My Dear Shareholder,

I am delighted to share the 41^st Annual Report of your Company for the financial year 2021-22. The past year brought unusual challenges for both people and businesses. The global economic recovery faced significant headwinds amid new waves of Covid-19 infections, supply chain challenges, uncertain shipping and commodity price increases and rising inflationary pressures. However, many countries, including India, adopted various economic and financial policies to promote financial stability and reduce vulnerability to the crisis.

On the domestic front, positive momentum continued as the Union Budget 2022-23 pushed the energy transition agenda further, with an additional allocation for energy efficiency, electric mobility, and grid-connected energy storage. Enabling policies like the Production-Linked Incentives (PLI) to boost domestic manufacturing, prioritising fully integrated manufacturing units and reducing dependency on imports added to the momentum.

FY 2021-22 was indeed a year of change; continuing with the second wave that was devastating for many across the world and particularly in India. I remember how many of our people were desperate to find a hospital bed. My heart goes out to families who lost their loved ones. Let’s pray and hope we don’t witness any further dangerous Covid waves.

Despite the challenging global and domestic environment, the year under review indicated a satisfying journey for Thermax, as we continued to drive change with partnerships and strategic tie-ups. Businesses secured many more green orders, with a continued focus on service orientation and digitalisation; helping our customers enhance energy efficiency, ensure high plant reliability and adopt best practices on cost and resource optimisation. Overall, there was a build-up of pride and positive energy while getting used to a hybrid working environment.

I take this opportunity to thank our Board for their valuable guidance and support, especially under difficult circumstances. On behalf of the Board, my sincere thanks to Ashish for having successfully led the business during such unprecedented times. I am proud of the work he and his entire team are doing to make the organisation a lot more energetic and vibrant, customer-facing, growth-oriented, employee-centric, as well as bringing a fresh perspective to investing in new energy initiatives and technology orientation.

A warm welcome to Dr. Ravi Gopinath who has joined our Board as an Independent Director. He worked as Chief Operating Officer, Chief Product Officer and Chief Strategy Officer in AVEVA plc, a FTSE listed industrial software company from 2018-2022. Ravi is based in Singapore and brings a perfect blend of engineering, manufacturing and digital domains, which will benefit Thermax as we navigate towards becoming a digitally-enabled organisation.

With a heavy heart, we say goodbye to Dr. Valentin von Massow as he retires from the Board in July 2022. Valentin has been associated with Thermax since the year 1999-2000, when he was the MD of Boston Consulting Group (BCG) India, and led the turnaround of our Company. It’s after his early retirement from BCG that he joined our Board and has been a strong pillar of strength, both in the Board room and outside. We thank Valentin for his immense contribution and wish him a very happy and healthy retired life.

Our Board members and the Company have been a strong proponent of green. With India having pledged to be ‘carbon neutral’ by 2070 at the COP26 summit last November, our brand promise, ‘Conserving Resources, Preserving the Future,’ clearly expresses the purpose of our existence and the goals we hope to accomplish.

It also gives me great pleasure to mention that we are one of the signatories to the ‘Social Compact’ (SoCo) initiative launched in September 2020.

As stated last year, we have set an internal blueprint for achieving 25% carbon reduction by 2025, from a 2019 baseline within the Company.

Thermax has always been a firm advocate of ESG (Environment, Social, Governance). Being a leading energy and environment solutions provider, it has managed a significant shift in its energy mix – coal combustion forms less than 20% of our revenues. Thanks to the sustained efforts of our employees, we have significantly reduced our dependency on fossil-based solutions and yet grown our revenue significantly. This year we invested in expanding our renewable energy business through our wholly-owned subsidiary, First Energy Private Limited. In doing so, we will be partnering with our customers in their energy transition journey through customised off-grid captive solar powered solutions. This complements our build-own-operate renewable energy model of TOESL (Thermax Onsite Energy Solutions Limited), which owns and operates green utilities.

With capacity enhancement projects going on in multiple industries, we are witnessing continued strength in new enquiries and robust order inflows from industrial segments like cement, steel, power, chemicals, refining and petrochemicals. The year saw our highest-ever order book. With climate change and the present spike in fossil fuel prices, more and more companies are looking to enhance energy efficiency, reduce their carbon and water footprint, and move away from coal to other forms of energy. Thermax is poised to play a major role in this shift, keeping in mind energy security as India moves into a just transition.

In summary, we have brought significant impetus to the business, building muscle to deliver continued profitable growth. We are preparing Thermax for further flexibility, agility and nimbleness. We are constantly trying to be a faster, better, more efficient, greener, more sustainable, and a performance-oriented organisation that nurtures and grows talent. We have a lot of work to do, and so much to look forward to.

It also gives me great pleasure to mention that we are one of the signatories to the ‘Social Compact’ (SoCo) initiative launched in September 2020. This is very much a part of the ‘S’ of ESG and continues in partnership with NGOs Dasra, Aajeevika Bureau and Centre for Social Justice. Although slow in taking off, each of our businesses is working towards meeting certain criteria to ensure equity and dignity of our informal labour force. We hope to shift gear this year and move a level deeper as businesses continue to engage.

As a step ahead, Thermax Foundation, along with Bajaj Auto, jointly launched a ‘Worker Facilitation Centre (WFC)’, mobilised by our NGO partners at Pimpri Chinchwad Municipal Corporation (PCMC), which is one of the major industrial clusters in Pune. We look forward to the WFC playing a key role in facilitating awareness and linkages to government-entitled schemes, providing services to workers in the community and other outreach programmes.

In closing, I would like to extend my sincere gratitude to all those who contributed to our success - our customers for believing in us; our employees who ensured we maintain leadership in a competitive landscape; our shareholders for their continued support, trust and confidence in us; our business and supplier partners and other stakeholders for helping us meet our commitments through a tough year.

Together, we hope to achieve an even brighter future for the environment and society at large. Stay safe.

Warmly,

Meher Pudumjee

Chairperson