-Meher Pudumjee
I am delighted to present the 42nd Annual Report of your Company for the financial year 2022-23. I am very happy to mention that almost every division of the company did a lot better than the previous year, not just in numbers and growth, but achieving several firsts. New and stronger partnerships were entered into, and businesses developed new applications especially focussed on reducing our customer’s carbon and water footprints. They implemented new processes, penetrated newer markets and most importantly, built a growth mindset, capable of thinking big, challenging themselves, being innovative, and doing things differently.
Heartfelt thanks to Ashish Bhandari, our Managing Director & CEO, for partnering in our vision to shift the Company’s predominant focus towards green. We thank our Executive Council members, our Strategic Business Unit heads and all our employees for their hard work and execution. Thank you to our customers who have had continued faith in Thermax; to all our vendor and business partners, as well as all other stakeholders. This year, we developed an extensive strategy framework for the period 2023-26, tying into our overarching strategic priorities for 2030. Sincere gratitude to our Board members for their valuable guidance and advice.
Even though the year 2022-23 started with the Russia-Ukraine war and the sudden increase in commodity and freight prices, we have reached new milestones, with the highest revenue and profit in our Company’s history. Unfortunately, with all the good news, it pains me to report a negative arbitration award of Rs. 250 crore slapped on the Company in the month of June 2023. Since the 2022-23 results were already audited, it does not form a part of the financials; however, we have mentioned the award in this Annual Report. The Company will be appealing the matter.
In the past year, we saw demand across business segments with an uptick in order book predominately from the refinery, steel, power, and chemical sectors. The order pipeline in waste heat recovery for cement and steel, waste-to-energy and build-own-operate based solutions grew. Our Industrial Products group comprising Heating, Water and Waste Solutions, Cooling and Air Pollution Control witnessed a demand from sugar, distilleries, paper and pulp, and food processing industries for green offerings.
Going forward, although India is on a growth trajectory, we are seeing a marginal slowdown in industrial infrastructure orders. If the government continues to invest heavily in infrastructure projects, Thermax will benefit from the ‘derived demand’, through investments in refineries, steel, and cement.
Since the Company operates and reviews its businesses in four major buckets, we have decided to project the same going forward. Thus we have realigned our businesses into four segments: Industrial Products, Industrial Infra, Green Solutions and Chemical. Both Industrial Products and Industrial Infra are predominantly green while the Green Solutions business provides 100% sustainable offerings.
As always, a strong ESG proposition has formed a key ingredient and filter for our decisions and actions. The ‘E’ (Environmental) impact of ESG is gaining traction the world over. Customers are constantly looking for economically viable solutions that have a lower carbon footprint. With the current war, every country has started to think of energy security seriously. The recently concluded COP27 summit carries forward the legacy of Glasgow – mainly on fossil fuels and emission reduction, by agreeing to keep the 1.5-degree temperature rise target alive and countries agreeing to ‘phase down’ coal use. For India, this enhances the emphasis on energy security through renewables and the use of coal with carbon capture, to bring down the dependence on oil and chemical imports. Thermax has developed and partnered with companies for technologies that could provide an alternative to importing chemicals. We are also constantly developing as well as looking to buy technologies that will help our customers with energy transition.
Thermax is witnessing a growing interest in renewable opex solutions, based on long-term agreements. I am happy to share that within one year, our subsidiary, First Energy Private Limited (FEPL), has successfully commissioned solar and solar-wind hybrid farms to fulfil our customers’ captive renewable power requirements. Another subsidiary under our Green Solutions segment, TOESL (Thermax Onsite Energy Solutions Limited), has achieved significant growth in revenues. Responding to the rising demand for utilities through build-own-operate solutions, TOESL is expanding its portfolio to include other sustainable avenues, such as cogeneration, recycled water, biomass gasification, and bio-CNG, and also spreading geographically.
I am happy to share that within one year, our subsidiary, First Energy Private Limited (FEPL), has successfully commissioned solar and solar-wind hybrid farms to fulfil our customers’ captive renewable power requirements.
Thermax responded to the challenge of stubble burning, to counter carbon emissions and produce a value added product. Every year in November, India enjoys a hearty kharif or rice harvest season, but the flip side of a good yield is an abundance of waste paddy straw stubble which is burned in farms prior to the next sowing season. The impact of this burning (apart from other factors) leaves northern India, especially parts of Delhi NCR and Punjab regions, choked by smog. To address this issue, Thermax, in partnership with EverEnviro and utilising Primove’s technology, has been able to convert this waste into bio-CNG, which is predominantly used in vehicles. The technology is a promising solution to replace carbon-positive fossil fuels and reduce the import of costly natural gas. Being a first-of-its- kind, the outcome is encouraging, but is taking time to reach the committed output.
Our clean energy portfolio is set to be augmented with the government’s support to green technologies and the various reforms introduced in the Union Budget for an increased focus on energy transition and environmental well-being. One of these is green hydrogen. With our recent partnership with Fortescue Future Industries (FFI), Australia, we believe, over time, that the production of green hydrogen will be a key step forward in decarbonising hard-to-abate industries in India, such as refineries, fertilisers, and steel.
Although not a large emitter of CO2 within the company, we have charted our decarbonisation path. By 2025, we will achieve 25% reduction in CO2, from our 2019 baseline, to support India in transitioning into a low-carbon economy. Progress has been made by enhancing operational efficiency, renewable energy generation, procurement, and fuel switch. In this financial year, we have achieved an absolute reduction of 17% in emissions from the base year of 2019. Moreover, our carbon emission intensity with respect to revenue has improved by 38.6%.
We remain committed to transforming Thermax as a future-ready, agile, productive, and effective organisation. We are leveraging tech-enabled processes and digitisation to ensure customer delight externally and reduce bureaucracy as well as repetitive processes internally. Leveraging the company’s experience in the domains of energy and environment over 55 years, Thermax introduced a unique digital solution called ‘Edge Live’ over a year ago. Our customers have experienced increased efficiency, improved plant performance, enhanced uptime and knowledge management of their industrial assets.
We understand that a sustainable business, in the long run, is one that maintains a consistent focus on the ‘S’ (Social) imperative of ESG.
I am delighted that our own workers in Pune have come forward to volunteer their time for this initiative.
Being a responsible organisation, we constantly find opportunities to take actions not only towards the planet, but also our people, and positively impact society.
The initiative Social Compact (SoCo), which Thermax and other companies have signed up for along with the NGO Dasra and others, ensures greater dignity and equity for unorganised industrial workers in India. Apart from our own manufacturing facilities and sites, Thermax started a worker facilitation centre (WFC) in Pune and another in Savli to help informal workers across industries access benefits linked to government schemes they are entitled to, such as the e-Shram card, BOCW benefits, Aadhaar card, PAN card, and health insurance. I am delighted that our own workers in Pune have come forward to volunteer their time for this initiative.
To further social equity, we are partnering with local communities near our manufacturing locations. During FY 2022-23, Thermax Foundation collaborated with NGOs such as Lokbharati and Manavlok, along with like-minded corporates, to provide skill development programmes for youth and capacity-building initiatives for farmers respectively. We also continue our support towards school education and the alumni programme at The Akanksha Foundation and iTeach. I’d like to express my heartfelt appreciation and commend our NGO partners, the CSR team and the local support from our employees, for their unwavering efforts in making a positive impact on people’s lives.
Last year we put together a Diversity, Equity, and Inclusion strategy, focussing on four pillars: enhancing diversity representation, nurturing and sponsoring talent, fostering mindset change, and promoting openness and inclusiveness in the workplace. We’ve taken some baby steps in hiring more women in leadership roles as well as on the shop floor and a few differently-abled individuals in our workforce. We aim to double the women working with Thermax within the next three years.
Through our ethical and inclusive corporate governance practices, which form an integral part of our Environmental, Social, and Governance (ESG) framework, we aim to add value to all our stakeholders and successfully fulfil our long-term business objectives. Once again, my heartfelt gratitude and appreciation to every stakeholder who has and continues to partner with us on this journey. We thank you for your ongoing trust and support.
Warmly,
