consecutive years up toNovember 9 2021. Mr. Mariwala is eligible for re-appointment as an Independent Directorfor another term of five consecutive years. According to the provisions of the CompaniesAct 2013 and based on the recommendation of the Nomination and Remuneration Committeethe Board has recommended the re-appointment of Mr. Mariwala as an Independent Directorfor another term of five consecutive years with effect from November 10 2021 up toNovember 9 2026 for the approval of the members through a special resolution to bepassed at the 40th AGM of the company. His brief profile and other details as requiredunder the Companies Act 2013 and Listing Regulations pertaining to his re-appointmentare provided in the Notice of the 40th AGM of the company and the explanatory statementunder section 102 of the Companies Act 2013 annexed to it.

The company has formulated a policy on ‘Familiarisation Programme for IndependentDirectors' which is available on the company's website:

Nawshir Mirza and Rajani Kesari are nominated as Directors on the Board of ThermaxBabcock & Wilcox Energy Solutions Private Limited a material subsidiary of thecompany.

During the year M.S. Unnikrishnan Managing Director and CEO of the companysuperannuated from the services of the company w.e.f. August 31 2020. Ashish Bhandariwho was earlier appointed as Joint Managing Director took charge as the Managing Directorand CEO w.e.f. September 1 2020.

In accordance with the provisions of the Companies Act 2013 and the company'sArticles of Association

Pheroz Pudumjee (DIN: 00019602) retires by rotation at the ensuing AGM and beingeligible offers himself for re-appointment as a Director.


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 aregiven in the Corporate Governance Report.

Remuneration Policy

The Remuneration Policy details for selection appointment and remuneration ofdirectors and senior management is given in the Corporate Governance Report and the saidpolicy is available on the company's website:

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard has carried out an annual evaluation of its performance. The details of the

Board/Committee 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 differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundsage ethnicity race and gender that will help in retaining its competitive advantage. TheBoard Diversity Policy adopted by the Board sets out its approach to diversity. The policyis available on the company's website:

Directors' Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act 2013 the directors of the companyto the best of their knowledge and belief and according to the information andexplanations obtained by them in the normal course of their work state that in allmaterial respects:

a) In the preparation of the annual financial statements for the year ended March 312021 the applicable accounting standards have been followed;

b) Appropriate accounting policies have been selected applied consistently andjudgment and estimates have been made that are reasonable and prudent to give a true andfair view of the state of affairs of the company as on March 31 2021 and of the profitof the company for the year ended on that date;

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets 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 wereadequate and operating effectively; and

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

Please refer to the Internal Controls section of the Management Discussion and Analysisfor further details.

Related Party Transactions

All related party transactions entered into during the financial year were at an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions made by the company with promoters directors keymanagerial personnel or other designated persons which may have a potential conflict withthe interest of the company at large.

All related party transactions are placed before the Audit Committee. Prior omnibusapproval of the Audit Committee is obtained annually for transactions that are foreseeableand repetitive. The transactions entered pursuant to the omnibus approval so granted and astatement giving details of all related party transactions are placed before the AuditCommittee for their approval on a quarterly basis.

The company has developed a Related Party Transactions Manual and Standard OperatingProcedures for the purpose of identification and monitoring such transactions.

The policy on Related Party Transactions as approved by the Board is available on thecompany's website:

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

Standalone and Consolidated Financial Statements

The financial statements for the year ended March 31 2021 have been prepared as perSchedule III to the Companies Act 2013 as amended from time to time. The consolidatedfinancial statements of the group are prepared in compliance with the Accounting Standardsand Listing Regulations as prescribed by SEBI. The cash flow for the year is attached tothe balance sheet. A separate statement containing the salient features of subsidiariesand joint ventures in the prescribed Form (AOC-1) is available on page no. 286.

Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the regulators and courts whichwould impact the going concern status of the company.

Public Deposits

The company had no unpaid/unclaimed deposit(s) as on March 31 2021. The company hasnot accepted any fixed deposits during the year.

Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments covered under the provisions of Section186 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 positionof the company which have occurred between the end of the financial year and the date ofthis report.

Internal Financial Control Systems and their Adequacy

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

Risk Management

The Board of Directors of the company has formed a Risk Management Committee to assessthe risks facing the business and the mitigation measures taken thereof.

The committee is responsible for assisting the Board in understanding existing risksand reviewing the mitigation and elimination plans for those. The Audit Committee hasadditional oversight in the area of financial risks and controls. The major risksidentified by the businesses and functions are systematically addressed through mitigatingactions on a continuing basis.

Committees of the Board

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


Statutory Auditors

M/s. SRBC & Co. LLP Chartered Accountants were appointed statutory auditors for aperiod of five years commencing from the 39th AGM until the conclusion of the 44th AGM.

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

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

Details of total fees for all services paid by the company and its subsidiaries on aconsolidated basis to the statutory auditors are set out in the Corporate GovernanceReport.

Cost Auditors

In terms of Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 M/s. Dhananjay V. Joshi & Associates CostAccountants Pune have been appointed as the cost auditors of the company for FY 2021-22.

Secretarial Audit

In accordance with the provisions of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the companyhas appointed M/s. SVD & Associates Company Secretaries Pune to undertake thesecretarial audit of the company for FY 2021-22. The Secretarial Audit Report for FY2020-21 is attached as Annexure 7 on page no. 102.

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

Annual Return

The company shall place an annual return filed with the Registrar of Companies for thefinancial year 2020-21 on its website: Since the Annual GeneralMeeting is proposed to be held on August 6 2021 the company shall upload a copy of theAnnual Return for FY 2020-21 once the same is filed with the Registrar of Companies.

Awards and Recognition

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


Your directors place on record their appreciation for the continued support extendedduring the year by the company's customers business associates suppliers bankersinvestors government authorities and joint venture partners. They also place on recordtheir appreciation for the dedication and value added contribution made by all theemployees.

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

For and on behalf of the Board

Meher Pudumjee

Chairperson (DIN: 00019581)

Pune May 25 2021