It is with great pleasure that I present to you Thermax’s Integrated Annual Report for FY 2023-24. On operating metrics, we did a good job of translating revenue growth into a better bottom line with improved gross margin and profitability percentages. However, orders were muted, as some of the larger projects from segments of steel, cement, refining and petrochemical fell short of expectations. In FY 2024-25, based on an improved enquiry pipeline, and a healthy macro-economic climate in India, there is an anticipation of renewed growth. Our focus remains on building new capabilities as a partner to our customers as they navigate energy transition. In my message to you, I would like to share this journey of building new capabilities.
- Ashish Bhandari
India and the World
India’s GDP grew by 7.6% in FY 2023-24, the highest growth globally clocked by a major economy on the back of infrastructure spend, private capex and buoyant consumer expenditure. The manufacturing PMI in India stood at a 16-year high at 59.1 in March 2024. The Index of Industrial Production (IIP) was up 5.8% for FY 2023-24. The largest democracy in the world underwent elections this year, a once in five years exercise. The election results indicate continuity with an expectation of investment in the manufacturing sector to carry forward the growth momentum.
While the Indian economy remains on a firm ground, the global situation remains mixed. The world economic growth stood at 3.2% for 2023, aided by better than expected growth in the US economy. However, other developed economies experienced subdued growth constrained by regional weaknesses, high interest rates, and geopolitical factors.
Energy Transition
Amidst the economic challenges, energy transition trends continue to accelerate worldwide. Globally, the capacity for renewable power generation is expanding more quickly than at any time in the last 30 years, according to the International Energy Agency (IEA).
In India too, significant strides are being made towards embracing renewable energy sources, particularly green hydrogen and solar power. The country added 18.5 GW of renewable capacity in FY 2023-24, out of which 15 GW was from solar energy. The country’s total installed power generation capacity now stands at 442 GW, of which 144 GW (33%) is from renewable sources. With solar installed capacity soaring over six-fold, from 12 GW in FY 2014-15 to over 75 GW by 2024, India ranks as the third-largest country in terms of solar installations. Going ahead, India is aiming for a 500 GW of renewable energy installed capacity by 2030, and targets to produce 5 million metric tonnes of green hydrogen by 2030. Given its 2070 net zero commitments, the government is supporting initiatives in renewable energy, green hydrogen, and biofuels among others.
Other Key Trends
Artificial Intelligence (AI) has entered our consciousness this year. Large language models (LLM) based generative AI will influence all spheres of economic activity in the near future. Companies adept at digital will be the future leaders in their respective industries.
Rapid urbanisation and economic growth in India and other growing economies continue to be accompanied by worsening environmental parameters. One of the most significant issues is the persistent problem of stubble burning in the northern states of India, particularly Punjab and Haryana, which is a major cause of pollution, choking the northern region including Delhi. Meanwhile, cities like Bengaluru are facing an equally critical environmental challenge – water scarcity. The country also experienced one of the hottest summers ever this year.
Energy transition, artificial intelligence and machine learning, and rapid urbanisation are all trends that offer significant opportunities for Thermax to deliver new business models while making the world around us a better place.
Building New Capabilities
New capacity
Thermax’s new manufacturing plant for water and wastewater treatment solutions is a symbol of a larger transformation of our Water and Waste Solutions (WWS) business as it delivers superior engineered products in a timely manner. The new Chemical plant in Jhagadia, Gujarat, while under construction, is already being modified to increase capacity and add new product lines. Capacity enhancement is also underway at our Chinchwad (Pune) plant for our Heating business to cater to the rising market demand.
Stabilising new platforms
In Thermax Onsite Energy Solutions Ltd. (TOESL) business, our backward integration into the supply chain of biomass is maintained through 10 dedicated briquetting facilities. We are collaborating closely with farmer produce organisations (FPOs) for efficient procurement and pricing, while also enabling farmers to generate an additional revenue stream. These facilities commissioned in FY‘24, have a cumulative production capacity of more than 200 tonnes per day (TPD), ensuring a steady supply of high-quality briquettes for our operations. TOESL is one of the early adopters of the SoCo 2.0 initiative, which has mobilised around 236 workers at 11 sites located in Maharashtra and Karnataka, ensuring access to government schemes.
The wind-solar hybrid renewable energy platform at First Energy Private Limited (FEPL) is expanding with new projects. Long duration battery energy storage systems (BESS) is increasingly becoming part of the discussion with industrial customers. However, improvement is needed in asset management to ensure that renewable assets deliver at their committed throughput. The bio-CNG business is a critical area of focus where the need for plant stabilisation is high. The opportunity to build a long-term business exists, but currently, we are working through operating challenges that require a novel approach.
EDGE Live, though relatively new, is already assisting many customers in enhancing uptime, improving energy efficiency and safety, and enabling data-driven decision-making, supported by predictive capabilities. We are continually investing in enhancing the digital platform further, both in terms of feature expansion and technological depth. The infrastructure now supports autoscaling and disaster recovery for faster scalability and reliability. Many new predictive models have been added as we broaden the platform to cover more asset classes.
New products
During the year, we have introduced many products in line with our strategy to innovate for energy transition. These include an electric heater, a reciprocating grate biomass-fired boiler, an enhanced multi-fuel fired solution, a hybrid heat pump, solid fuel fired thermic fluid heater, upgraded oil & gas fired steam boiler, multi-fuel flexible steam boiler, ultrafiltration membrane system, mechanical vapour recompression based ZLD, and gas purification and upgradation technology, to name a few. Besides being environmentally compliant, these products are aesthetically designed, compact and modular, offering a reduced footprint, lower operating costs, and improved efficiency.
New partnerships
The theme of partnerships for FY 2023-24 remains strong. Thermax signed an agreement to acquire a 51% stake in TSA Process Equipments. This is a strategic addition to Thermax’s portfolio that will enable the Company to offer a one-stop solution for highpurity water requirements of its customers in sectors such as pharma, biopharma, personal care, and food and beverages. We are actively exploring new partnerships to expand our chemical business. While some M&A (merger and acquisition) transactions concluded this year, not all could materialise. We are accelerating the due diligence process for small sized acquisitions to expedite future growth opportunities. Our Green Hydrogen business is actively pursuing strategic options, and we are confident of substantial progress in the coming months.
New people capabilities
Last year, I wrote about developing a performance-driven culture at Thermax. In line with this endeavour, this year we focussed on leadership training. We created a detailed training curriculum for executives (ELDP), senior leaders (SLDP) and young talent (YLDP). As part of these programmes, 75 individuals were trained through year-long interventions that included teaching by some of the best international faculty with experiential learning. Thermax has been able to achieve a substantial reduction in its attrition from FY 2022-23. However, attrition among early-tenured employees remains high, and this is an area we need to improve. Similarly, while female participation is getting better, we have to do more to attract more women in operational and leadership roles.
New initiatives
In many ways, as you can see from some of the examples of building new capabilities that I have shared above, Thermax is a Company in transition. We have a strong core around which we are adding and sculpting several new pieces that will enable the Company to thrive in the years to come. To share some of our new capabilities with the external world, our customers especially, we undertook two events – Thermax Fest and Thermax Roadshow – Rediscover that were both well organised and very well received.
As an extension to Thermax Fest, Roadshow – Rediscover was held across regions in India. As part of this programme series, I had the opportunity to meet over 100 CEOs and business leaders across multiple cities in India. I was enthused by the general positivity leaders had for the business environment and the connect with Thermax’s message and burgeoning capabilities around energy transition.
In Conclusion
During my time at Thermax, one of
my biggest learnings has been to
witness the Thermax Board in action.
Led by Meher, the directors are all
leaders in their domain who are, in
their unique ways, deeply passionate
about Thermax. As I thank all our
employees, our customers, our
vendors for delivering a fantastic
year, I would like to specifically
acknowledge Nawshir Mirza and
Jairam Varadaraj for their immense
contributions as Independent Directors of Thermax. Personally,
the relative ease with which I fit into
the company, significant credit goes
to Nawshir and Jay. Their approach
to their work and to life has left an
indelible mark. As they retire from the
Thermax Board,
I wish them continued success
Best Regards,
Ashish Bhandari
MD & CEO