It is my privilege to present the 32nd Annual Report of your company. Thermax has
marginally improved its order backlog to Rs. 4,357 crore in fiscal 2012-13, compared to
Rs. 4,230 crore last year. The operating revenue stood at Rs. 4,691 crore, a dip of 12%
when compared to Rs. 5,304 crore last year. The company`s profit after tax was lower by
14% at Rs. 350 crore, down from last year`s Rs. 407 crore.
I would like to thank our Managing Director and CEO, M.S. Unnikrishnan and his entire
team for the company`s performance in these trying times. I am also grateful to our
Directors for their continued guidance and support. I am happy to share with you that our
MD received the Asia Innovator Award at the 2012 CNBC Asia Business Leaders Awards in
Bangkok. My hearty congratulations to him on this unique honour.
The overall economic landscape is not likely to change for the better in the immediate
future and we may see another challenging year. These apprehensions stem from the fact
that the global economy, though improving, is witnessing a very slow turnaround. The
austerity measures across Europe continued for most of last year. From all available
indicators it also seems that the recovery of the US economy will be slow and long
drawn-out. Most emerging economies including BRIC have witnessed decelerating growth and
some of them have introduced financial protection measures.
On the domestic front, high inflation, an increased current account deficit and
controlling monetary response slowed consumption demand in 2012-13. Although reforms in
fuel subsidies are a welcome move to reduce the current account deficit, the excess
capacity in engineering and capital goods the world over is likely to affect exports from
India, as also margins. However, Thermax`s footprint in most overseas countries is small
and we are continuing our efforts to enhance our presence in select international markets.
The sudden depreciation of the Indian rupee will certainly help exports, but will have a
negative impact on our imports.
Due to a slow reform process, large investments in infrastructure projects, especially
the power sector which Thermax substantially depends on, have been the worst affected. The
slowdown in decision making has impacted important milestones such as environment
clearances, fuel linkages and land acquisition. Banks reaching the end of their sectoral
lending limits for the power sector, delay in the much awaited distribution reforms and
tariff revisions have aggravated the situation, leading to delays in a number of power
projects. This sector has not seen many finalisations of new orders. With elections
looming, not many large projects will see the light of day in the immediate future.
I am happy to inform you that the state-of-the-art plant for supercritical boilers
being set up by our joint venture company, Thermax Babcock & Wilcox Energy Solutions
is nearing completion. Due to the current stagnation in the power sector, we are still
awaiting our first order. In the medium to long term, I am confident the JV will do well.
As part of derisking our business, we have created a strategic spread of our product
businesses which cater to small-medium enterprises and other process industries. These
businesses, which have not been affected as deeply as the projects business, coupled with
the service revenue stream and selective internationalisation, have lived up to the very
purpose they were seeded for offsetting the periodic instability caused by project
business cycles. I am confident that the market for energy and environment products will
improve in the medium term. If we can take care of our governance issues, India has the
right ingredients a young and very large demography, a growing middle class,
moderate inflation and sustained consumer spends for a brighter long-term future.
Last year, your company was able to progress further with its greening portfolio by
adding more renewable energy projects. The Power business won projects on biomass and also
on waste gas and heat recovery. Thermax also successfully executed a technology
demonstration project to provide cold storage facilities in rural areas. This system
successfully integrates various forms of renewable energy to create a cold storage to
preserve agricultural produce at below 5 C and also generate incidental power.
The Solar business of the company has expanded into the solar photovoltaic space and
has commissioned a few prestigious projects. On the concentrated solar power (CSP) front,
Thermax is executing a major balance of plant for a power block of Asia`s largest CSP
project under construction.
It gives me immense pleasure that our Thermax Social Initiative Foundation has
successfully completed its 6th year of operation. Through our strategic
alliance with the Pune Municipal Corporation (PMC) and the Akanksha Foundation, we now
manage four municipal schools within PMC limits. I am delighted to share with you that
this year, the first batch of 58 students from one of our schools appeared for the 10th
Standard Board examination the first ever batch from a PMC English medium school to
do so. The school scored a 100% pass, with 42 students scoring a First Class and 9
achieving Distinction. From June 2013, we have started two more schools in the Pimpri
Chinchwad Municipal Corporation (PCMC) under this initiative.
Since we believe the best way to give back to society is through education, we feel
that the quality of education will not improve without quality teaching staff. We are
therefore working with the PMC to conduct a year-long in-service training programme for
teachers of the PMC English Medium Schools. This is the first time we have ventured into
formal and holistic teacher training and we are keen to make it a worthwhile experience.
Let me conclude by once again thanking all our employees, customers, shareholders,
business partners and well wishers. With your support, we are confident of managing these
With best wishes,