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Directors Report of Thermax Ltd.

Mar 31, 2023

Your directors have pleasure in presenting the Forty Second Annual Report on the business and operations of the Company, together with the audited financial statements of your Company for the year ended March 31, 2023.

Financial Results

(Rs. crore)
Particulars	Standalone		Consolidated
	FY 2022-23	FY 2021-22	FY 2022-23	FY 2021-22
Total revenue	5,141.16	4,015.39	8,089.81	6,128.33
Profit before finance cost, depreciation and tax	517.02	350.58	757.74	548.38
Finance cost and depreciation	92.73	80.52	154.45	138.41
Profit before tax and exceptional items	424.29	270.06	603.06	410.10
Exceptional items	7.2	(14.00)	-	-
Profit before tax but after exceptional items	431.49	256.06	603.06	410.10
Provision for taxation (incl. deferred tax)	102.23	55.27	152.36	97.79
Profit after tax	329.26	200.79	450.70	312.31
Other comprehensive income	(7.78)	4.24	0.19	7.62
Total comprehensive income	321.48	205.03	450.89	319.93
Total equity	3,217.76	3,001.00	3,868.07	3,492.49
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing operations	27.63	16.85	39.98	27.73
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing and discontinuing operations	27.63	16.85	39.98	27.73

Result of Operations and the State of Affairs

Standalone

Your Company, on a standalone basis, posted a revenue of Rs. 5,141 crore for the financial year 2022-23, against last yearâs revenue of Rs. 4,015 crore. Revenue from exports was up 10.6% at Rs. 1,053 (Rs. 952 crore). Order booking from continuing operations stood at Rs. 5,307 crore, lower by 22.7% as compared to Rs. 6,867 crore in the previous year.

Consolidated

On a consolidated level, the group revenue was at Rs. 8,090 crore (Rs. 6,128 crore). The Groupâs international business was higher by 25.8% at Rs. 2,041 crore (Rs. 1,622 crore). Consolidated order booking for FY 2022-23 decreased by 6.6% to Rs. 8,788 crore

(Rs. 9,410 crore). Order booking in international markets at Rs. 2,064 crore was higher by 9.9%.

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.

Credit Rating

Your Company has been rated âAA / Stable (Reaffirmed) for Long Term Rating and A1 (Reaffirmed) for Short Term Ratingâ by Credit Rating Information Services of India Limited (CRISIL) for its banking facilities. The rating reflects your Companyâs continued good parentage, credit profile, liquidity position, strong corporate governance practices, financial flexibility and conservative financial policies.

The report on the growth trends and outlook of those subsidiaries which impact your Companyâs performance reasonably are captured in the Management Discussion and Analysis section of this report.

Changes in Subsidiaries during the Year

Through its wholly owned subsidiary, First Energy Private Limited (FEPL), the Company has established below step-down subsidiaries for undertaking Group Captive Solar projects in different states of India:

1 Name of Subsidiary	Date of incorporation
First Energy 3 Private Limited	25/05/2022
First Energy 4 Private Limited	07/12/2022
First Energy 5 Private Limited	13/12/2022
First Energy 6 Private Limited	23/03/2023
First Energy 7 Private Limited	26/03/2023

Further, FEPL has acquired two subsidiaries, namely Jalansar Wind Energy Private Limited and Kanakal Wind Energy Private Limited on June 22, 2022, for commissioning captive solar project in Maharashtra.

With a view of consolidating the solar projects of the Group under one roof of FEPL, the Company transferred the solar plants of Thermax Onsite Energy Solutions Limited (TOESL), to FEPL w.e.f. March 30, 2023.

During the year, the Company has executed Shareholders, Agreement with EverEnviro Resource Management Private Limited (EverEnviro) on July 27, 2022 to incorporate new company which will execute Technology, Engineering, Procurement & Construction (âTEPCâ) scope for the bio-CNG projects. Pursuant to the same, a new subsidiary was incorporated i.e. Thermax Bioenergy Solutions Private Limited (TBSPL) on August 12, 2022.

Further, Thermax Senegal S.A.R.L, a wholly owned subsidiary of the Company, stands liquidated effective December 14, 2022. Further, Thermax Sustainable Energy Solutions Limited, wholly owned subsidiary of the Company, stands liquidated as per the order of The National Company Law Tribunal, Mumbai Bench (NCLT) issued on April 25, 2023.

Further, during the year, the Board of Directors of the Company have approved proposal / Scheme of restructuring of Thermax Cooling Solutions Limited, a wholly owned subsidiary of the Company. Accordingly, a Scheme of Arrangement between Thermax Cooling Solutions Limited (TCSL/Demerged Company) and Thermax Instrumentation Limited (TIL/Resulting Company), wholly

Dividend

The Board of Directors have recommended a dividend of Rs. 10/- (500%) per equity share of face value of Rs.

2/- each for the year ended March 31, 2023. The dividend is subject to the approval of members at the ensuing Annual General Meeting (AGM).

In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Company has adopted the Dividend Distribution Policy, which is made available on the Companyâs website and can be accessed using the link: https:// www.thermaxglobal.com/wp-content/uploads/2020/03/ DIVIDEND-DISTRIBUTION-POLICY.pdf

Transfer to Reserve

The closing balance of the retained earnings of the Company for FY 2022-23, after all appropriation and adjustments, was Rs. 2,649 crore on standalone basis and Rs. 3,142 crore on consolidated basis. 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, 2023. There were no public or preferential rights or bonus issued during the year.

The Company has not issued any shares with differential voting rights, sweat equity shares. The details of stocks granted during the year are provided on the website of the Company.

Statement of Deviation(s) or Variation(s) in Share Capital

During the year under review, there was no instance to report containing Statement of Deviation(s) or Variation(s) in share capital as per Regulation 32 of Listing Regulations.

Subsidiaries

In accordance with Section 136 of the Act, the Annual Report of your Company containing inter alia, financial statements and consolidated financial statements, has been placed on our website: https://www.thermaxglobal.com/ annual-reports/ which can be accessed using the above link.

Further, the financial statements of the subsidiaries have also been placed on our website: https:// www.thermaxglobal.com/subsidiary-annual-report/

owned subsidiaries of the Company, under sections 230 to 232 read with section 66 of the Companies Act, 2013 have been filed with the National Company Law Tribunal.

The Scheme is subject to necessary approval from regulatory authorities.

Management Discussion and Analysis

The Management Discussion and Analysis section highlighting the performance of the Companyâs Industrial Products, Industrial Infra, Green Solutions and Chemicals, including details of select subsidiaries, information on the Companyâs health, safety and environment measures, human resources, risk management and internal controls, is given on page no. 24.

Corporate Governance Report

A detailed report on Corporate Governance as per Listing Regulations and disclosures required as per section 134 and 177 of the Companies Act, 2013, is attached as Annexure 1 on page no. 71.

A certificate from M/s. SVD & Associates, Company Secretaries, Pune, regarding compliance with the conditions of corporate governance as required under Schedule V of the Listing Regulations forms part of this Report.

Secretarial Standards

Your Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI) as amended from time to time.

Business Responsibility and Sustianability Reporting

In terms of the Listing Regulations, Business Responsibility and Sustainability Report describing the initiatives taken by the Company from environmental, social and governance perspectives is enclosed as Annexure 2 on page no. 96.

Vigil Mechanism/Whistleblower Policy

The Company has a âWhistleblower Policyâ as a part of the vigil mechanism to deal with instances of fraud and mismanagement, if any. The details of the policy are provided in the Corporate Governance Report and also available on the website of the Company: https:// www.thermaxglobal.com/wp-content/uploads/2021/08/ Thermax-Ltd.-Whistleblower-Policy-.pdf

Industrial Relations

The overall Industrial Relations at all the manufacturing locations was peaceful during the year 2022-23.

The Company has signed Long Term Settlements (LTS) with the trade union at three locations:

â¢ Chinchwad: On 1^st June 2022 for 3 years period from 1/5/2022 to 30/4/2025

â¢ Savli: on 30^th September, 2022 for 5 years period from 1/4/2022 to 31/3/2027

â¢ Paudh: on 21^st November, 2022 for 3 years period from 1/7/2022 to 30/6/2025

Human Resources Management

1. Particulars of Employees

The total number of permanent employees on the rolls of the Company as on March 31, 2023, was 2,572 compared to 2,410 employees in the previous year.

At the group level, the total number of permanent employees are 4,818 compared to 4,634 employees in the previous year.

The information required pursuant to section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, duly amended, in respect of employees of the Company, forms part of Annexure A to this Boardâs report and information required pursuant to Rule 5(2) 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.

2. Anti-Sexual Harassment Policy/ Internal Committee

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and 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 online induction/refresher programmes across the organisation on a periodic basis.

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

There were no complaints received or disposed of during the year 2022-23.

Disclosure Pursuant to Section 197(14) of the Companies Act, 2013, and Rules made thereunder

The Managing Director and CEO of the Company are not in receipt of any remuneration and/or commission from any Holding / Subsidiary Company, as the case may be.

Details of Trusts formed for the Benefit of Employees a) ESOP Trust

The Company has a Thermax Employees ESOP & 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.

Thermax Employee Stock Option Scheme 2021

With a view to motivate the key workforce, seeking their contribution to the corporate growth, to create an employee ownership culture, to attract new talents and to retain them for ensuring sustained growth, your Company has implemented an employee stock option plan namely âThermax Limited Employee Stock Option Plan 2021â (âESOP 2021â/ âPlanâ) covering the employees of the Company and its Group Companies including subsidiary and its associate companies.

The scheme was approved by the shareholders through postal ballot on January 13, 2022 with requisite majority.

During the year under review, the Nomination and Remuneration Committee (NRC) and the Board of Directors of your Company, have approved grant of stock options to employees under ESOP 2021.

There were no material changes made in the ESOP 2021 during the year. The above-mentioned Scheme is in compliance with the SEBI (Share-Based Employee Benefits & Sweat Equity) Regulation, 2021 (SBEB Regulations, 2021). Your Companyâs Secretarial Auditor, M/s. SVD & Associates, Company Secretaries, Pune, has certified that the Companyâs above-mentioned Scheme has been implemented in accordance with the SBEB Regulations, 2021.

In line with regulation 14 of the SBEB Regulations, 2021, a statement giving complete details, as at March 31, 2023, is available on the website of the Company: https://www.thermaxglobal.com/ wp-content/uploads/2023/06/ESOP-Disclosure-Under-Regulation-14-FY22-23.pdf

b) Employee Welfare Trusts

The Company has various Employee Welfare Trusts primarily for providing medical, housing 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.

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.132.

Corporate Social Responsibility Initiatives

As a part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken project in the area of education. The project is in accordance with Schedule VII of the Companies Act, 2013. Since 2007,

CSR initiatives have been undertaken through Thermax Foundation, the details of CSR activities are provided under CSR Activities and CSR Policy on page no.135.

The details of the CSR Committee and CSR Policy are available on the Companyâs website: https:// www.thermaxglobal.com/corporate-governance-policies-and-disclosures/

Directors and Key Managerial Personnel

The Board of Directors of your Company comprises of 9 directors, viz., two non-executive directors, one executive director and six independent directors, including one independent woman director as on March 31, 2023. As per the Articles of Association of the Company, one-third of the Directors, other than Independent Directors and Chairperson, are liable to retire by rotation at the AGM of the Company every year.

Dr. Ravi Shankar Gopinath was appointed as an Independent Director of the Company for a term of 5 (five) consecutive years commencing from November 10, 2021 at the 41^st AGM and Dr. S. B. Pandit was re-appointed as an Independent Director of the Company for a second term of 5 (five) consecutive years commencing from from May 30, 2022 at the 41^st AGM.

Mrs. Rajani Kesari (DIN: 02384170) was appointed as Independent Director of the Company from November 14, 2018 to November 13, 2023. Considering the performance evaluation, contribution to the Company during her first term of office, her knowledge, qualification and experience along with skills and expertise she brings on the Board and based on recommendations of the Nomination and Remuneration Committee, the Board approved the re-appointment of Mrs. Kesari for a second term of consecutive five years commencing from November 14, 2023 to November 13, 2028, subject to approval of shareholders at the ensuing Annual General Meeting (AGM) of the Company.

Further, in accordance with the provisions of the Companies Act, 2013 and the Companyâs Article of Association,

Mr. Pheroz N. Pudumjee (DIN: 00019602), Non-Executive, Non-Independent Director, retires by rotation and being eligible offers himself for re-appointment. Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors recommends his re-appointment. A proposal for his re-appointment forms part of the Notice of the 42^nd AGM of the Company.

The Company has received the necessary declarations from the above directors as required under the Companies Act, 2013 and the Listing Regulations. Further, Mrs. Kesari has also confirmed that she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations.

Dr. Valentin Albrecht Herwart (DIN: 00239314) ceased to be Director (Non-Executive, Independent Director) of the Company upon completion of his second term at the close of business hours on July 21, 2022.

Board and Independent Directorsâ 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.

For the financial year 2022-23 the Independent Director conducted one meeting on February 10, 2023.

Familiarisation Programme

The Company has formulated a policy on âFamiliarisation Programme for Independent Directorsâ, which is available on the Companyâs website: www.thermaxglobal.com.

Committees of the Board

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

Key Managerial Personnel

During the year under review, there were no changes in the Key Managerial Personnel of the Company.

Remuneration Policy

The Remuneration Policy details for selection, appointment and remuneration of directors and senior management are given in the Corporate Governance Report, and the said policy is available on the Companyâs website: https:// www.thermaxglobal.com/wp-content/uploads/2020/03/ Policy-on-Selection-and-Appointment-of-Directors-and-their-Remuneration.pdf

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.

Board Diversity

The Company recognises and embraces the importance of a diverse Board for its success. Your Company believes that a truly diverse Board will leverage differences 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 outlines its approach to diversity. The policy is available on the website: https://www.thermaxglobal.com/ wp-content/uploads/2021/04/Board-Diversity-Policy.pdf

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. Prior omnibus approval of the Audit Committee is obtained annually for transactions that are foreseeable and repetitive. The transactions entered pursuant to the omnibus approval so granted along with the statement giving details of all related-party transactions are placed before the Audit Committee for their approval on a quarterly basis.

Pursuant to the latest amendments by the SEBI, the Company has adopted the revised policy on Related Party Transactions which is available on the Companyâs website: https://www.thermaxglobal.com/wp-content/ uploads/2023/03/RPT-Policy.pdf

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

Standalone and Consolidated Financial Statements

The financial statements for the year ended March 31, 2023, have been prepared as per Schedule III to the Companies Act, 2013, as amended from time to time. The consolidated financial statements of the Group are prepared in compliance with the Accounting Standards and Listing Regulations. 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 available on page no. 244.

Public Deposits

During the year, your Company has not accepted deposits from the public, and as such no principal or interest was outstanding as on March 31, 2023, as per the provisions of the Companies Act, 2013 and the Rules framed thereunder.

Particulars of Loans, Guarantees or Investments

The 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.

Pursuant to the provisions of Section 67(3)(c) of the Companies Act, 2013, and rules made thereunder, the Company has not given any loan to persons in the employment of the Company including its Directors or Key Managerial Personnel, in order to purchase or subscribe shares of the Company.

Directorsâ Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act,

2013, the Directors of your Company, 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, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) Appropriate accounting policies have been selected, applied consistently and judgment 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, 2023, 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 refer to the Internal Controls section of the Management Discussion and Analysis for further details.

Details Regarding Frauds Reported by Auditors Under Section 143(12)

During the year under review, there were no frauds reported by the auditors of the Company to the Audit Committee or the Board under section 143(12) of the Act.

Related Party Transactions

All related party transactions entered into during the financial year were at armâs 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

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.

The Insolvency And Bankruptcy Code, 2016

Your Board confirms that there is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.

There was no instance of one-time settlement with any Bank or Financial Institution during the year under review.

Internal Audit

The internal audit at Thermax Group is carried out by the in-house Internal Audit Department with co-sourcing support. For scope determination, planning the audit and conducting reviews, the Internal audit department has been consistently following an audit cycle of July to June every year, which ensures review of transactions included in financial year April to March. The internal audit is risk based with a focus on controls for management of risks.

The Directors consider this approach to meet the desired purpose of Internal Audit.

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 section, which is a part of this report.

Risk Management

The Board of Directors of the Company have 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. The major risks identified by the businesses and functions are systematically bifurcated between the committees of the Board and addressed through mitigating actions on a continued basis.

Auditors Statutory Auditors

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

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

The details of total fees for all services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditors are set out in the Corporate Governance Report.

The Auditorâs Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

Cost Auditors

In terms of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, have been appointed as the cost auditors of the Company for FY 2022-23.

The maintenance of cost records as specified under Section 148 of the Act is applicable to the Company, and accordingly, all the cost records are made and maintained by the Company and audited by the cost auditors.

The Cost Auditorâs Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

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 2022-23. The Secretarial Audit Report for FY 2022-23 is attached as Annexure 5 on page no. 137.

The Secretarial Audit Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

Annual Return

The Annual Return of the Company for the financial year 2022-23 to be filed with Registrar of Companies is available on website of the Company at https://www.thermaxglobal. com/wp-content/uploads/2023/06/Thermax-MGT-7-web. pdf.

Since the Annual General Meeting is proposed to be held on August 1, 2023, the Company shall upload final copy of the Annual Return for FY 2022-23, 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 the awards received during the year are given on page no. 59.

Acknowledgements

Your Directors place on record their appreciation for the continued support extended during the year by the Companyâs customers, business associates, suppliers, bankers, investors and government authorities. They also place on record their appreciation for the dedication and value-added contribution 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 17, 2023

Mar 31, 2022

Your directors have the pleasure in presenting the Forty-First Annual Report on the business and operations of the Company, together with the audited financial statements of your Company for the year ended March 31, 2022.

Financial Results

(Rs. in crore)
Particulars	Standalone		Consolidated
	FY 2021-22 FY 2020-21		FY 2021-22 FY 2020-21
Total revenue	4,015.39	3,131.48	6,128.33	4,791.25
Profit before finance cost, depreciation and tax	350.58	358.51	548.38	462.93
Finance cost and depreciation	80.52	72.56	138.41	135.21
Profit before tax and exceptional items	270.06	285.95	410.10	327.72
Exceptional items	(14.00)	(103.03)	-	(52.53)
Profit before tax but after exceptional items	256.06	182.92	410.10	275.19
Provision for taxation (incl. deferred tax)	55.27	41.90	97.79	68.61
Profit after tax	200.79	141.02	312.31	206.58
Other comprehensive income	4.24	0.87	7.62	16.91
Total comprehensive income	205.03	141.89	319.93	223.49
Total equity	3,001.00	2,879.38	3,492.49	3,251.39
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing operations	16.85	11.83	27.73	18.34
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing and discontinuing operations	16.85	11.83	27.73	18.34

Result of Operations and the State of Affairs

Standalone

Your Company, on a standalone basis, posted a revenue of Rs. 4,015 crore for the financial year 2021-22, against last yearâs revenue of Rs. 3,131 crore. Revenue from exports was up 20% at Rs. 952 crore (Rs. 791 crore). Order booking from continuing operations stood at Rs. 6,867 crore, higher by 123% as compared to Rs. 3,079 crore in the previous year.

Consolidated

On a consolidated level, the group revenue was at Rs.

6,128 crore (Rs. 4,791 crore). The Groupâs international business was lower by 3% at Rs. 1,622 crore (Rs.

1,675 crore). Consolidated order booking for FY 2021-22 increased by 97% to Rs. 9,410 crore (Rs. 4,784 crore).

Order booking in international markets at Rs. 1,878 crore was higher by 37%. The Company booked a major order in refinery for a sulphur recovery unit worth Rs. 1,176 crore and

two orders for flue gas desulphurisation systems worth Rs. 1,376 crore in the fiscal year.

The energy segment contributed 70.8% (74.8%) to the Groupâs gross operating revenues in FY 2021-22.

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.

Credit Rating

Your Company has been rated âAA â by Credit Rating Information Services of India Limited (CRISIL) for its banking facilities. The upgrade reflects your Companyâs continued good parentage, credit profile, liquidity position, strong corporate governance practices, financial flexibility and conservative financial policies.

Covid-19

Measures taken by the Company for Covid relief are covered in Integrated Report.

Dividend

The Board of Directors have recommended a dividend of Rs. 9 (450%) per equity share of face value of Rs. 2/- each for the year ended March 31, 2022. The dividend is subject to the approval of members at the ensuing Annual General Meeting (AGM).

Transfer to Reserve

The closing balance of the retained earnings of the Company for FY 2021-22, after all appropriation and adjustments, was Rs. 2,434 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, 2022. There were no public or preferential rights or bonus issued during the year.

The Company has neither issued any shares with differential voting rights, sweat equity shares nor has it granted any stock options.

Statement of Deviation(s) or Variation(s) in Share Capital

During the year under review, there was no instance to report containing Statement of Deviation(s) or Variation(s) in share capital as per Regulation 32 of SEBI Listing Regulations, 2015.

Subsidiaries

In accordance with Section 136 of the Act, the Annual Report of your Company containing inter alia, financial statements, including consolidated financial statements, has been placed on our website: https://www.thermaxglobal.com/ annual-reports/ which can be accessed using the link.

Further, the financial statements of the subsidiaries have also been placed on our website: https://www.thermaxglobal. com/subsidiary-annual-report/. On request, these

documents will be made available for inspection at the Companyâs corporate office.

The report on the growth trends and outlook of those subsidiaries which impact your Companyâs performance reasonably are captured in the Management Discussion and Analysis section of this report.

Information on Newly Incorporated Subsidiaries and Acquisitions during the Year

Through its wholly-owned subsidiary, First Energy Private Limited (FEPL), the Company has established step-down subsidiaries, named First Energy TN 1 Private Limited and First Energy 2 Private Limited, incorporated on January 29, 2022, and March 30, 2022, respectively, for launching the renewable energy business of FEPL.

During the year, the Company has done restructuring of international subsidiaries, by which Thermax Thailand Limited and Thermax SDN BHD, Malaysia, the wholly-owned subsidiaries of the Company have been transferred to Thermax Engineering Singapore Pte Limited effective December 2021; and with this Thermax Thailand Limited and Thermax SDN BHD, Malaysia, became step down subsidiaries of Thermax Limited. This restructuring is in line with the consolidation of South-East Asia entities of the Group under Thermax Engineering Singapore Pte Limited.

During the year, the liquidation of subsidiary Boilerworks Properties ApS is completed. This Companyâs principal activity was to own and lease out the property at Papegojevej 7, DK-6270 Tender. During 2019-20, the property was sold, on September 28, 2020, the Company entered into voluntary liquidation, and no claims in the period of notice to creditors have been received. The Company has been liquidated on March 24, 2022.

The Company has decided to make an investment in ExactSpace Technologies Private Limited (ExactSpace) up to a sum of Rs. 10 crore in one or more tranches. ExactSpace is engaged in the business of developing artificial intelligence solutions for industries in the energy segment.

The investment will result in the Companyâs holding up to 15.17% of the share capital of ExactSpace. The Company has invested up to Rs. 6.50 crore till March 2022.

Management Discussion and Analysis

The Management Discussion and Analysis section highlighting the performance of the Companyâs energy, environment and chemical segments, including details of

The wage settlement at the Savli manufacturing plant is in force till March 31, 2022, and at Chinchwad plant up to April 30, 2022. The Company has started negotiation with the union at both the places, and is hopeful of concluding the discussion by the end of July 2022.

Human Resources Management

1. Particulars of Employees

The total number of permanent employees on the rolls of the Company as on March 31, 2022, was 3,096 compared to 3,034 employees in the previous year.

At the group level, the total number of permanent employees is 4,634 compared to 3,627 employees in the previous year.

The information required pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014, duly amended, in respect of employees of the Company, forms part of Annexure A to this Boardâs report and information required pursuant to Rule 5(2) 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.

2. Anti-Sexual Harassment Policy / Internal Committee

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

The following is a summary of sexual harassment complaints received and disposed of during the year 2021-22:

â¢ Number of complaints received - Nil

â¢ Number of complaints disposed of - NA

select subsidiaries, information on the Companyâs health, safety and environment measures, human resources, risk management and internal controls, is on page no.57.

Corporate Governance Report

A detailed Corporate Governance Report regarding the SEBI (Listing Obligations and 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. 87.

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.

Integrated Report

The SEBI, in its circular dated February 6, 2017, has advised the top 500 listed companies (by market capitalisation) to voluntarily adopt Integrated Reporting (IR) from FY 2017-18.

In compliance with the above circular, an Integrated Report encompassing both financial and non-financial information enabling the Companyâs diverse stakeholders to make well-informed decisions and have a better understanding of the Companyâs long-term perspective is on page no. 02.

Secretarial Standards

Business Responsibility Reporting

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-2 on page no. 109.

Vigil Mechanism/Whistleblower Policy

The Company has a vigil mechanism named âWhistleblower Policyâ 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: www.thermaxglobal.com.

Industrial Relations

The overall Industrial Relations at all the locations were peaceful. The Company has signed three years wage settlement with the union at the Paudh Chemical facility in July 2021.

Disclosure Pursuant to Section 197(14) of the Companies Act, 2013, and Rules made thereunder

The Managing Director and Whole Time Director of the Company are not in receipt of any remuneration and/or commission from any Holding / Subsidiary Company, as the case may be.

Details of Trusts for the Benefit of Employees

a) ESOP Trust

The Company has 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.

Thermax Employee Stock Option Scheme 2021

With a view to motivate the key workforce, seek their contribution to the corporate growth, create an employee ownership culture, attract new talents, and retain them to ensure sustained growth, your Company has implemented an employee stock option plan namely âThermax Limited Employee Stock Option Plan 2021â (âESOP 2021â/ âPlanâ) covering the employees of the Company and its Group Companies including subsidiary and its associate companies. The scheme was approved by the shareholders through a postal ballot on January 13, 2022, with requisite majority.

In line with Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a statement giving complete details, as on March 31, 2022, is available on the website of the Company: https://www.thermaxglobal.com/.

b) Employee Welfare Trusts

The Company has various Employee Welfare Trusts primarily for providing medical, housing, and educational aid to its employees. 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.

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. 113.

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, CSR initiatives have been undertaken through Thermax Foundation. The detailed report on CSR in the new format 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 Companyâs website: www.thermaxglobal.com.

The Annual Report on CSR Activities and CSR Policy is provided as Annexure 4 on page no. 116.

Directors and Key Managerial Personnel

The Board of Directors of your Company comprises of 10 directors, viz., two non-executive directors, one executive director and seven independent directors, including one independent woman director as on March 31, 2022. As per the Articles of Association of the Company, one-third of the Directors, other than Independent Directors and Chairperson, are liable to retire by rotation at the AGM of the Company every year.

Appointment and Re-appointment of Directors

Based on the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on November 10, 2021, appointed Dr. Ravi Shankar Gopinath (DIN: 00803847) as an Additional Director (Independent) of your Company with effect from November 10, 2021. Dr. Ravi Shankar Gopinath will hold office as an Additional Director (Independent) up to the date of the ensuing AGM and subject to the approval of Members at the 41^st AGM, shall be appointed as Independent Director to hold office for a period of five consecutive years effective November 10, 2021.

Mr. Shashishekhar Pandit Balkrishna (DIN: 00075861) was appointed as an Independent Director of the Company from May 30, 2017 to May 29, 2022. Considering the performance evaluation, contributions to the Company during his first term of office, his background, qualification and experience and based on the recommendation of the Nomination and Remuneration Committee, the Board approved the re-appointment of Mr. Shashishekhar Pandit Balkrishna for

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 Companyâs website: www.thermaxglobal.com.

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.

Board Diversity

Directorsâ Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act, 2013, the directors of your Company, 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, 2022, 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, 2022, and of the profit of the Company for the year ended on that date;

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

the second term commencing from May 30, 2022, subject to the approval of the shareholders in the ensuing AGM.

Further, in accordance with the provisions of the Companies Act, 2013 and the Companyâs Articles of Association,

Mr. Ashish Bhandari (DIN: 05291138) retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment as a Director.

The Company has received the necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations.

Board and Independent Directorsâ Meeting

The Independent Directors met two times during the financial year 2021-22. These meetings were held on August 06, 2021, and December 22, 2021, and the same is covered under the Corporate Governance Report.

Familiarisation Programme

The Company has formulated a policy on âFamiliarisation Programme for Independent Directorsâ, which is available on the Companyâs website: www.thermaxglobal.com.

Committees of the Board

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

Key Managerial Personnel

During the year Kedar P. Phadke ceased to be the Company Secretary, Key Managerial Person (KMP) and Compliance Officer of the Company with effect from August 19, 2021, due to his sudden demise.

Further, based on the recommendation of the Nomination and Remuneration Committee, the Board appointed Ms. Janhavi Khele, a qualified Company Secretary (Membership No. A20601), as the Company Secretary, Compliance Officer and KMP of the Company w.e.f. September 1, 2021, pursuant to the provisions of Section 203 of the Companies Act, 2013. She also carried out the responsibility of the Compliance Officer during the intermittent period from August 19, 2021 to August 31, 2021.

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 the Internal Controls section of the Management Discussion and Analysis for further details.

Details Regarding Frauds Reported by Auditors under Section 143(12)

During the year under review, there were no frauds reported by the auditors to the audit committee or the Board under Section 143(12) of the Act.

Related Party Transactions

Pursuant to the latest amendments by the SEBI, the Company has adopted the revised policy on Related Party Transactions which is available on the Companyâs website: www.thermaxglobal.com.

None of the directors has any pecuniary relationships or transactions vis-a-vis the Company 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, 2022, have been prepared as per Schedule III to the Companies Act, 2013, as amended from time to time. 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 available on page no. 222.

Public Deposits

During the year, your Company has not accepted deposits from the public. Further, your Company has also not accepted any deposits during the financial year 2021-22, and as such, no principal or interest was outstanding as on March 31, 2022, as per the provisions of the Companies Act, 2013 and the Rules framed thereunder.

Particulars of Loans, Guarantees or Investments

The 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.

Pursuant to the provisions of Section 67(3)(c) of the Companies Act, 2013, and rules made thereunder, the Company has not given any loan exceeding the limit mentioned therein, to persons in the employment of the Company other than its Directors or Key Managerial Personnel, in order to purchase or subscribe shares of the Company.

Significant and Material Orders Passed by the Regulators or Courts

There were no significant material orders passed by the regulators and courts which would impact the going concern status of the Company.

The Insolvency and Bankruptcy Code, 2016

Your Board confirms that there was no proceeding pending under the Insolvency and Bankruptcy Code, 2016.

During the year, there was no instance of one-time settlement with any Bank or Financial Institution during the year under review.

Internal Audit

The Internal audit at Thermax Group is largely carried out by the in-house Internal Audit Department with co-sourcing support. For scope determination, planning the audit and conducting reviews, the Internal audit department has been consistently following an audit cycle of July to June every year, which ensures review of transactions included in financial year April to March. The internal audit is risk based with a focus on controls for management of enterprise risks. The Directors consider this approach to meet the desired purpose of Internal Audit.

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 section, which is a part of this report.

Risk Management

The Board of Directors of the Company have formed a Risk Management Committee to assess the risks facing the business and the mitigation measures taken thereof.

Auditors Statutory Auditors

M/s. SRBC & Co. LLP, Chartered Accountants, were appointed as the statutory auditors for a period 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 the Ministry of Corporate Affairs, the appointment of statutory auditors is not required to be ratified at every AGM.

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.

The details of total fees for all services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditors are set out in the Corporate Governance Report.

The Auditorâs Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

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 2022-23.

The Cost Auditorâs Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

Secretarial Auditors

The Secretarial Audit Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

Annual Return

The Company shall place an annual return filed with the Registrar of Companies for the financial year 2021-22 on its website: www.thermaxglobal.com. Since the Annual General Meeting is proposed to be held on August 2, 2022, the Company shall upload a copy of the Annual Return for FY 2021-22, once the same is filed with the Registrar of Companies.

Acknowledgements

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 20, 2022

Mar 31, 2019

Dear shareholder,

The 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)

Particulars	Standalone		Consolidated
	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) (Rs.) face value per share Rs. 2/- from continuing operations	13.51	13.52	28.90	20.61
Earnings Per Share (EPS) (Rs.) face value per share Rs. 2/- from continuing and discontinuing operations	23.10	19.99	28.90	20.61

The current yearâs revenue is exclusive of Goods and Service Tax (GST), while last yearâs 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 Rs. 3,664 crore for the financial year 2018-19, against last yearâs revenue of Rs. 2,846 crore. On a consolidated level, the group revenue was at Rs. 6,123 crore (Rs. 4,602 crore).

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

On a standalone basis, revenue from exports have gone up by 54.4% to Rs. 1,061 crore (Rs. 687 crore) and the group international business was higher by 46.9% at Rs. 2,636 crore (Rs. 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 Rs. 5,633 crore (Rs. 6,380 crore) with standalone order booking from continuing operations at Rs. 3,325 crore, a decrease of 8.5% over the previous year (Rs. 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 Rs. 2,748 crore last year (43.4%).

On a standalone basis, the exceptional item of expenditure of Rs. 48 crore (Rs. 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 Rs. 161 crore, same as the previous year. EPS were at Rs. 13.51 (Rs. 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 difficulties 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 Thermaxâs new facility in Indonesia witnessed an encouraging response from the market.

Dividend

The directors have recommended a dividend of Rs. 7/- (350%) per equity share of the face value Rs. 2/-.

The dividend, if approved by the shareholders, will translate in a payout of Rs. 101 crore, including dividend distribution tax of Rs. 17 crore.

Share Capital

The paid-up equity share capital of the company was Rs. 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.

Subsidiaries

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 companyâs corporate office.

The company does not have any âmaterial subsidiaryâ 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 companyâs 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 âThermax Engineering Construction FZEâ, 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 companyâs energy, environment and chemical segments, including details of subsidiaries, information on companyâs 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 âWhistle Blower Policyâ 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, www.thermaxglobal.com.

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 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 Benefits) Regulations, 2014 on Employee Welfare Trusts will be made available on the companyâs website: www.thermaxglobal.com.

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 âCorporate Social Responsibilityâ (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 companyâs website: www.thermaxglobal.com.

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

Directors

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 âfamiliarisation programme for independent directorsâ which is available on the companyâs website: www.thermaxglobal.com.

In accordance with the provisions of the Companies Act, 2013 and the companyâs 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 38^th 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.

Meetings

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 companyâs website www.thermaxglobal.com.

Board Evaluation

Directorsâ 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 armâs 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 companyâs website: www.thermaxglobal.com.

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, 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.

Auditors

Statutory Auditors

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

Awards and Recognition

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

- Thermax was awarded as the âOutstanding Engineering Solution Providerâ 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.

- Thermaxâs Steam Engineering Groupâs High-Pressure High Temperature Condensate Recovery System (HPCRS) was recognised as an âInnovative Energy Saving Productâ and has bagged the 19^th National Award for Excellence in Energy Management at the Energy Efficiency Summit organised by CII in Hyderabad.

- M.S. Unnikrishnan received the âPower 100 2018â Award at the Renewable Energy India Expo, where Indiaâs 100 most powerful solar industry business leaders were recognised.

- Thermax has won the âREFCOLD Emersion Awardâ in the âIndustrial Refrigerationâ 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 22^nd November, 2018 in Gujarat.

- Dr. R.R. Sonde, head of Research & Innovation at Thermax received the âGlobal Excellence Awards-2019â 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 âEQ Tamil Nadu State Solarâ Award on February 27, 2019 as the rooftop solar EPC company of the year in the âIndustrialâ category.

- Thermax won the âACREX Award of Excellence 2019â in the âEnergy Savingâ category for its hybrid heat pump and bagged the runners up in the âInnovationâ category for sub-zero absorption chiller at ACREX2019 in Mumbai on February 28, 2019.

- 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.

Acknowledgements

Your directors place on record their appreciation for the continued support extended during the year by the companyâs 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

Mar 31, 2018

Dear shareholder,

The directors are pleased to present the Thirty-Seventh Annual Report, together with the audited financial statements of your company for the year ended March 31, 2018.

Financial Results

(Rupees in Crore)

Particulars	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Total revenue	3992.61	3972.94	4602.03	4703.77
Profit before finance cost, depreciation and tax	475.35	476.44	517.33	547.04
Finance cost & depreciation	72.24	69.02	95.29	91.61
Profit before tax & exceptional items	403.11	407.42	422.04	455.43
Exceptional items	(25)	(132.84)	0	(17.84)
Profit before tax but after exceptional items	378.11	274.58	422.04	437.59
Provision for taxation (incl. deferred tax)	139.86	129.75	165.75	155.99
Profit after tax	238.25	144.83	256.29	281.60
Share of profit/(loss) on joint venture	NA	NA	(25.19)	(65.46)
Other comprehensive income	3.59	8.82	27.03	(19.15)
Total comprehensive income	241.84	153.65	258.13	196.99
Total equity	2565.56	2409.76	2714.74	2539.01
Earnings Per Share (EPS) (Rs.) Face Value Per Share Rs. 2/-	19.99	12.15	20.61	19.80

Annual Performance

Your company posted a total revenue of Rs. 3,993 crore for the financial year 2017-18, against last yearâs Rs. 3,973 crore. On a consolidated level, the group revenue was at Rs. 4,602 crore (Rs. 4,704 crore). The current yearâs revenue is exclusive of Goods and Service Tax (GST), while last yearâs revenue includes Excise Duty, and hence they are not comparable.

The Energy segment contributed 78% (79.2%) to the groupâs operating revenue while the Environment segment accounted for 14.1% (14%). The Chemical segment contributed 7.9% (6.8%) to the revenue.

On a standalone basis, revenue from exports, including deemed exports, was Rs. 1,262 crore against Rs. 1,176 crore in the previous year, an improvement of 7.3%.

Group operating revenue from international business was Rs. 1,794 crore against Rs. 1,585 crore during the last year.

Profit before tax and exceptional items, on a standalone basis, was at Rs. 403 crore, 10.1% of the total revenue, compared to Rs. 407 crore, 10.2% of the total revenue in the previous year. The groupâs profit before tax and exceptional items at Rs. 422 crore was 9.2% of the total revenue, compared to Rs. 455 crore, at 9.7% in the previous year.

On a standalone basis, the exceptional item of expenditure Rs. 25 crore (Rs.133 crore), represents an impairment of investment in subsidiary companies Thermax (Zhejiang) Cooling & Heating Engineering Co. Limited (TZL) and Thermax SPX Energy Technologies Limited. Profit after tax and exceptional items stood at Rs. 238 crore compared to Rs. 145 crore in the previous year. Earnings per share (EPS) were at Rs. 19.99 (Rs. 12.15).

The year showed signs of a possible recovery in the global economy as well as an uptick in capacity utilisation in the domestic sector. The revenue was flat due to lower order carry forward and continued slowdown during the initial quarters. However, your company registered significant growth in order booking arising from business opportunities in refinery upgradation due to Bharat VI requirements, captive cogeneration plants in the fertiliser and chemical sector as well as significant orders in the Middle East, Africa and South East Asia.

Standalone order booking for the year was Rs. 5,696 crore against Rs. 3,831 crore last year, registering an increase of 49%. Your company completed the year with an order backlog of Rs. 5,302 crore as against Rs. 3,618 crore in the previous year. Consolidated order intake was Rs. 6,380 crore, 45% higher than last yearâs Rs. 4,394 crore.

Dividend

The directors have recommended a dividend of Rs. 6/- (300%) per equity share of the face value Rs. 2/-.

The dividend, if approved by the shareholders, will translate in a payout of Rs. 86.18 crore, including dividend distribution tax of Rs. 14.69 crore.

Share Capital

The paid-up equity share capital of the company was Rs. 23.83 crore as on March 31, 2018. 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.

Subsidiaries

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

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

The report on the performance of subsidiary companies is included in the Management Discussion and Analysis section of this report.

Information on newly incorporated subsidiaries and acquisition during the year

Keeping pace with the strategy of selective internationalisation, the company has set up a step-down subsidiary company in Sri Lanka (through a Singapore based wholly owned subsidiary), named âThermax Energy & Environment Lanka (Private) Limitedâ which was incorporated on August 8, 2017.

The company, through its step-down subsidiary in Denmark, acquired 100% stake in Barite Investments Sp. z.o.o., Poland (âBariteâ). With this, Danstoker Poland Sp. Zoo. (Danstoker Poland Spolka Z Ograniczona Odpowiedzialnosciq), erstwhile âBariteâ, became a step-down subsidiary of the company.

During the year, the company has increased its equity stake from 54.67% to 76% in First Energy Private Limited (FEPL), Pune, an alternative energy solutions company.

This is pursuant to an agreement entered into in July 2015, envisaging stage-wise acquisition of FEPL.

Management Discussion and Analysis

Corporate Governance Report

Secretarial Standards

The Institute of Company Secretaries of India had revised the Secretarial Standards on meetings of the Board of Directors (SS-1) and Secretarial Standards on general meetings (SS-2) with effect from October 1, 2017. The company complies with the revised secretarial standards.

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 - 4 on page no. 62.

Vigil Mechanism/Whistle Blower Policy

Employee Strength

The total number of permanent employees on the rolls of the company as on March 31, 2018 were 3,664 compared to 3,488 employees in the previous year.

Wage Agreements

During the year, an amicable wage settlement was signed with Chemical Mazdoor Panchayat (representing workmen at Savli works). This long-term settlement is of five years duration. Similarly, a long pending wage agreement was also signed with Bhartiya Kamgar Karmachari Mahasangh and Hind Kamgar Sanghatana (representing workmen at Paudh works).

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 it. Any shareholder interested in obtaining such particulars may write to the Secretarial Department 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 had set up a Thermax Employee Stock Option Plan (ESOP) Trust in the year 2002 which holds 29,06,250 equity shares of Rs. 2/- each of Thermax. The Trust has been rechristened as Thermax Employees ESOP and Welfare Trust (ESOP and Welfare Trust).

The Trust has not made any buying or selling transactions in the secondary market.

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

b) Employee Welfare Trusts

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, 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.

The following is a summary of sexual harassment complaints received and disposed off during the year 2017-18:

- Number of complaints received - Nil

- Number of complaints disposed off- 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 annexed as Annexure - 5 on page no. 78.

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 Thermax Foundation. The detailed report on CSR is provided as Annexure - 2 on page no. 40.

The details of the CSR committee and CSR policy are available on the companyâs website: www.thermaxglobal.com

The Annual Report on CSR activities & CSR policy is provided as Annexure - 6 on page no. 80.

Directors

The company has formulated a policy on âFamiliarisation programme for independent directorsâ which is available on the companyâs website: www.thermaxglobal.com

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

Meetings

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

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

Remuneration Policy

The Remuneration Policy in brief for selection, appointment and remuneration of directors and senior management is given in the Corporate Governance Report.

Board Evaluation

Directorsâ Responsibility Statement

In terms of Section 134 (3)(c) of the Companies Act, 2013, your directors, to the best of their knowledge and belief, 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, 2018, the applicable accounting standards have been followed;

b. Appropriate accounting policies have been selected, applied consistently, judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on March 31, 2018 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.

Change in Key Managerial Personnel (KMP)

Kedar Phadke was appointed as Company Secretary and KMP effective August 8, 2017. He was also designated as the Compliance Officer of the company in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in place of Sudhir Lale.

Related Party Transactions

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 a 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 the purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is available on the companyâs website: www.thermaxglobal.com

None of the directors have any pecuniary relationships or transactions vis-a-vis the company 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, 2018 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 2017-18 is attached to the balance sheet. A separate statement containing the salient features of subsidiaries/associate companies 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, 2018. 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.

Auditors

Statutory Auditors

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

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 2018-19.

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 2018-19. The Secretarial Audit Report for FY 2017-18 is annexed as Annexure-7 on page no. 83.

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.

Extract of Annual Return

The details forming part of the extract of the annual return in Form No. MGT-9 is annexed herewith as Annexure - 8 on page no. 86.

Awards and Recognition

Your company has received the following awards during the year:

- Thermax received the âExcellence in Governanceâ Award at âThe Economic Times Family Business Awardsâ held in Mumbai for best practices in corporate governance.

- Anu Aga was honoured at the âTimes Pune Visionariesâ felicitation on April 13, 2018. At this Times Group event that celebrated the work of stalwarts from different walks of life, Anu was felicitated for her exemplary contribution to national life.

- At the World HRD Congress, Sharad Gangal, EVP, HR, IR and Admin of Thermax received the âHR Excellence in Manufacturingâ Award. The event recognises leading organisations and HR practitioners creating impactful human capital strategies.

- Jagdish Lomte, Chief Information Officer of Thermax, won the CIO 100 Award at the 12^th Annual CIO 100 Symposium & Awards Ceremony for a project designed and built by Thermaxâs Business Technology Group -for an Enterprise Management Solution to bring the IT environment under a unified management platform.

- Thermax won the âInnovative Energy Saving Productâ Award for its One Degree Absorption Chiller at the 18^th CII National Award for Excellence in Energy Management in Hyderabad.

Acknowledgements

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 18, 2018

Mar 31, 2017

Dear shareholder,

The directors have pleasure in presenting the Thirty-Sixth Annual Report, together with the audited financial statements of your company for the year ended March 31, 2017.

Financial Results

(Rupees in Crore)

Particulars	Standalone		Consolidated
	2016-17	2015-16	2016-17	2015-16
Total revenue	3972.94	4572.94	4703.77	5388.01
Profit before finance cost, depreciation and tax	476.44	488.18	547.04	551.53
Finance cost & depreciation	69.02	65.49	91.61	84.43
Profit before tax & Exceptional Items	407.42	422.69	455.43	467.10
Exceptional Items	(132.84)	-	(17.84)	-
Profit before tax but after Exceptional Items	274.58	422.69	437.59	467.10
Provision for taxation (incl. deferred tax)	129.75	125.20	155.99	143.94
Profit after tax	144.83	297.49	281.60	323.16
Share of loss on joint venture	NA	NA	65.46	40.89
Other Comprehensive Income	8.82	(2.10)	(19.15)	22.08
Total Comprehensive Income	153.65	295.39	196.99	304.35
Total equity	2409.76	2342.15	2539.01	2416.16
Earnings Per Share (EPS) Face Value Per Share Rs. 2	12.15	24.97	19.80	25.07

The Financial Statement for the year 2015-16 has been recanted in accordance with the new accounting standards (Ind AS).

Annual Performance

Your company posted a total revenue of Rs. 3,973 crore for the financial year 2016-17, against last year''s Rs. 4,573 crore, a decrease of 13.1%. The shortfall in revenue was largely due to lower carried forward order balance at the beginning of the year, challenging market conditions and the absence of big-sized orders predominantly from the domestic market. On a consolidated level, the group revenue at Rs. 4,704 crore was 12.7% down (Rs. 5,388 crore).

Thermax''s Energy segment contributed 79% of the Group''s operating revenue (Net) while the Environment segment accounted for 13.9%. The Chemical segment contributed 7.1% of the revenue.

During the year, revenue from exports, including deemed exports, was Rs. 1,176 crore against Rs. 1,446 crore in the previous year. The drop was owing to lower carry forward of orders at the beginning of the year.

Profit before tax and exceptional items at Rs. 407 crore was 10.2% of the total revenue, compared to Rs. 423 crore, at 9.2% in the previous year.

The exceptional item of expenditure Rs. 133 crore, amongst other items, mainly represents impairment of investment in joint venture, Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (TBWESL). In view of the global shift to non-fossil fuels and renewable energy, viability of coal based power plants has been adversely affected. Therefore, the management has thought it prudent to impair the investment in TBWESL to a more realistic level. Profit after tax and exceptional items stood at Rs. 145 crore compared to Rs. 297 crore in the previous year. Earnings per share (EPS) were at Rs. 12.15 (Rs. 24.97 in FY 2015-16).

In a difficult year, some of the positive indicators for the company''s performance came from business opportunities created by refinery up gradation due to Bharat VI requirements, capacity expansion in the fertilizer sector, the opportunities offered by the crash in solar PV prices, and the revival of capex cycle in certain sectors due to the government''s focus on infrastructure.

Order booking for the year was Rs. 3,831 crore against Rs. 3,701 crore last year, registering a marginal increase of 3.5%. Your company completed the year with an order backlog of Rs. 3,618 crore as against Rs. 3,747 crore in the previous year.

Dividend

The directors have recommended a dividend of Rs. 6/-(300%) per equity share of the face value Rs. 2/- each.

The dividend, if approved by the shareholders, will translate in a pay out of Rs. 86.04 crore, including dividend distribution tax of Rs. 14.55 crore.

Share Capital

The paid-up equity share capital of the company was Rs. 23.83 crore as on March 31, 2017. 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.

Subsidiaries

The company does not have any ''material subsidiary'' whose net worth exceeds 20% of the consolidated net worth of the holding company in the immediately preceding financial year or has generated 20% of the consolidated revenue during the previous financial year.

The report on performance of subsidiary companies is included in the Management Discussion and Analysis section of this Report.

Information on newly incorporated subsidiaries and acquisition during the year

Lighting the lamp during Thermax''s Golden Jubilee celebrations in Pune on November 12,2016. Employees and their families, current and former directors and special invitees enthusiastically participated in the event. There were similar celebrations in the company''s work centres in other locations.

In keeping with the strategy of select internationalization the company has set up a step-down subsidiary company in the Philippines (through a Singapore based wholly owned subsidiary), named ''Thermax Energy & Environment Philippines Corporation'' which was incorporated on August 19, 2016. This subsidiary will mainly engage in sales activities, negotiate and finalize orders with customers, support them in installation and commissioning of equipment, handle operation & maintenance, sell spare parts and provide after-sales service in the Philippines.

During the year, the company has increased its stake from 33% to 68.64% (including preference shares) in First Energy Private Limited (FE), Pune, an alternative energy solutions company. This is pursuant to an agreement entered into in July 2015 envisaging stage-wise acquisition of FE.

The company has entered into a definitive agreement in March 2017 with Weiss SP. Z.O.O., Poland (Weiss), to acquire certain assets and production activities related to boiler manufacturing of Weiss. This transaction, concluded in May 2017, was undertaken through a European subsidiary of the company.

Management Discussion and Analysis

The Management Discussion and Analysis section, highlighting the performance and prospects of the company''s energy and environment segments, including details of subsidiaries, information on company''s health, safety and environment measures, human resources, risk management and internal controls systems, is attached as Annexure - 1 on page no. 28.

Corporate Governance Report

A detailed Corporate Governance Report in terms of 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. 50.

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 at Annexure - 4 on page no. 65.

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, 2017 were 3,488 compared to 3,872 employees in the previous year.

Wage Agreements

During the year, an amicable wage settlement was signed with Thermax Kamgar Sanghatana (representing workmen at Chinchwad works). Negotiation on wage settlement with Bharatiya Kamgar Karmachari Mahasangh (representing workmen at Paudh works) is at an advanced stage.

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 thereto. Any shareholder interested in obtaining such particulars may write to the Secretarial Department 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 had set up Thermax Employee Stock Option Plan (ESOP) Trust in the year 2002 and it holds 29,06,250 equity shares of Rs. 2/- each of Thermax. The Trust has been rechristened as Thermax Employees ESOP and Welfare Trust (ESOP and Welfare Trust), pursuant to the approval of the shareholders at the 35^th Annual General Meeting (AGM) in accordance with the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014. At the AGM, the shareholders empowered the Nomination & Remuneration Committee (NRC) to frame suitable schemes/policies and procedures, implement and administer the operations of the ESOP and Welfare Scheme under the Trust.

The Trust has not made any buying or selling transactions in the secondary market.

The company, at present, does not have any scheme under the ESOP and Welfare Trust.

b) Employee Welfare Trusts

The company has various Employee Welfare Trusts primarily for providing medical and educational aid and other welfare objects 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.

At the 35^th AGM, the shareholders had given their consent to continue extending the benefits to the employees of the company and empower the NRC to amend the terms and conditions of the schemes under these Welfare Trusts in line with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014. Accordingly, the NRC at its meeting held on May 29, 2017 has approved medical scheme and educational grant policy/scheme for imparting the benefits to the employees.

The relevant disclosures as required under the SEBI (Share Based Employee Benefits) Regulations, 2014 on Employee Welfare Trusts will be made available on the company''s website: www.thermaxglobal.com.

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, trainees) are covered under this policy.

An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

The following is a summary of sexual harassment complaints received and disposed of by it during the year 2016-17:

- Number of complaints received - Nil

- Number of complaints disposed of - NA

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on 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 annexed as Annexure - 5 on page no. 82.

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 Thermax Foundation (earlier known as Thermax Social Initiative Foundation). The detailed report on CSR is provided as Annexure - 2 on page no. 44.

The details of the CSR committee and CSR policy are available on the company''s website.

The Annual Report on CSR activities & CSR policy is provided as Annexure - 6 on page no. 84.

Directors

The company has formulated a policy on ''Familiarization programme for independent directors'' which is available on the company''s website (www.thermaxglobal.com)

In accordance with the provisions of the Companies Act, 2013 and the company''s Articles of Association, Anu Aga retires by rotation at the ensuing AGM and being eligible, offers herself for re-appointment as a Director.

Harsh Mariwala has been inducted on the Board of your company as an Additional Director on November 10, 2016 in the category of Non-Executive Independent Director to hold office up to the ensuing 36^th AGM in accordance with the provisions of Section 161 of the Act. In terms of Section 149 and other applicable provisions of the Act, Harsh Mariwala is proposed to be appointed as an Independent Director of the Company for five consecutive years, for a term up to November 9, 2021.The requisite notice, with necessary deposit has been received pursuant to Section 160 of the Act, proposing him as a director of the company. A resolution appointing him as director has been set out in the notice of ensuing AGM for the approval of the shareholders.

S. B. (Ravi) Pandit has been inducted on the Board of your company as an Additional Director on May 30, 2017 in the category of Non-Executive Independent Director to hold office up to the ensuing 36^th AGM in accordance with the provisions of Section 161 of the Act. In terms of Section 149 and other applicable provisions of the Act, S. B. (Ravi) Pandit is proposed to be appointed as an Independent Director of the company for five consecutive years, for a term up to May 29, 2022. The requisite notice, with necessary deposit has been received pursuant to Section 160 of the Act, proposing him as a director of the company. A resolution appointing him as director has been set out in the notice of ensuing AGM for the approval of the shareholders.

M.S. Unnikrishnan has been reappointed as the Managing Director and Chief Executive Officer of the company for a period of three years commencing from July 1, 2017. His reappointment requires approval of the shareholders at the ensuing AGM.

Meetings

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

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

Remuneration Policy

The Remuneration Policy in brief for selection, appointment and remuneration of directors and senior management is given in the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out an annual evaluation of its own performance. The details of Board evaluation 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, 2017, the applicable accounting standards have been followed;

b) Appropriate accounting policies have been selected, applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2017 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.

Change in Key Managerial Personnel (KMP)

Amit Atre, who had been appointed as the Company Secretary as well as KMP as per the provisions of Section 203 of the Companies Act, 2013 and who had also been designated as the Compliance Officer of the company in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 resigned on January 12, 2017.

Following Mr. Atre''s resignation, Devang Trivedi, Deputy Company Secretary was appointed as Compliance Officer in terms of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, who has resigned effective May 30, 2017 and in place of him Sudhir Lale,

Sr. Manager is appointed as Compliance Officer effective from May 30, 2017.

Related Party Transactions

All related party transactions entered into during the financial year were on an arm''s 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 is obtained on a quarterly basis for the transactions which are of a 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 company''s website.

None of the directors have 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, 2017 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 2016-17 is attached to the balance sheet. A separate statement containing the salient features of subsidiaries/ associate companies and joint ventures in the prescribed Form (AOC-1) is also attached.

Significant and Material Orders Passed by the Regulators or Courts

During the year, the Commissioner of Central Excise, has passed an additional order raising demand of excise duty on bought out items [Refer contingent liabilities note no. 32A (a) to the Financial Statements] and based on independent legal advice, the company is confident that the issue will be ultimately decided in its favor.

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, 2017. 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.

Auditors

Statutory Auditors

M/s. B.K. Khare & Co., Chartered Accountants retire as statutory auditors at the ensuing AGM and are not eligible for re-appointment since their term expires as per Section 139 (2) read with the Companies (Audit and Auditors) Rules, 2014.

The appointment of M/s. SRBC & Co. LLP, Chartered Accountants, as Joint Auditors for a period of five years commencing from 34^th AGM until the conclusion of 39^th AGM will require ratification by the shareholders at the ensuing AGM. A resolution for such ratification is proposed to be passed at the ensuing AGM. Consequent upon the expiry of the term of M/s. B. K. Khare & Co., Chartered Accountants, M/s. SRBC & Co. LLP, Chartered Accountants, shall be the statutory auditors of the Company.

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 2017-18.

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 2017-18. The Secretarial Audit Report for FY 2016-17 is annexed as Annexure - 7 on page no. 87.

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.

Extract of Annual Return

The details forming part of the extract of the annual return in Form No. MGT-9 is annexed herewith as Annexure - 8 on page no. 90.

Awards and Recognition

Your company has received the following awards during the year:

- Anu Aga received the Leadership award from Frost & Sullivan at its Growth, Innovation and Leadership Summit in Mumbai. The award cited her contribution to the social sector, commitment towards philanthropy and for bringing in strategic transformation at Thermax.

- Thermax won the ''Most innovative energy saving product'' award at the 17^th National awards organized by the Confederation of Indian Industry (CII) at Hyderabad. The prize winning vapour driven chiller helps in reducing carbon emissions and helps clients to save on water use.

- Thermax''s chiller- heater won first prize in the ''Energy saving'' category at ACREX 2016. This is the second consecutive year that Thermax has bagged the award.

The high efficiency equipment simultaneously provides 1Â°C chilled water and 90Â°C hot water, with an overall energy saving of 23%.

Acknowledgements

Your directors place on record their appreciation for the continued support extended during the year by the company''s customers, business associates, suppliers, partners, bankers, investors, government authorities and joint venture partners. They also place on record their appreciation for the dedication and contributions made by all the employees for their commitment, hard work and support.

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 30, 2017

Mar 31, 2015

Dear shareholder,

The directors have pleasure in presenting the Thirty-fourth Annual Report, together with the audited financial statements of your company for the year ended March 31, 2015.

Financial Results (Rupees in crore) 2014-15 2013-14

Total revenue 4808.22 4366.46

Profit before finance cost, depreciation and tax 580.85 473.51

Finance cost & depreciation 83.81 66.62

Profit before tax 497.04 406.89

Provision for taxation (incl. deferred tax) 161.10 153.92

Profit after tax 335.94 252.97

Balance carried forward from last year 1452.16 1308.83

Profit available for appropriation 1788.10 1561.80

Proposed equity dividend 83.41 71.49

Tax on dividend 16.98 12.15

Transfer to general reserve - 26.00

Surplus carried forward 1687.71 1452.16

Annual Performance

Your company posted a total revenue of Rs. 4,808 crore for the financial year 2014-15, against last year''s 4,366 crore, an increase of 10%. The rise in revenues in subdued market conditions that have prevailed for over two years was largely due to the higher order book at the beginning of the year. The government has been taking various steps to promote the manufacturing sector. Though these measures have created a favourable market sentiment, it would take some more time for noticeable changes to happen at the ground level. In the capital goods industry we largely depend upon the revival of core sectors like power, steel, cement, oil & gas, etc. but there has been no significant investment in these sectors. Considering this scenario, the company is putting in more efforts in its international initiatives while focusing on improving the domestic market share.

Thermax''s Energy business contributed 82% of the Group''s operating revenue while the Environment business accounted for the remaining 18%.

Despite adverse market conditions, your company continued to invest in research and innovation initiatives.

During the year, the revenue from international markets including deemed exports were Rs. 1,092 crore against Rs. 1,101 crore last year.

Profit before tax at Rs. 497 crore was 10.3% of the total revenue, compared to Rs. 407 crore, at 9.3% in the previous year.

Profit after tax stood at Rs. 336 crore, compared to Rs. 253 crore in the previous year. Earnings per share (EPS) were at Rs. 28.19 (Rs. 21.23 in FY 2013-14).

Order booking for the year was Rs. 3,951 crore against Rs. 5,394 crore last year, registering a decrease of 27%. Your company completed the year with an order backlog of Rs. 4,396 crore as against Rs. 5,389 crore last year. Though your company made a modest improvement in its revenue and profit, 2014-15 continued to be tough in the absence of project orders getting finalised in the core sectors of the economy.

Dividend

The Directors have recommended a dividend of Rs. 7/-(350%) per equity share of face value Rs. 2/-.

The dividend, if approved by the shareholders, will result in a payout of Rs. 100 crore, including dividend distribution tax of Rs. 17 crore.

subsidiaries

Annual accounts of the subsidiary companies and related detailed information are available to shareholders of the parent company, subsidiary companies and to the statutory authorities. On request, these documents will be made available for inspection at the company''s corporate office.

The report on performance of subsidiary companies is included in Management Discussion and Analysis.

Information on newly incorporated / ceased subsidiaries during the year

In order to enhance its presence in South-East Asia, the company has incorporated a wholly-owned subsidiary, ''Thermax Engineering Singapore Pte.Ltd.'' on May 22, 2014.

The company has set up another step-down subsidiary company in Indonesia (through the Singapore based wholly-owned subsidiary), namely, ''PT Thermax International Indonesia'' which was incorporated on October 22, 2014.

Thermax incorporated a subsidiary, ''Thermax Senegal S.A.R.L.'' to tap business in power sector in Senegal.

During the year, Omnical Kessel, the company''s step down subsidiary in Germany has filed for insolvency, due to continued losses.

The company does not have any ''material subsidiary'' whose net worth exceeds 20% of the consolidated net worth of the holding company in the immediately preceding accounting year or has generated 20% of the consolidated revenue during the previous financial year.

Management Discussion and Analysis

The Management Discussion and Analysis report, highlighting the performance and prospects of the company''s energy and environment segments, including details of subsidiaries catering to the respective businesses, information on company''s health, safety & environment measures, human resources, risk management and internal controls systems, is attached.

Corporate Governance Report

A detailed Corporate Governance Report that also contains disclosures required as per the Section 134 and 177 of the Companies Act, 2013 is attached.

A certificate from the statutory auditors of the company regarding compliance with the conditions of corporate governance as required under Clause 49 of the Listing Agreement is part of this report.

Finance, Accounts And Systems

During the year, the company has invested Rs. 49 crore in capital expenditure. The net fixed assets including capital work-in-progress stands at Rs. 648 crore as on March 31, 2015.

The company has generated Rs. 280 crore from

operations after payment of tax. Cash and cash equivalent as at the end of the financial year stands at Rs. 1,005 crore.

Current investment in mutual fund was Rs. 783 crore.

In order to strengthen its internal control system, the company has automated a number of controls and is also reinforcing its existing system. Further, its Oracle ERP has been upgraded to the latest R-12 platform.

Public Deposits

The company had no unpaid/ unclaimed deposit(s) as on March 31, 2015. It 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.

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 said policy is explained 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 was 4,027 as on March 31, 2015 (4,046 the previous year).

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 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 thereto. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the corporate office of the company. The said information is also available for inspection at the registered office during working hours up to the date of the Annual General Meeting.

Details of Trusts for the Benefit of Employees

a) ESOP Trust

The company has ESOP Trust which holds 29,06,250 (2.44%) Equity Shares of Rs. 2/- each of Thermax. The Trust has not made any buying or selling transactions in the secondary market. The company presently does not have any ESOP scheme.

b) Employee Welfare Trusts

The company has a few Employee Welfare Trusts primarily for providing housing loans / medical / 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.

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.

An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed of during the year 2014-15:

Number of complaints received - Nil Number of complaints disposed of - Nil

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on 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 annexed as ''Annexure 1''

Corporate Social Responsibility Initiatives

As a part of its initiatives under "Corporate Social

Responsibility (CSR)'''', the company has undertaken projects in the areas of education, livelihood, health, water and sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. The CSR initiatives are undertaken through Thermax Social Initiative Foundation (TSIF), since 2007.

In view of the requirements under the Companies Act, 2013, the Company has formed a Corporate Social Responsibility Committee (CSR Committee) and approved CSR Policy, a copy of which is available on the company''s website. As per the said policy, the company would continue its CSR initiatives through TSIF.

The Annual Report on CSR activities is annexed as ''Annexure 2''.

Directors

At the Annual General Meeting (AGM) of the company held on July 22, 2014, the members of the company have appointed Dr. Jairam Varadaraj, Dr. Valentin A.H. von Massow, Dr. Raghunath Mashelkar and Nawshir Mirza as independent directors in terms of the Companies Act, 2013 for a term of 5 years effective from July 22, 2014.

All independent directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The company has formulated a policy on ''Familiarisation programme for independent directors'' which is available on the company''s website, www.thermaxglobal.com

In accordance with the provisions of the Companies Act, 2013 and the company''s Articles of Association, Pheroz Pudumjee retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment as director.

Meetings

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

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

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, approved a policy for selection, appointment and renumeration of director and senior management. The gist of Remuneration Policy is stated in the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance. The manner in which the evaluation has been carried out is explained 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, 2015, the applicable accounting standards have been followed;

b) Appropriate accounting policies have been selected, applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2015 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.

Related Party Transactions

All related party transactions that were entered into during the financial year were at an arm''s length basis and were in the ordinary course of business. There are 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 is obtained on a quarterly basis for the transactions which are of a 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 is 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 uploaded on the company''s website.

None of the directors have any pecuniary relationships or transactions vis-a-vis the company.

Particulars of contracts & arrangements with Related Parties are appended in Form AOC 2 as ''Annexure 3''.

Significant and Material Orders Passed by the Regulators nr Courts

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the company and its future operations.

Committees of The Board

Risk Management Committee

During the year, pursuant to the requirement of Clause 49 of the Listing Agreement, the company has constituted a Risk Management Committee. A Risk Management Policy has been prepared which is placed on the website of the company.

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

Auditors

Statutory Auditors

M/s. B. K. Khare & Co., Chartered Accountants, retire as statutory auditors at the ensuing Annual General

Meeting (AGM) and are eligible for reappointment.

As required under the provisions of Section 139 (1) of the Companies Act, 2013, the company has obtained a written consent from them to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said section.

The Audit Committee has recommended appointment of M/s. SRBC & Co. LLP Chartered Accountants, at the ensuing (AGM) as Joint Auditors of the company for a term of five years. Necessary resolution for such appointment is mentioned in the Notice of the AGM for approval of the members.

As required under Clause 49 of the Listing Agreement, the auditors have also 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 2015-16.

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.

The Secretarial Audit report is annexed herewith as ''Annexure 4''.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form No. MGT-9 is annexed herewith as ''Annexure 5''.

Awards and Recognition

Your company has received the following awards during the year:

- Best Concentrated Solar Thermal manufacturer

award from Ministry of New and Renewable Energy for the largest number of solar installations in the last three years.

- Safety Innovation Award 2014 for Chinchwad factory from the Institution of Engineers, India (IEI) for safety management and disaster mitigation; and Safety Award 2014 for Chinchwad factory by the Greentech Foundation for its innovative health, safety and environment practices.

- ''L&D Team of the Year'' award from the Tata Institute of Social Sciences for innovation and industry focused content in learning and development.

- BML Munjal Awards 2015 - Business Excellence through Learning and Development for recognising learning and development as an enabler to improve business performance.

- Bharat Asmita Lifetime achievement award 2015 for Anu Aga, director, instituted by MAEER''s MIT Group of Institutions, Pune.

Acknowledgements

Your directors place on record their appreciation of the continued support extended during the year by the company''s customers, business associates, suppliers, partners, bankers, investors, government authorities and joint venture partners. They also place on record their appreciation of the dedication and contributions made by all the employees for their commitment, hard work and support.

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

For and on behalf of the Board

Meher Pudumjee Pune: May 26, 2015 Chairperson

Mar 31, 2013

Dear Shareholder,

The Directors have pleasure in presenting the Thirty-second Annual Report, together with the audited accounts of your company for the year ended March 31, 2013.

Financial Results

(Rupees in crore)

2012-13 2011-12

Total income 4763.88 5374.55

Profit before finance cost, depreciation and tax 580.14 654.40

Finance cost & depreciation 64.51 53.50

Profit before tax 515.63 600.90

Provision for taxation (incl. deferred tax) 165.67 194.04

Profit after tax 349.96 406.86

Balance carried forward from last year 1091.46 823.54

Profit available for appropriation (cumulative) 1441.42 1230.40

Proposed equity dividend 83.41 83.41

Tax on dividend 14.18 13.53

Transfer to general reserve 35.00 42.00

Surplus carried forward 1308.83 1091.46

ANNUAL PERFORMANCE

For the financial year 2012-13, your company reported a total revenue of Rs. 4,763.9 crore as against last year''s revenue of Rs. 5,374.6 crore, a reduction of 11.4 % owing to a lower order book at the beginning of the year.

Thermax''s Energy business Â Boiler & Heater, Power, Cooling and Heating divisions plus the fledgling Solar group Â contributed 77% of the total revenue while the Environment business comprising Air Pollution Control, Water and Waste Solutions and Chemical division accounted for the remaining 23%. Last year the share of Energy and Environment businesses was 78% and 22% respectively.

During the year, exports including deemed exports were at Rs. 983.9 crore against Rs. 1,142.7 crore last year, a decrease of 13.9%.

Profit before tax at Rs. 515.6 crore was 10.8% of the total revenue, compared to Rs. 600.9 crore, 11.2%, previous year. In a year that continued to witness increase in input costs, lower price realisations and reduced revenues, the company maintained EBITDA margins at 10.8% as the management continued focusing on operational efficiency and controlling costs on a sustainable basis across the company.

Profit after tax stood at Rs. 350 crore compared to Rs. 406.9 crore in the previous year. Earnings per share (EPS) declined to Rs. 29.37 from Rs. 34.15 in FY 2011-12.

Order booking for the year was Rs. 4,859 crore against Rs. 4,032 crore last year, registering an increase of 20%. Your company completed the year with an order backlog of Rs. 4,357 crore as against Rs. 4,230 crore in FY 2011-12. Like the previous year, FY 2012-13 has also been challenging for the capital goods sector. The difficulties of the power sector and the resulting absence of fresh investments and order finalisations continued.

Profit after tax on a consolidated basis is lower than the stand-alone results owing to the losses incurred by Thermax Instrumentation Ltd. (TIL), Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd. (TZL) and the company''s share of losses in the joint venture subsidiaries, Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (TBWES) and Thermax SPX Energy Technologies Ltd. (TSPX). TIL, which undertakes construction and commissioning work for the Power division of the company, is expected to face another challenging year ahead. In the tough market conditions prevailing in China, TZL is still working towards breaking even. The construction of the manufacturing plant of TBWES is nearing completion and the JV is focussing on making it operational.

The consolidated total income of the Thermax Group was Rs. 5,576.5 crore (Rs. 6,174.2 crore, previous year). Income from international business including deemed exports was Rs. 1,468.3 crore as compared to Rs. 1,574.2 crore for the previous year. The Group registered a profit before tax of Rs. 481.4 crore (Rs. 596.5 crore, previous year). Profit after tax, and minority interest was Rs. 320.1 crore for the year.

EPS was Rs. 26.87 (Rs. 33.86, previous year).

The audited consolidated financial statements presented by the company include the financial results of all subsidiary companies, prepared in accordance with Accounting Standard 21 issued by The Institute of Chartered Accountants of India. In addition, a statement of summarised financials of all the subsidiaries is included.

ACQUISITION OF ASSETS

In April 2013, the company, through its step down subsidiary Danstoker A/S, Denmark, acquired assets including the factory of D.P. Clean Tech Ltd., Denmark which are suitable for manufacturing and servicing industrial boilers. The assets are held in the newly formed companies viz. Boilerworks A/S and Boilerworks ApS. They will provide additional manufacturing support for Danstoker. The acquisition was funded through the internal accruals of Danstoker A/S.

DIVIDEND

The Directors have recommended a dividend of Rs. 7/- (350 %) per equity share of face value Rs. 2/-. The dividend, if approved by the shareholders, will result in a payout of Rs. 97.6 crore, including dividend distribution tax of Rs. 14.2 crore.

SUBSIDIARIES

By a general circular (No. 2/ 2011 dated February 8, 2011), the Ministry of Corporate Affairs, Government of India, under Section 212(8) of the Companies Act, 1956, has permitted companies not to attach copies of the Balance Sheets and Profit and Loss Accounts, Directors'' Reports, Auditors'' Reports and other documents of all their subsidiaries to the Accounts of the company. The company has acted accordingly.

However, annual accounts of the subsidiary companies and the related detailed information are available at any time to shareholders of the parent company, subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the company''s corporate office.

Thermax Energy Performance seruices Ltd. (TEPS)

TEPS, a joint venture company with 51-49 percent shareholding between Thermax Limited and EPS Asia Inc. respectively, had been referred for voluntary winding-up effective February 28, 2007 due to non- acceptance of business model and lack of technical and financial investments from the joint venture partner.

TEPS was dissolved on May 10, 2012 pursuant to the Order passed by the Bombay High Court.

Thermax Sdn. Bhd., Malaysia

Your company acquired this entity (registered under the Companies Act, 1965 of Malaysia) in July, 2012 by way of acquisition of its entire share capital. The entity is now a wholly-owned subsidiary of the company.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis report, highlighting the performance and prospects of the company''s energy and environment segments, including details of subsidiaries catering to the respective businesses is attached.

CORPORATE GOVERNANCE REPORT

A detailed Corporate Governance Report is included in this report.

A certificate from the statutory auditors of the company regarding compliance with the conditions of corporate governance as required under Clause 49 of the Listing Agreement is part of this report.

LISTING ON STOCK EXCHANGES

The company''s equity shares are listed on two stock exchanges - National Stock Exchange of India Limited (NSE stock code - Thermax EQ) and BSE Limited (BSE stock code - 500411).

FINANCE, ACCOUNTS AND SYSTEMS

Opening cash & cash equivalent as on April 1, 2012 including current investments was Rs. 771.5 crore. Closing cash & cash equivalent as on March 31, 2013 including current investments stood at Rs. 632.9 crore, after repayment of buyer''s credit loan of Rs. 162.8 crore.

In addition to repayment of outstanding buyer''s credit loan of Rs. 162.8 crore during the year, the company made net investments of Rs. 127.3 crore in fixed assets (previous year Rs. 105.8 crore) and Rs. 42.7 crore in certain subsidiaries (previous year Rs. 88.6 crore), details of which are mentioned in this report.

The net cash outflow after factoring the above was Rs. 138.6 crore in the current year as against Rs. 25.9 crore in the previous year.

During the year, the company has made net investment of Rs. 195.5 crore in mutual funds which has been shown separately in cash flow statement.

The company''s net working capital, adjusted for bank fixed deposits, was positive at Rs. 469.1 crore as against Rs. 33.6 crore in the previous year owing to lower customer advance balances and higher receivables in absolute terms.

The company continued to strengthen the process of building internal controls as well as automation of work flows. Focus on cash flows, working capital as well expenditure control continued through enhanced Management Information Systems.

ICRA Ltd. has reaffirmed its rating, AA for long term and A1 for short term banking facilities. The long term rating carries a ''Stable'' outlook.

Public Deposits

The company had no unpaid / unclaimed deposit(s) as on March 31, 2013. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total number of permanent employees on the rolls of the company was 4,100 as on March 31, 2013 (4,016, the previous year).

WAGE AGREEMENTS

During FY 2013-14, the Memorandum of Settlement with the Thermax Kamagar Sangathan (representing workmen at Chinchwad works) and with the Bhartiya Kamgar Karmachari Mahasangh (representing workmen at Paudh works) are due for fresh negotiations. The management of the company is confident of amicable negotiations and closure of these settlements.

PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars required under Section 217(1) of the Companies Act, 1956 (the Act), read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed and forms part of this Report.

In terms of the provisions of Section 217(2A) of the Act, read with the rules framed thereunder as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219 (1) (b) (IV) of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the company and others entitled thereto. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the corporate office of the company. The statement is also available for inspection at the corporate office during working hours up to the date of the Annual General Meeting.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the company''s Articles of Association, Pheroz Pudumjee and Dr. Jairam Varadaraj retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment as directors.

COMPANY SECRETARY

Gajanan P Kulkarni was appointed as the Company Secretary as per the provisions of Section 383A of the Companies Act, 1956. He was also designated as the Compliance Officer in terms of the Listing Agreement.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them with respect to the statement of Profit & Loss for the financial year ended March 31, 2013 and the Balance Sheet as at that date ("financial statements"), confirm that:

1. The financial statements have been prepared on a going concern basis. In the preparation of the financial statements the generally accepted accounting principles (GAAP) of India and applicable accounting standards issued by The Institute of Chartered Accountants of India have been followed.

2. Appropriate accounting policies have been selected and are being applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit of the company for that period. Significant accounting policies and other required disclosures have been made in Notes to the Financial Statements.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems consistent with its size and nature of operations. In weighing the assurance provided by any such system, its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The company has an Internal Audit department which coordinates the internal audit process. The Audit Committee of the Board meets at periodic intervals to review the internal audit function.

4. The financial statements have been audited by M/s. B.K. Khare & Co., the statutory auditors and their report is appended.

COMMITTEES OF THE BOARD

During the year, changes have been effected in the following committees of the Board:

A) Borrowing & Investments Committee: The terms of reference of the committee were amended by the Board on July 26, 2012.

B) Strategic Business Development Committee: The Board appointed Dr. Jairam Varadaraj as a member of the committee with effect from February 26, 2013.

The Corporate Governance Report gives details of these committees.

AUDITORS

M/s. B.K. Khare & Co., Chartered Accountants, retire as statutory auditors at the ensuing Annual General Meeting and are eligible for reappointment.

As required under the provisions of Section 224(1B) of the Companies Act, 1956, the company has obtained a written consent from them to the effect that their reappointment, if made, would be in conformity with the limits specified in the said section.

COST AUDITORS

M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune have been appointed as the Cost Auditors of the Company for FY 2013-14 subject to the approval of the Central Government.

AWARDS AND RECOGNITION

Your company has received the following awards and recognition during the year:

- Thermax MD and CEO, M.S.Unnikrishnan received the Asia Innovator Award at the 2012 CNBC Asia Business Leaders Awards (ABLA) in Bangkok. He is the first Indian to receive the Innovation Award in the 11 year history of ABLA.

- Thermax''s Savli and Chinchwad factories won awards from the CII and the Greentech Foundation for their health, safety and environment (HSE) practices, employee involvement and environment management systems.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the continued support extended during the year by the company''s clients, business associates, suppliers, bankers, investors, government authorities and joint venture partners. Your Directors also place on record their appreciation of the dedication and contributions made by all the employees including the workmen, for commitment, hard work and support.

Your Directors would also like to thank all their shareholders for their continued faith in the company and its future.

For and on behalf of the Board

Meher Pudumjee

Pune: May 22, 2013 Chairperson

Mar 31, 2012

Dear Shareholder,

The Directors have pleasure in presenting the Thirty-first Annual Report, together with the audited accounts of your company for the year ended March 31, 2012.

Financial Results (Rupees in crore)

2011-12 2010-11

Total income 5374.55 4935.49

Profit before finance cost, depreciation tax and extraordinary items 654.40 618.21

Finance cost& depreciation 53.50 45.51

Profit before tax & before extraordinary items 600.90 572.70

Provision for taxation (incl. deferred tax) 194.04 190.28

Profit after tax & extraordinary items 406.86 382.42

Balance carried forward from last year 823.54 605.76

Profit available for appropriation (cumulative)1230.40 988.18

Proposed equity dividend 83.41 107.24

Tax on dividend 13.53 17.40

Transfer to general reserve 42.00 40.00

Surplus carried forward 1091.46 823.54

ANNUAL PERFORMANCE

Your company has registered record total revenue of Rs. 5374.6 crore, a growth of 8.9% over last year's revenue of Rs. 4935.5 crore.

Thermax's Energy business comprising Boiler & Heater, Power, Cooling and Heating contributed 78.2% of the total revenue while the Environment business comprising Air Pollution Control, Chemicals, Water and Wastewater Solutions accounted for the remaining 21.8%. Last year, the share of Energy and Environment businesses was 80% and 20% respectively.

During the year, exports, including deemed exports were higher at Rs. 1142.7 crore from Rs. 1065.9 crore last year, an increase of 7.2%.

Profit before tax at Rs. 600.9 crore was 11.2% of total revenue as compared to Rs. 572.7 crore in the previous year which was 11.6%. The company maintained the EBITDA margins at 11% even though the year witnessed increase in input costs. The company's management continues to work on building operational efficiency and controlling costs on a sustainable basis at divisional and overall company levels.

Profit after tax and extraordinary items was at Rs. 406.9 crore compared to Rs. 382.4 crore in the previous year. Earnings Per Share (EPS) rose to Rs. 34.15 from Rs. 32.09 in 2010-11.

Order booking for the year was Rs. 4032 crore against Rs. 5318 crore last year. Your company completed the year with an order backlog of Rs. 4230 crore as against Rs. 5605 crore in the previous year. 2011-12 had been a challenging year for the capital goods sector. Various policy and economic factors were responsible for significantly reducing fresh investments and order finalisations in the power sector, affecting order booking and resulting in lower order backlog. The order inflows were lower compared to the previous year as the economy witnessed a slowing down of growth, particularly in the second half of the financial year.

The profit after tax on a consolidated basis is lower than the stand alone results owing to the losses incurred by the subsidiaries namely, Thermax Instrumentation Ltd. (TIL), Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd. (TZL) and the company's share of losses in the recent joint venture subsidiaries, Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (TBWES) and Thermax SPX Energy Technologies Ltd. TIL, which undertakes erection and commissioning work for the Power division of the company, is expected to face a challenging year ahead. TZL improved its business operations and reduced operating losses. TBWES is yet to be operational.

The consolidated total income of the Thermax Group was Rs. 6174.2 crore (Rs. 5393.6 crore, previous year) recording a 14.5% increase. Income from international business including deemed exports was up 25.9% to Rs. 1574.2 crore from Rs. 1250.3 crore. The Group registered a profit before tax of Rs. 596.5 crore (Rs. 573.4 crore, previous year). Profit after tax, extraordinary items and minority interest was Rs. 403.5 crore for the year. Consequently, EPS also increased to Rs. 33.86 (Rs. 32.03 after extraordinary item, previous year).

A detailed review of performance and future prospects of the company's business and its subsidiaries is included in the section 'Management Discussion and Analysis'.

The audited consolidated financial statements presented by the company include the financial results of all subsidiary companies, prepared in accordance with Accounting Standard 21 issued by The Institute of Chartered Accountants of India. In addition, a statement of summarised financials of all the subsidiaries is included.

STRATEGIC ACQUISITION

Your company acquired Rifox-Hans Richter GmbH, a leading German steam traps and allied steam accessories manufacturer which was the subsidiary of Virgo Valves & Controls Ltd., India. Virgo's steam division has also been acquired by your company for an aggregate consideration of Rs. 13.39 crore. The acquisition which is effective from April 1, 2012, offers a strategic fit for the company's steam engineering business. The acquisition would enable your company's Cooling and Heating service business to extend its portfolio in Europe, South East Asia and the Middle East.

DIVIDEND

The Directors have recommended a dividend of Rs. 7/- (350%) per equity share of face value Rs. 2/-. The dividend, if approved by the shareholders, will entail a payout of Rs. 96.9 crore, including dividend distribution tax of Rs. 13.5 crore.

SUBSIDIARIES

By a general circular (No. 2/ 2011 dated February 8, 2011), the Ministry of Corporate Affairs, Government of India, under Section 212(8) of the Companies Act, 1956, has permitted companies not to attach copies of the Balance Sheets and Profit and Loss Accounts, Directors' Reports, Auditors' Reports and other documents of all their subsidiaries, to the Accounts of the Company. The company has acted accordingly.

However, annual accounts of the subsidiary companies and the related detailed information are available at any time to shareholders of the parent company and subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the company's corporate office.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis report, highlighting the performance and prospects of the company's energy and environment segments including details of subsidiaries catering to the respective businesses, is attached.

CORPORATE GOVERNANCE

It has been the endeavour of your company to follow and implement the best practices in corporate governance, in letter and spirit. A detailed Corporate Governance Report is included in this report.

A certificate from the statutory auditors of the company regarding compliance with the conditions of corporate governance as required under Clause 49 of the Listing Agreement is part of this report.

LISTING ON STOCK EXCHANGES

The company's equity shares are listed on two stock exchanges - National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

FINANCE, ACCOUNTS AND SYSTEMS

As on March 31, 2012 the company's cash and cash equivalents including current investments stood at Rs. 771.5 crore.

The net cash flows from operations, before investments in fixed assets and subsidiaries was Rs. 174.5 crore (previous year Rs. 53.4 crore).

The company made net investments of Rs. 105.8 crore in fixed assets and Rs. 74 crore as equity in Thermax Babcock Wilcox Energy Solutions Private Limited - the Joint Venture with Babcock & Wilcox India Holdings Inc., USA. Besides, the company infused equity of Rs. 10.6 crore in Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd. and Rs. 4 crore in Thermax Sustainable Energy Solutions Ltd. during the year. The net cash outflow, after factoring the above, was Rs. 25.9 crore in the current year as against Rs. 9.9 crore in the previous year.

The company's net working capital, adjusted for bank fixed deposits, was positive at Rs. 34 crore as against a negative Rs. 117 crore in the previous year owing to lower customer advance balances and higher receivables in absolute terms. The company's management continues to monitor closely and control the working capital.

The process of building internal controls as well as the automation of work flow was continued during the year.

The company's financial statements have been prepared according to the revised Schedule VI of the Companies Act, 1956.

ICRA Ltd. has reaffirmed its rating, LAA for long- term and A1 for short term banking facilities. The long term rating carries a 'Stable' outlook.

Public Deposits

The company had no unpaid / unclaimed deposit(s) as on March 31, 2012. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total number of permanent employees on the rolls of the company was 4016 as on March 31, 2012 (3920 previous year).

WAGE AGREEMENT

During the year, the management of the company has amicably signed the following wage settlement agreements:

1) Memorandum of settlement with Thermax Kamagar Sangathan (representing workmen at Chinchwad works) which will remain in force for a period of three years commencing from May 1, 2010.

2) Memorandum of settlement with Bhartiya Kamgar Karmachari Mahasangh (representing workmen at Paudh works) which will remain in force for a period of three years commencing from July 1, 2010.

PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars required under Section 217(1) of the Companies Act, 1956 (the Act), read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed and forms part of this Report.

In terms of the provisions of Section 217(2A) of the Act, read with the rules framed thereunder as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. Having regard to the provisions of Section 219(1)(b) (IV) of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the company and others entitled thereto. Any shareholder interested in obtaining such particulars may write to the Dy. Company Secretary at the corporate office of the company. The statement is also available for inspection at the corporate office, during working hours up to the date of the Annual General Meeting.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the company's Articles of Association, Dr. Valentin A.H. von Massow and Dr. Raghunath A. Mashelkar retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment as directors.

M. S. Unnikrishnan has been reappointed as the Managing Director and Chief Executive Officer of the company for a period of five years commencing from July 1, 2012. His reappointment requires approval of the shareholders at the ensuing Annual General Meeting.

COMPANY SECRETARY

Devang Trivedi was appointed Compliance Officer in terms of the Listing Agreement and also

Deputy Company Secretary as per the provisions of Section 383A of the Companies Act, 1956. His appointment was necessitated by the resignation of Sunil Lalai as the Company Secretary and Compliance Officer.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them with respect to the statement of Profit & Loss for the financial year ended March 31, 2012 and the Balance Sheet as at that date ("financial statements"), confirm that:

1. The financial statements have been prepared on a going concern basis. In the preparation of the financial statements the generally accepted accounting principles (GAAP) of India and applicable accounting standards issued by The Institute of Chartered Accountants of India have been followed.

2. Appropriate accounting policies have been selected and are being applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit of the company for that period. Significant accounting policies and other required disclosures have been made in Notes to the Financial Statements.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system, its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The company has an Internal Audit department, which coordinates the internal audit process. The Audit Committee of the Board meets at periodic intervals to review the internal audit function.

4. The financial statements have been audited by M/s. B. K. Khare & Co., the statutory auditors and their report is appended thereto.

COMMITTEES OF THE BOARD

During the year, changes have been effected in the following committees of the Board:

A) Audit Committee: The Board appointed Nawshir Mirza as a member of the committee with effect from May 3, 2011.

B) International Investment Committee: The terms of reference of the committee were amended by the Board on October 20, 2011.

The Corporate Governance Report gives details of the aforesaid committees.

AUDITORS

M/s. B. K. Khare & Co., Chartered Accountants, retire as statutory auditors at the ensuing Annual General Meeting and are eligible for reappointment. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the company has obtained a written certificate from them to the effect that their reappointment, if made, would be in conformity with the limits specified in the said section.

COST AUDITORS

As per the Order dated January 24, 2012, issued by the Ministry of Corporate Affairs, the appointment of Cost Auditors becomes mandatory for your company pursuant to the provisions of Section 233B of the Companies Act, 1956.

Accordingly, the Board of Directors at its meeting held on May 11, 2012 approved appointment of M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune as the Cost Auditors of the company for the financial year 2012-13 subject to the approval of the Central Government.

AWARDS AND RECOGNITION

Your company has received the following awards and recognition during the year:

- Thermax won the CNBC TV-18 India award for

the 'most promising entrant to the big league'. M. S. Unnikrishnan received the award from the Union Finance Minister, Pranab Mukherjee in January, 2012.

- Anu Aga, Director and former Chairperson of Thermax, nominated as Member of the Rajya Sabha by the President of India, on the recommendations of the Prime Minister.

- Chinchwad factory bagged the Safety Innovation Award 2011 from the Institution of Engineers, Delhi, for its innovative health, safety and environment initiatives.

- Chinchwad factory won the Health, Safety and Environment appreciation award 2011 from CII, Western region.

- Gopal Mahadevan, Chief Financial Officer and Executive Vice President received the best performing CFO award in the Capital Goods sector by CNBC TV-18 in February, 2012.

- Meher Pudumjee's column, 'Expressions' in Fireside, the company in-house magazine, won first prize at the Association of Business Communicators of India in November 2011.

- Thermax employees continue to win awards for technical paper presentations, corporate quizzes and sports tournaments.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the continued support extended during the year by the company's clients, business associates, supplier-partners, bankers, investors, government authorities and its joint venture partners. Your Directors also place on record their appreciation of the dedication and contributions made by employees at all levels including the workmen, who through their commitment, hard work and support have steered the company.

Your Directors would also like to thank all their shareholders for their faith in the company and its future.

For and on behalf of the Board

Meher Pudumjee

Pune: May 11, 2012 Chairperson

Mar 31, 2011

The Directors are pleased to present the Thirtieth Annual Report together with the audited accounts of your company for the year ended March 31, 2011.

FINANCIAL RESULTS

(Rupees in crore)

2010-11 2009-10

Total income 4935.49 3235.23

Profit before interest, depreciation, tax and extraordinary items 618.34 433.88

Interest & depreciation 45.37 41.94

Profit before tax & before extraordinary items 572.97 391.94

Extraordinary items of expenses /(income) Nil 114.86 (Net of tax)

Provision for taxation (incl. deferred tax) 190.55 135.64

Profit after tax & extraordinary items 382.42 141.44

Balance carried forward from last year 605.76 548.00

Profit available for appropriation (cumulative) 988.18 689.44

Proposed equity dividend 107.24 59.58

Tax on dividend 17.40 9.90

Transfer to general reserves 40.00 14.20

Surplus carried forward 823.54 605.76

ANNUAL PERFORMANCE

You will be happy to know that this year, at Rs. 4935 crore, the total income of your company has exceeded US $ one billion, a 52.6% increase over last years income of Rs. 3235 crore.

Thermaxs energy business comprising Boiler & Heater, Power and Cooling & Heating contributed 77.3% of its income while the environment business comprising Air Pollution Control, Chemicals, along with Water and Wastewater Solutions accounted for the remaining 22.7%.

In terms of profitability, the company had an EBITDA of 11.6% (12.1% last year). The variation has been due to the rising cost of raw materials, higher share of Power EPC business and the acceptance of certain strategic orders at lower margins.

Your companys performance during fiscal 2010- 11 straddled two distinctly dissimilar phases in the economic environment Ã a first half of robust growth followed by six months of economic uncertainties. While the first phase saw the continuing surge in our order finalisation, the latter six months saw credit drying up due to high interest rates, resulting in a slowing down of orders. Due to the slow-down in new orders in the last two quarters of 2010-11, your companys performance next year is likely to be subdued. However, being positioned in the crucial areas of energy and environment, with the continuing vibrancy of the national economy, the medium to long term outlook for the company is positive.

Profit before tax and extraordinary items was also higher at Rs. 573 crore as compared to Rs. 391.9 crore in the previous year. Profit after tax and extraordinary items was at Rs. 382.4 crore compared to Rs. 141.4 crore in the previous year (after providing for extraordinary item of Rs. 114.9 crore). Earnings per share (EPS) rose to Rs. 32.09 from Rs. 11.87 (after extraordinary item)in 2009-10.

Order booking for the year was Rs. 5318 crore against Rs. 5794 crore, last year. Your company completed the year with an order backlog of Rs. 5605 crore as against Rs. 5381 crore in the previous year.

During the year, exports, including deemed exports, were higher at Rs. 1065.9 crore from Rs. 656.5 crore last year, an increase of 62.4%.

A detailed review of performance and future prospects is included in the section Management Discussion and Analysis of the Annual Report.

The consolidated total income of the Thermax Group was Rs. 5395 crore (Rs. 3422.2 crore, previous year) recording a 58% increase. Income from international business including deemed exports was up 74% to Rs. 1250.5 crore from Rs. 720.4 crore. The Group registered a profit before tax of Rs. 573.7 crore (Rs. 400.4 crore, previous year). Profit after tax and extraordinary items and minority interest was Rs. 381.7 crore for the year. Consequently, earnings per share (EPS) also increased to Rs. 32.03 (Rs. 12.11 after extraordinary item, previous year).

By a general circular (No. 2/ 2011 dated February 8, 2011), the Ministry of Corporate Affairs, Government of India, under Section 212(8) of the Companies Act, 1956, has permitted companies to not attach copies of the Balance Sheets and Profit and Loss Accounts, Directors Reports, Auditors Reports and other documents of all their subsidiaries, to the Accounts. The company has acted accordingly.

However, annual accounts of the subsidiary companies and the related detailed information are available at any time to shareholders of the parent company and subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the companys corporate office.

The audited consolidated financial statements presented by the company include the financial result of the workings of all subsidiary companies, prepared in accordance with Accounting Standard 21 issued by The Institute of Chartered Accountants of India. In addition, a statement of summarised financials of all the subsidiaries is included. Further, the accounts of individual subsidiary companies shall also be posted on the companys website.

STRATEGIC ACQUISITION

During the year, your company acquired Danstoker A/S, a leading European boiler

manufacturer and its German subsidiary, Omnical Kessel for a consideration of Rs. 186.6 crore. The acquisition offers a strategic fit for the companys packaged boiler business, under the Cooling & Heating Business Unit. Providing state-of-the-art technology and process know-how for the companys heating business, this acquisition will enable the division to enhance its product portfolio and extend it to new, untapped markets. The Danstoker and Omnical brands will help your company expand its reach in Europe, South East Asia and the Middle East.

The acquisition will also help in expanding your companys green initiatives, as a significant portion of the revenues of Danstoker and Omnical come from biomass and waste heat recovery boilers. It will enable Thermax to gain from the ongoing renewable energy movement of Europe aimed at generating 20% of its overall energy generation from renewables by 2020.

Details of the acquired entities are provided in the Subsidiaries section of this report.

DIVIDEND

The Directors have recommended a dividend of Rs. 9/- (450%) per equity share of face value Rs. 2/-.

The dividend, if approved by the shareholders, will entail a payout of Rs. 124.6 crore, including dividend distribution tax of Rs. 17.4 crore.

DOMESTIC SUBSIDIARIES

Joint Ventures

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd.

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. was incorporated on June 26, 2010, following the joint venture agreement signed last year with Babcock & Wilcox (B&W), USA to manufacture supercritical boilers.

A manufacturing facility is being set up at Shirwal in Satara District, Maharashtra State to manufacture 3,000 MW of supercritical and sub- critical boilers per year, in the first phase, with a provision to expand the annual capacity to 5,000 M W. The plant will be ready for commercial operations during the financial year 2012-13. As over 60% of the coal based power projects coming up in the 12th Plan are likely to be based on supercritical technology, the subsidiary is confident of its business prospects.

Your company has currently contributed Rs. 49.2 crore in various tranches towards its 51% share of the equity share capital in the joint venture.

Thermax SPX Energy Technologies Ltd.

The company is a joint venture (JV) between Thermax Limited and SPX Netherlands B.V., a wholly owned subsidiary of SPX Corporation, USA. Thermax has a 51% stake in the JV.

The JV would supply equipment to help power plants meet stringent emission norms and improve thermal efficiencies in boiler islands. During the year, the JV has commenced execution of its first order won last year from a leading oil refinery.

The total revenue for the year were Rs. 9.2 crore (Rs. 0.05 crore, previous year). Net loss after tax was Rs. 0.4 crore (Rs. 0.9 crore).

The companys prospects look promising in the medium to long term.

Wholly owned

Thermax Engineering Construction Co. Ltd.

Thermax Engineering Construction Co. Ltd. (TECC) undertakes and executes engineering construction projects mainly for the Boiler and Heater (B&H) business unit.

During 2010-11, the company earned a total income of Rs. 120.1 crore (Rs. 96.8 crore, previous year). It achieved a profit after tax of Rs. 6.4 crore (Rs. 3 crore), resulting from better cost management and favourable settlement of liquidated damages provided in earlier years.

The year-end order balance is Rs. 244 crore, the highest in its history.

Thermax Instrumentation Ltd.

Thermax Instrumentation Limited (TIL) is engaged in the installation and commissioning of power and cogeneration plants, including civil construction, that have been built by the parent companys Power division.

During the year, the company earned a total income of Rs. 236.5 crore and profit after tax of Rs. 3.4 crore (Rs. 129.1 crore and Rs. 2 crore respectively, last year).

TIL has an order balance of Rs. 440 crore at the end of FY 2011.

Thermax Sustainable Energy Solutions Ltd.

Thermax Sustainable Energy Solutions Limited

has been created to develop business related to clean development mechanism (CDM). During the year, the subsidiary received registration for its Programme of Activities from the United Nations Framework Convention on Climate Change (UNFCCC).

The company earned an income of Rs. 0.3 crore (Rs. 0.7 crore, previous year). This mainly comprised CDM consultancy services provided to project owners. The company has incurred a net loss of Rs. 1.2 crore (Rs. 1.2 crore), due to expenses for development, validation and registration of the CDM project and investments in IT infrastructure. As this is an entirely new business for India with its attendant uncertainties, the subsidiary will need the necessary gestation time to establish itself.

The company will be investing substantially in the coming year to accredit many projects under its Programme for carbon credit entitlements in the future.

Thermax Onsite Energy Solutions Ltd.

The company is focused on delivering utilities Ã green energy from biomass and other renewable sources that it supplies to customers Ã on a unit consumption basis. As a first step the company has commenced the business of supplying process steam / heat.

Apart from two projects undertaken the previous year, this subsidiary had a lean 2010-11. However, as the business model is conducive for the emerging business environment, it plans to take up more projects this year.

The company had a total income of Rs. 6.1 crore and profit after tax of Rs. 0.6 crore.

Your company has infused Rs. 3.6 crore equity capital into this subsidiary and will invest more, based on the needs of the new contracts.

WHOLLY OWNED OVERSEAS SUBSIDIARIES

Thermax Inc., USA

This step-down subsidiary, which provides the Group access to US markets, currently focuses on ion exchange resins and vapour absorption chillers.

2010-11 witnessed a challenging environment in the US market with slashed production and shrinking investments. The steep rise in hydrocarbon prices increased the input costs of chemical operations. Though these are passed on to customers, sharing the general industry experience, there is a lag between cost increase and price increase that is borne by the producer.

Despite these difficult circumstances, the subsidiary recorded a sales of USD 13.1 mn (USD 14.9 mn, previous year) and a profit of USD 0.04 mn ( USD 0.96 mn, previous year).

Thermax Europe Ltd., UK

Although the market has remained flat in comparison to last year, this subsidiarys focus on specialised market segments and new applications helped it to retain and improve its market share. The company achieved a turnover of GBP 4.3 mn (USD 7 mn) compared to GBP 3.8 mn (USD 5.8 mn) in the previous year. The profit after tax stands at GBP 0.4 mn (USD 0.7 mn) against the previous years profit of GBP 0.4 mn (USD 0.7 mn). The year also saw one of the highest order intake of GBP 5 mn.

Although the market is expected to remain subdued in the short term, the company will continue to focus on its niche segments for the coming year.

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

2010-11 was the second full year of its operation. It doubled its production during the period and has plans to ramp it up this year. The company faced the challenge of rising costs in a market recovering after the 2009 global recession. It has taken initiatives to optimise designs and achieve benchmark performance at reduced costs.

In 2010-11 the company achieved total revenues of RMB 47 mn (USD 7.2 mn), an increase of 143% compared to the previous year (RMB 19.3 mn). Loss for the year was RMB 11.4 mn (USD 1.7 mn) after accounting for interest and depreciation, compared to RMB 10.4 mn (USD 1.5 mn), last year.

The final tranche of equity infusion of USD 1.12 mn from the total approved USD 14.4 mn has been remitted in the last quarter.

Thermax Denmark ApS

Thermax Denmark ApS was incorporated on October 29, 2010 with authorised capital of DKK 75 mn (USD 14.3 mn), to acquire the European entity Danstoker A/S along with its subsidiaries. The company is the holding company of Danstoker AS and EIN.

Thermax Netherlands B.V.

Thermax Netherlands B.V. was incorporated on November 4, 2010 with an initial authorised capital of EUR 30 mn (USD 42.5 mn) and is the holding company of Thermax Denmark ApS.

Danstoker A/S, Denmark

The acquisition of Danstoker A/S, a leading European boiler manufacturer and its German subsidiary, Omnical Kessel was completed on November 8, 2010 and was valued at Euro 29.5 mn (USD 41.8 mn).

Danstoker, headquartered in Herning, Denmark has a 75 year tradition in manufacturing. Its manufacturing facilities are located in Denmark and in Omnical, Germany, that it acquired in 2003. Professionally managed and profitable, the company has current annual sales of Euro 40 mn. Danstoker is a respected brand in the renewable energy space and has a strong presence in the Nordic countries, Germany, UK, France and Russia.

Operating predominantly within Germany, Omnical has supplier relationships with European and Japanese gas turbine manufacturers for their requirements of waste heat recovery systems.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis report, highlighting the performance and prospects of the companys energy and environment businesses is attached.

CORPORATE GOVERNANCE

It has been the endeavour of your company to follow and implement best practices in corporate governance, in letter and spirit. A detailed Corporate Governance Report is included in this report.

A certificate from the auditors of the company regarding compliance with the conditions of corporate governance as required under Clause 49 of the Listing Agreement is part of this report.

LISTING ON STOCK EXCHANGES

The companys equity shares are listed on two stock exchanges Ã National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

FINANCE, ACCOUNTS AND SYSTEMS

As on March 31, 2011, the companys cash and cash equivalents stood at Rs. 752 crore.

One of the major investments made during the year was the infusion of Rs. 130 crore as equity in Thermax Netherlands B. V. for the acquisition of Danstoker Group. The company had also paid an amount of Rs. 159 crore towards the successful out-of-court settlement concluded in the previous year with a US based company. Besides these the company had also made an investment of Rs. 55 crore in fixed assets and Rs. 49 crore as equity in Thermax Babcock Wilcox Energy Solutions Private Limited Ã the Joint Venture with Babcock & Wilcox Power Generation Group, USA. The net cash outflow after factoring the above was Rs. 164 crore in the current year as against an inflow of Rs. 452 crore in the previous year.

The companys net working capital was negative at Rs. 150 crore as against a negative Rs. 381 crore in the previous year. The companys management continues to monitor and control the working capital position closely.

ICRA Ltd. has reaffirmed its assigned LAA+ and A1+ rating for fund based and non fund based banking facilities, respectively. The long term rating carries a Stable outlook.

Public Deposits

The company had no unpaid / unclaimed deposit(s) as on March 31, 2011. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total number of permanent employees on the rolls of the company was 3920 as on March 31, 2011 (3631 previous year).

PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars required under Section 217(1) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed and forms part of this Report.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the rules framed thereunder as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report. Having regard to the provisions of Section 219(1)(b) (IV) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the company and others entitled thereto. Any shareholder interested in obtaining such particulars may write to the company secretary at the corporate office of the company. The statement is also available for inspection at the corporate office, during working hours up to the date of the Annual General Meeting.

DIRECTORS

Mr. Nawshir Mirza has been inducted on the Board of your company as an Additional Director with effect from May 3, 2011. He holds office till the ensuing Annual General Meeting in accordance with the provisions of Section 260 of the Companies Act, 1956 (the Act). The requisite notice, with necessary deposit has been received pursuant to Section 257 of the Act, proposing him as a Director of the company. A resolution appointing him as Director has been set out in the notice of the ensuing Annual General Meeting for the approval of the shareholders.

In accordance with the provisions of the Companies Act, 1956 and the companys Articles of Association, Mrs. A. R. Aga and Mr. Tapan Mitra retire by rotation at the ensuing Annual

General Meeting and being eligible, offer themselves for reappointment as directors.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors accept responsibility for the integrity and objectivity of the Profit & Loss Account for the financial year ended March 31, 2011 and the Balance Sheet as at that date (Ãfinancial statementsÃ) and confirm that:

1. The financial statements have been prepared on a going concern basis. In the preparation of the financial statements the generally accepted accounting principles (GAAP) of India and applicable accounting standards issued by The Institute of Chartered Accountants of India have been followed.

2. Appropriate accounting policies have been selected and are being applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit of the company for that period. Significant accounting policies and other required disclosures have been made in Schedule 17 annexed to the Financial Statements.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system, its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The company has an Internal Audit department, which coordinates the internal audit process. The Audit Committee of the Board meets at periodic intervals to review the internal audit function.

4. The financial statements have been audited by M/s. B. K. Khare & Co., the statutory auditors and their report is appended thereto.

COMMITTEES OF THE BOARD

During the year, changes have been effected in the following committees of the Board:

International Investment Committee: The Overseas Investment Committee of the Board was renamed as International Investment Committee on July 21, 2010. The Corporate Governance Report gives details of the aforesaid committee.

Audit Committee: Dr. Valentin von Massow was co-opted as a member of the committee for the meeting on October 26, 2010. This was necessitated owing to Dr. Jairam Varadarajs inability to attend the meeting.

AUDITORS

M/s. B. K. Khare & Co., Chartered Accountants, retire as statutory auditors at the ensuing Annual General Meeting and are eligible for reappointment. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the company has obtained a written certificate from them to the effect that their reappointment, if made, would be in conformity with the limits specified in the said section.

AWARDS AND RECOGNITION

As a company striving for excellence, we are proud to receive the following awards and recognition during this fiscal year:

- Customer Service Excellence award in water treatment chemicals by Frost and Sullivan.

- Bry Air award for innovative product design.

- Top prizes at 35th International Convention on Quality Control Circles, 2010.

- The ÃCII National HR Excellence Award for 2009 in recognition of Thermaxs leadership in HR excellence.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the continued support extended during the year

by the companys clients, business associates, supplier partners, bankers, investors, government authorities and its joint venture partners. Your Directors also place on record their appreciation of the dedication and contributions made by employees at all levels including the workmen, who through their commitment, hard work and support have steered the company.

Your Directors would also like to thank all their shareholders for their faith in the company and its future.

For and on behalf of the Board

Meher Pudumjee Chairperson

Pune: May 3, 2011

Mar 31, 2010

The Directors take pleasure in presenting the Twenty-ninth Annual Report together with the audited accounts of your company for the year ended March 31, 2010.

FINANCIAL RESULTS

(Rupees in crore)

2009-10 2008-2009

Total income 3235.23 3303.17

Profit before interest, depreciation, tax and extraordinary items 433.88 453.23

Interest & depreciation 41.94 35.38

Profit before tax & before extraordinary items 391.94 417.85

Extraordinary items of expenses / (income) 114.86 (1.36) (Net of tax)

Provision for taxation (incl. deferred tax) 135.64 131.91

Profit after tax & extraordinary items 141.44 287.30

Balance carried forward from last year 548.00 359.20

Profit available for appropriation (cumulative) 689.44 646.50

Proposed equity dividend 59.58 59.58

Tax on dividend 9.90 10.12

Transfer to general reserves 14.20 28.80

Surplus carried forward 605.76 548.00

PERFORMANCE

The total order booking for the year was Rs. 5794 crore as against Rs. 3557 crore, last year. Your company completed the year with a record order book of Rs. 5381 crore. The year 2009-10 began with a lower order book, owing to the global financial crisis, resulting in the total income being marginally lower at Rs. 3235.2 crore, as compared to the previous year. Profit before tax and extraordinary items was Rs. 391.9 crore compared to Rs. 417.9 crore in the previous year. Profit, after tax and extraordinary items, was significantly lower at Rs. 141.4 crore compared to Rs. 287.3 crore in the previous year, owing to a one-time extraordinary expense of Rs. 114.9 crore (net of tax) towards a business settlement. Earnings per share (EPS) dropped to Rs. 11.87 from Rs. 24.11 in 2008-09.

During the year, exports - including deemed exports - were lower at Rs. 656.5 crore from Rs. 912.3 crore last year, a decline of 28% due to the continued financial turmoil in the global market.

A detailed review of performance and future prospects is included in the section Management Discussion and Analysis of the Annual Report.

Collaboration with global technology majors

During the year, your company made significant moves that will help it to benefit from the rapid growth happening in the countrys power sector. It signed two joint venture agreements Ã with SPX Netherlands BV (SPX) for air pollution control equipment to help power plants meet stringent emission norms and also improve their thermal efficiencies; and with Babcock & Wilcox (B&W), USA for manufacturing supercritical boilers. Details of the joint venture (JV) company formed with SPX is provided in the Subsidiaries section of this report.

With Babcock & Wilcox Power Generation Group, Inc. (B&W PGG), a global leader in power generation industry, Thermax has entered into an alliance to form a strategic joint venture to engineer, manufacture and supply supercritical boilers for the Indian power sector. The JV will also manufacture subcritical boilers over 300 megawatts (MW) in size.

Thermax will own 51% share of the joint venture while B&W PGG will have 49% ownership. The company will bring to the Indian power sector Thermaxs expertise of integrating energy and environment solutions and B&Ws long history of providing proven, state-of-the-art power generation technology and world class project management capabilities. B&W was the first company in the world to build a supercritical boiler.

This technology will allow the new JV to contribute to efficient power generation in the ultra mega thermal plants planned to meet the massive energy requirements of the country. Utility boilers above 660 MW generally fall under the supercritical category. Operating at higher pressures than those of subcritical boilers, they increase efficiency and produce more energy from the same amount of fuel.

The new joint venture is being established at a critical time when Indias ambitious growth plans and its dependence on coal fired power plants for power throw up tremendous energy and environment challenges. It will help meet the challenges of energy efficient power generation, a crucial requirement in the context of emission reduction and the need to conserve fossil fuel.

CONSOLIDATED RESULTS

The consolidated total income of the Thermax Group has reduced, marginally, to Rs. 3422.2 crore from Rs. 3500.7 crore last year. Income from international business was down to Rs.720.4 crore from Rs. 958.8 crore. The Group registered a profit before tax of Rs. 400.4 crore as against Rs. 423.3 crore in the previous year. Profit after tax & extraordinary items and minority interest decreased by 50.1% to Rs. 144.3 crore owing to a one-time extraordinary expenditure of Rs. 114.9 crore (net of tax) relating to the business settlement with Purolite. Consequently, earnings per share (EPS) also reduced to Rs.12.11 as compared to Rs. 24.25 in the previous year.

The liquidation process of ME Engineering Ltd., the erstwhile UK based step-down subsidiary, was completed during the current year. Voluntary winding-up of Thermax Energy Performance Services Ltd., the joint venture company, is under way and is expected to be completed this year. Thermax Hong Kong Ltd., a wholly- owned subsidiary has been registered for a dormancy status in March 2010. Accordingly, these companies have not been considered for consolidation.

In terms of approval granted by the Central Government pursuant to the provisions of Section 212(8) of the Companies Act, 1956, copy of the Balance Sheet and Profit and Loss Account, Directors Report, Auditors Report and other documents of all the subsidiary companies, have not been attached to the Accounts of the company for the year 2009-10. However, on request by any member of the company/statutory authority interested in obtaining them, these documents will be made available for inspection at the companys corporate office. The audited consolidated financial statement presented by the company include the financial information of all its subsidiary companies prepared in accordance with the Accounting Standard 21 (AS 21) issued by The Institute of Chartered Accountants of India. Pursuant to the approval, a statement of summarised financials of all the subsidiaries is attached along with the consolidated financial statement. Further, the accounts of individual subsidiary companies shall also be posted on the companys website.

DIVIDEND

The Directors have recommended a dividend of Rs. 5/- (250%) per equity share of face value of Rs. 2/-.

The dividend, if approved by the shareholders, will entail a payout of Rs. 69.5 crore, including dividend distribution tax of Rs. 9.9 crore.

SETTLEMENT OF BUSINESS DISPUTE

Your company had been involved in a business dispute with Purolite International Ltd., a US competitor, concerning inter alia their trade secrets. The case had been in a US court since May 2005 and has been amicably settled.

In January 2010, the Honourable Judge of a US District Court, unexpectedly ruled against the company on certain

aspects of the case and committed the matter to jury trial. Until then, the company had been advised by its legal counsel that there was remote probability of any significant financial cost in resolution of this dispute. After weighing the uncertainties associated with jury trial, prolonged litigation, resultant costs and future business prospects in that country,

your Board of Directors decided as a matter of business prudence and abundant caution, that the company should seek settlement of the dispute. The business settlement arrived at in February 2010 permanently resolves and closes all claims and counterclaims.

As per the business settlement agreement, Thermax will pay four installments of USD 9.5 million each, spread over the calendar year beginning April 2010. The liability, net of tax, arising from the settlement and amounting to Rs. 114.9 crore has been charged as an extraordinary item to the Profit and Loss Account of the year under report. Your Directors believe that this amicable business settlement will pave the way for your company to move on and pursue worldwide growth in its energy and environment business.

DOMESTIC SUBSIDIARIES

Joint Venture

Thermax SPX Energy Technologies Ltd.

Your company has entered into a joint venture with SPX Netherlands BV, a wholly-owned subsidiary of SPX Corporation, USA - a global infrastructure leader in providing power plant equipment and services. The joint venture was incorporated on October 6, 2009.

The company will operate on the basis of a license agreement with Balcke-DÃÂ¼rr GmbH, Germany, a wholly- owned subsidiary of SPX Corporation. The initial planned equity capital of the joint venture is Rs. 25 crore of which Thermax shall hold 51%. The joint venture will address the requirements of the growing Indian power sector, providing technology solutions for projects above 300 MW range. By integrating SPX solutions for large infrastructure projects and Thermaxs energy-environment expertise, the JV would help power plants meet stringent emission norms and also improve their thermal efficiencies.

In the initial phase, it shall cover air pollution control systems, electrostatic precipitators (ESPs) for high ash coal- based power plants, bag filters and equipment for reducing SOx-NOx emissions, and rotary heat exchangers.

During the year, the company has secured its first order for a regenerative air-preheater (RAPH). This order involves design, engineering, manufacturing, supply, supervision, installation, erection and commissioning of four RAPH units for two 750 TPH boilers (two RAPH for each boiler) for a leading oil refinery. The company has been actively participating in a number of bids for electrostatic precipitators, regenerative air-preheaters, air-cooled condensers and such balance-of-plant equipment to build a strong foundation for future business.

During the year, your company has infused Rs. 10.2 crore as an initial contribution towards the share capital of the joint venture.

Wholly owned

Thermax Engineering Construction Co. Ltd.

Thermax Engineering Construction Co. Ltd. (TECC) undertakes and executes engineering construction projects mainly for the Boiler and Heater (B&H) business unit of your company.

In 2009-10, this subsidiary earned a total income of Rs. 96.8 crore and profit after tax of Rs. 3 crore compared to Rs. 99.9 crore and Rs. 1.5 crore respectively, in the previous financial year. The marginal decline in income was due to lower order balance as on March 31, 2009, resulting from the economic slowdown and projects being put on hold by customers during the financial year 2008-09. Despite the lower income, the subsidiarys profit improved as a result of better cost management. However, the profitability of the company may be impacted in the coming year due to enhanced demand for construction vendors and skilled labour from the power sector.

During the year, the company successfully completed the assembly of a second FM boiler weighing 585 tons at the Mundra port facility, for export. Erection of three spent wash fired units and a municipal solid waste (MSW) fired boiler are the other highlights of the year.

With the companys year end order balance being significant, the focus for the coming year will be on the execution of existing orders. The company is gearing up to face the challenge of recruitment along with training and development of skilled personnel for projects.

Thermax Instrumentation Limited

Thermax Instrumentation Limited (TIL) focuses its operations on installation and commissioning of power and cogeneration plants including civil construction.

During the year, the company earned a total income of Rs. 129.1 crore and profit after tax of Rs. 2 crore compared to Rs. 103.2 crore and Rs. 0.4 crore respectively, last year. Increase in business volume has helped the company achieve a better performance as compared to last year.

The company has secured a breakthrough order in larger capacity projects in the Independent Power Producers (IPP) range.

During the year, the subsidiary successfully commissioned eight power plants comprising ten units aggregating to 212.5 MW Ã the largest capacity commissioned in any year so far.

With the country focusing on dramatically improving its power generation capacity, and with Thermaxs foray into utility projects, the outlook for the company is positive.

Thermax Sustainable Energy Solutions Limited

With the looming threat of climate change and the need to reduce carbon emission, Thermax Sustainable Energy Solutions Limited (TSES) is entering into businesses related to clean development mechanism (CDM). An amount of Rs. 4 crore was infused towards the share capital of the company to support its foray into this business area.

During the year under review, TSES has developed CDM projects, which are now under validation. In the coming financial year, these projects are expected to be registered with United Nations Framework Convention on Climate Change (UNFCCC).

The company has earned an income of Rs. 69.6 lakh during the year against Rs. 14.2 lakh in the previous year. This comprised mainly reimbursement of expenses for support rendered to the parent company. It has incurred a net loss of Rs. 117.3 lakh compared to Rs. 12.8 lakh loss in the previous year. The loss was predominantly due to higher outlay of expenditure, which would help ramp up the operations when the expected approval from UNFCCC is received.

Thermax Onsite Energy Solutions Limited

Thermax Onsite Energy Solutions Limited (TOESL) was incorporated in September 2009. This subsidiary, focusing on the area of green energy from biomass and other alternate sources, plans to develop utility delivery business to customer on unit-consumption basis. For this, the company installs its own equipment and peripherals at customer site, operates and maintains these, and organises required inputs like fuel, manpower and consumables at its own cost.

This business mainly aims to capture the major share of revenue-side spending of clients by supplying steam, heat or chilled water on a unit basis.

During the period under review, the subsidiary has signed a project for a tenure of seven years to supply heat to a leading paint manufacturing company. The company is already offering services of steam supply to a joint venture in textile knit wear business. With several industrial units identifying the benefits of savings in capital expenditure and freedom from having to manage operation and maintenance of utilities, the outlook for the business looks promising.

The Board of your company has approved an overall investment of Rs. 6 crore towards the equity capital of TOESL for this new business initiative.

OVERSEAS SUBSIDIARIES Wholly owned

Thermax Inc., USA

This step-down subsidiary is the front-end value chain for your companys cooling and chemical businesses in the USA.

The profit after tax of the subsidiary increased significantly to USD 0.96 million (USD 0.1 million, previous year) on a marginally higher top line of USD 14.9 million. Better financial results were achieved in a depressed market environment with sharper focus on speciality resins, customised solutions and cost control.

The external economic environment continues to be challenging with respect to growth, investment and availability of credit. To maintain margins for the chemical business, the efforts to focus on product mix and pricing discipline will continue.

The cooling business segment has started growing with the commercial execution of sourcing/distribution agreement with Trane (division of Ingersoll Rand). Marketing initiatives are in place to transform to a Ãmarket shareÃ player in the near future.

Thermax Europe Ltd., UK.

The year witnessed a significant slow down in business activities in all European economies due to credit crunch. The company closed the financial year with a turnover of GBP 3.8 million (USD 5.7 million) as compared to GBP 5.6 million (USD 8.5 million) in the previous year. The profit after tax was GBP 0.43 million (USD 0.65 million) against the previous year profit of GBP 0.55 million (USD 0.83 million). In comparison to the previous year the profitability has increased to 11.3% from 9.8%, owing to better product mix. Although the enquiry levels for chillers remained constant, conversion into orders was a challenge.

The year also saw a 45% increase in service revenues over the previous year. Key highlights of the year included supply of a 3 MW steam chiller to Copenhagen for a district cooling plant. The chiller formed part of the green systems highlighted during the Climate Change Conference. Working with a large German electricity firm, the company installed the first exhaust gas chiller at a major airport in Europe.

With challenging conditions continuing and aggressive strategies adopted by competition, there is pressure on pricing. The company plans to identify standard market segments and improve profitability through operational efficiencies. Service business would continue to be the thrust area for the company to reduce volatility in the business.

With the European economies yet to recover from the effects of global financial crisis the company aims to maintain its performance.

Thermax Hong Kong Limited, Hong Kong

Thermax Hong Kong Limited (THKL) was formed in December 2003 as part of the strategy to enter the Chinese absorption cooling market. It had no revenue stream planned for the financial year. The company was slated for the dormancy status after collection of debts and completion of committed contractual transactions. This being achieved, the company has been registered for a dormancy status in March 2010 under the existing company laws of Hong Kong.

The absorption cooling business of the company is now routed through Thermax (Zhejiang) Cooling & Heating Engineering Company Ltd., a subsidiary set up in China. The sourcing activities are now being done directly by your company.

To support and meet administrative expenses like audit fees, statutory filings, etc. during the dormancy stage, the Board of your company has invested USD 6,500 towards equity share capital.

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

Thermax (Zhejiang) Cooling & Heating Engineering Company Ltd. that began commercial operations in September 2008 completed its first full year of operations. During the year, the company has expanded its operations in China with the opening of sales offices in 10 regions. For the year ended December 31, 2009, the company has achieved overall revenue of RMB 20.2 million (USD 3.0 million). It incurred a loss of RMB 11.9 million (USD 1.8 million), after accounting for interest and depreciation. The companys top line is lower than initially planned and the management team is drawing up strategies to scale up revenues.

For the export market, it has geared up to compliment your companys Indian manufacturing base by acquiring all the necessary certifications for supplying chillers to the European and American markets which are poised for growth in the coming years. The company has already commenced its first supplies to these markets during the year.

Thermax International Ltd., Mauritius

During the year, your company has invested USD 25,000 in the share capital of this subsidiary to meet operational expenses. The total investment in this subsidiary towards share capital now stands at USD 3.2 million. The company is a parent to the step down subsidiary, Thermax Inc., USA.

Thermax do Brasil Ã Energia e Equipamentos Ltda., Brazil

During the fiscal year the subsidiary earned an income of BRL 0.12 million (USD 0.07 million) and made a profit after tax of BRL 0.04 million (USD 0.02 million).

At present, steps are being evaluated towards putting the affairs of the company to hibernation.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis report, highlighting the performance and prospects of the companys energy and environment businesses is attached.

CORPORATE GOVERNANCE

It has been the endeavour of your company to follow and implement best practices in corporate governance, in letter and spirit. A detailed Corporate Governance Report is included in this report.

A certificate from the auditors of the company regarding compliance with the conditions of corporate governance as required under Clause 49 of the Listing Agreement is part of this report.

LISTING ON STOCK EXCHANGES

The companys equity shares are listed on two stock exchanges Ã National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

FINANCE, ACCOUNTS AND SYSTEMS

As on March 31, 2010, with the increased order booking, the companys cash and cash equivalents stood at Rs. 916 crore. After an investment of Rs. 88 crore in fixed assets, the companys net cash inflow was Rs. 452 crore. Its net working capital was negative at Rs. 380.6 crore as against a positive Rs. 17.1 crore in the previous year.

The management of the company would continue to focus on prudent working capital management and cash flows. The companys funds are invested in debt funds and fixed deposits with reputed banks. It has not traded or engaged in any derivative instruments or options during the year.

ICRA Ltd. has assigned the company LAA+ and A1+ rating for long term and short term bank limits, respectively.

Public Deposits

The company had no unpaid / unclaimed deposit(s) as on March 31, 2010. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total number of permanent employees on the rolls of the company was 3631 as on March 31, 2010.

PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars required under Section 217(1) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed and forms part of this Report.

Particulars of the employees as required under Section 217(2A) of the Companies Act, 1956, read with the rules framed thereunder, are also annexed and forms part of this report. However, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent to all shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the corporate office.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the companys Articles of Association, Mr. Pheroz Pudumjee and Dr. Jairam Varadaraj retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment as Directors.

IN MEMORY OF DR. MANU SETH

Dr. Manu Seth, a senior member of the Board passed away on August 8, 2009. The Board and the management places on record its heart-felt appreciation of the valuable guidance and support provided by the late Dr. Seth during his tenure of over nine years with the company as its Director and a member of the Audit Committee.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors accept responsibility for the integrity and objectivity of the Profit & Loss Account for the financial year ended March 31, 2010 and the Balance Sheet as at that date (Ãfinancial statementsÃ) and confirm that:

1. The financial statements have been prepared on a

going concern basis. In the preparation of the financial statements the generally accepted accounting principles (GAAP) of India and applicable accounting standards issued by The Institute of Chartered Accountants of India have been followed.

2. Appropriate accounting policies have been selected and are being applied consistently. Judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit of the company for that period. Significant accounting policies and other required disclosures have been made in Schedule 17 annexed to the Financial Statements.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system, its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The company has an Internal Audit department, which coordinates the internal audit process. The Audit Committee of the Board meets at periodic intervals to review the internal audit function.

4. The financial statements have been audited by M/s. B. K. Khare & Co., the statutory auditors and their report is appended thereto.

COMMITTEES OF THE BOARD

During the year, changes have been effected in the following committees of the Board:

Human Resources Committee: The Remuneration and Compensation Committee of the Board was renamed on January 30, 2010 and the terms of reference of the committee were also modified.

The Corporate Governance Report details the changes in respect of the aforesaid committee.

Audit Committee: The Board appointed D r. Valentin von Massow on October 30, 2009 as a member. This was to facilitate quorum for the meeting of the committee on January 30, 2010 for which Dr. Jairam Varadaraj had expressed inability to attend due to business exigency.

AUDITORS

M/s. B. K. Khare & Co., Chartered Accountants, retire as statutory auditors at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

AWARDS AND RECOGNITION

Mrs. Anu Aga, Director of your company was honoured with the Padma Shri by the President of India. The Award is in recognition of her distinguished service in the field of social work.

Thermax won the Enertia Award 2009 for setting up the state-of-the-art manufacturing facility for boilers and allied equipment at Savli, Gujarat. The award was given in the Manufacturing power generation equipment and related auxiliaries category.

Your companys manufacturing plants at Chinchwad won awards for safety performance and environment management from the Greentech Foundation. The plants of its Boiler & Heater business also won the Golden Peacock Award for Occupational Health and Safety from the Institute of Directors.

Thermax also won the Imai Award for Operational Excellence for Exemplary Employee Engagement in Total Productive Maintenance from the Kaizen Institute in February 2010.

At CIIs (Western Region) HR Awards for Excellence 2008, your company received a commendation award for Strong commitment to HR Excellence.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the continued support extended during the year by the companys clients, business associates, supplier partners, bankers and investors. Your Directors also place on record their appreciation of the dedication and contributions made by employees at all levels, who through their commitment, hard work and support have enabled the company to steer itself through a tough and challenging year.

Thanks to the climate of goodwill and mutual trust created over the years, industrial relations in the company continue to be warm and nurturing. The Directors would like to record their appreciation of the good work done by the companys labour union and employees to maintain a harmonious environment for productive work.

Your Directors would also like to thank the shareholders for their continued support.

For and on behalf of the Board

Meher Pudumjee

Pune: May 12, 2010 Chairperson

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