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Thermax Ltd.

BSE: 500411 Sector: Engineering
BSE 00:00 | 18 Jun 1417.85 -12.00






NSE 00:00 | 18 Jun 1419.20 -7.25






OPEN 1431.25
52-Week high 1569.70
52-Week low 703.25
P/E 79.30
Mkt Cap.(Rs cr) 16,894
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1431.25
CLOSE 1429.85
52-Week high 1569.70
52-Week low 703.25
P/E 79.30
Mkt Cap.(Rs cr) 16,894
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 Thirty-Ninth Annual Report together with theaudited 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 3319.48 3663.90 5831.31 6123.05
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 2737.49 2735.85 3027.90 3014.29
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. 3319 crore for the financial year 2019-20against last year's income of Rs. 3664 crore. On a consolidated level the group incomewas at Rs. 5831crore (Rs. 6123 crore).

The energy segment contributed 80.4% (79.4%) to the group's operating revenues in FY2019-20.

On a standalone basis revenue from exports was down by 28.5% at Rs. 759 crore (Rs.1061 crore) and the group international business was lower by 25.3% at Rs. 1969 crore(Rs. 2636 crore).

Consolidated order booking for FY 2019-20 reduced by 2.4% at Rs. 5498 crore (Rs. 5633crore) with standalone order booking from continuing operations at Rs. 4058 crore anincrease of 22.1% over the previous year of Rs. 3325 crore. Group order booking ininternational markets at Rs. 1470 crore was lower by 25.9% and accounted for 26.7% of theconsolidated gure as compared to Rs. 1984 crore last year (35.2%).

On a standalone basis the exceptional item of expenditure of Rs. 15 crore (Rs. 48crore) 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. 161crore 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 growthimpacting investor sentiments. Amidst the prevailing challenges globally Thermaxcontinued to focus on its strategy of selective internationalisation to combat volatilityin the domestic capital expenditure cycle. New manufacturing facilities both in DahejGujarat and in Indonesia were stabilised. It also stabilised its operations at Sri CityAndhra Pradesh which was inaugurated in January 2019. Though the operations of Danstokerin Europe encountered di culties during the year the activities in its new Polandfacility after initial challenges have recently picked up and positioned the business tocapitalise on opportunities in Eastern Europe. The localisation process in Thermax's newfacility 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 inmany countries dominated by the US forcing the Government to impose national lockdown inIndia. The safety of employees was paramount in all the decisions taken by your company tocontinue or restart operations. The company is also using innovative methods to supportits customers during this crisis. The spread of this virus has compelled your company torevisit its ways of working including working from home.

Based on the available information and the business projections by management whichappear reasonably conservative the Board is satised that no material adjustments arerequired 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 thecompany for the quarter and nine months ended December 31 2019 which had resulted in apayout 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 allappropriation and adjustments was Rs. 2171.10 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 312020. There was no public rights preferential or bonus issued during the year. Thecompany has neither issued any shares with di erential voting rights sweat equity sharesnor has 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 o ce.Subsequent to the transfer of Boiler & Heater("B&H") business of the company by way of a slump sale as ‘goingconcern' to Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES) aWholly Owned Subsidiary (WOS) of the company TBWES has become a 'material subsidiary'.

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

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.

Comprehensive details on each subsidiary including their financial performance andcontribution to the overall performance of the Comapny during the year are available inAOC-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 thecompany Thermax Engineering Singapore PTE Ltd.) named 'Thermax International TanzaniaLimited' which was incorporated on December 7 2019 as a pre- requisite for supervisionof 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 thecompany's energy environment and chemical segments including details of selectsubsidiaries information on company's health safety and environment measures humanresources 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 perSections 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 theconditions of corporate governance as required under Schedule V of the Listing Regulationsis a part of this report.

Integrated Report

The company has voluntarily decided to publish an Integrated Report from this yearwhich encompasses both financial and non-financial information to enable its diversestakeholders to take well informed decisions and have a better understanding of thecompany's 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 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 2on page no. 87.

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 inthe Corporate 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 312020 was 3325 compared to 4110 employees in the previous year. The signicant reductionin 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 hassigned three years wage settlement with the union at Chinchwad on November 12 2019 forthe period May 1 2019 to April 30 2022. The wage settlement with the union at Paudhended on June 30 2019 and negotiations for the subsequent settlement are in progress. Thewage 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 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 at the corporate o ce of the company.The information is also available for inspection at the corporate o ce during workinghours 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 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 Benets)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 carryingout induction/refresher programmes in 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 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 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. 92.

Corporate Social Responsibility Initiatives

As a part of its initiatives under ‘Corporate Social Responsibility' (CSR) thecompany has undertaken projects mainly in the area of education. The projects are inaccordance with Schedule VII of the Companies Act 2013. Since 2007 the CSR initiativeshave been undertaken through the Thermax Foundation. The detailed report on CSR isprovided in the Social and Relationship Capital on page no. 44.

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. 94.

Directors and Key Managerial Personnel

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

The company has formulated a policy on 'familiarisation programme for independentdirectors' which is available on the company's website:

In accordance with the provisions of the Companies Act 2013 and the company's Articlesof Association Mr. Pheroz Pudumjee retires by rotation at the ensuing AGM and beingeligible o ers himself for re-appointment as a director.

The company has announced the appointment of Mr. Ashish Bhandari as the Joint ManagingDirector 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 therole of Managing Director & CEO.

During the year Mr. Amitabha Mukhopadhyay Group CFO of the company has resignedw.e.f. May 31 2019 and Mr. Rajendran Arunachalam took charge as the Group CFO of thecompany 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 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 theevaluations 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 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 your directors to the bestof their knowledge and belief and according to the information and explanations obtainedby 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 312020 the applicable accounting standards have been followed;

b) Appropriate accounting policies have been selected applied consistently andjudgement and estimates have been made that are reasonable and prudent to give a true andfair view of the state of a airs of the company as on March 31 2020 and of the prot ofthe 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 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 arm'slength basis and were in the ordinary course of business. During the year Mr. ZahaanPudumjee a relative of the promoters was appointed as Head - Operations in ThermaxOnsite Energy Solutions Limited (TOESL) a WOS of the company. Since his appointment wasto a place of prot necessary approval of the Board of Directors of the company wasobtained. There were no materially significant related party transactions made by thecompany with promoters directors key managerial personnel or other designated personswhich may have a potential conict with the interest of the company at large.

All related party transactions are placed before the Audit Committee. Prior / omnibusapproval of the Audit Committee/Board is obtained annually for transactions which areforeseeable and repetitive. The transactions entered into pursuant to the omnibus approvalso granted and a statement giving details of all related party transactions are placedbefore the Audit Committee for its approval on a quarterly basis. The company hasdeveloped a Related Party Transactions Manual and Standard Operating Procedures forpurpose of identification and monitoring of 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. 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 perSchedule III to the Companies Act 2013. The consolidated financial statements of thegroup are prepared in compliance with the Accounting Standards and Listing Regulations asprescribed by SEBI. The Cash flow for the year is attached to the balance sheet. Aseparate statement containing the salient features of subsidiaries and joint ventures inthe 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 whichwould 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 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 a ecting the financial position ofthe 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 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 isresponsible for assisting the Board in understanding existing risks and reviewing themitigation and elimination plans for those. The Audit Committee has additional oversightin the area of financial risks and controls. T he major risks identied by the businessesand functions are systematically addressed through mitigating actions on a continuingbasis.

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 as the StatutoryAuditors for a period of have years commencing from the 34th AGM until the conclusion ofthe 39th AGM.

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

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.

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 2020-21.

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 2020-21. The Secretarial Audit Report for thecompany 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 andtherefore 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 herewithas Annexure 6 on page no. 106. Copy of the annual return is also available on thecompany's website:

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 other stakeholders. They also place on record theirappreciation 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 reposefaith in the company and its future.

For and on behalf of the Board

Meher Pudumjee

Chairperson (DIN: 00019581)

Pune June 18 2020