Thermax Ltd

My Dear Stakeholders,

Reflecting on a year that saw significant strides in our energy transition efforts and a fairly strong performance on the business front, I am pleased to present the Annual Report for FY 2023-24. Almost all our strategic business units have done well, even though orders were slightly low paced. The year witnessed a growth in revenues and a healthy growth in EBITDA, along with strategic partnerships and investments in new energy areas, including renewable energy, waste heat utilisation, and green solutions, among others.

Beyond business pursuits, FY 2023-24 also brought with it numerous accolades for the Company. I am delighted to mention that we received the prestigious IMD Global Family Business Award in November 2023. I am proud that Thermax is only the second Indian organisation in around 25 years to win the much-coveted award. The award recognises family businesses' contribution to the global economy and their adherence to best business practices. It reaffirms our commitment to sustainability, ethical conduct, core vision and values, culture, resilience, adaptability, and being a role model. Kudos and a big thank you to all our employees, past and present, as well as all our other stakeholders/partners. In another notable achievement, Thermax has been certified as a ‘Great Place to Work'. The recognition reflects our dedication to nurturing a supportive, collaborative, and inclusive work culture where everyone feels valued, trusted, respected, and empowered to succeed.

The year gone by witnessed significant growth across our businesses, bolstered by a diverse range of orders secured across different segments. Thermax continues to drive progress in clean air, clean energy, clean water, and the chemical verticals through its engineering and innovation prowess. With energy and environment at the core of our vision, and with climate change increasingly becoming a pressing concern, we have delved internally, to reflect and align ourselves with the changing energy landscape and meet the demands of our customers. Thus, starting at our Board Retreat, we have expanded and redefined our strategic objectives into six revised imperatives – SO1: Innovate for Energy Transition, where our focus will be to develop products and technologies suitable for energy transition; SO2: Strenghthen Solutions Businesses – expand our capabilities to provide long-term industrial utility services; SO3: Scale Up Businesses Relating to Sustainability and Urbanisation – grow our water, cooling and chemical businesses; SO4: Drive Digital Transformation – enhance our digital prowess to improve efficiency both within and outside the organisation; SO5: Build an Agile, Market-Responsive Organisation Structure – align the organisation to suit evolving market needs; and SO6: Energise the Core – where we continue to build on our products, projects and services portfolios, which include domestic and selective overseas markets. While we achieved many highs in the financial year, there were strategies that did not work in our favour. Our MOU with Fortescue Future Industries (FFI), Australia, unfortunately, did not materialise as we could not agree on the terms of collaboration and associated modalities for setting up an electrolyser manufacturing plant. Meanwhile, to advance our efforts, we have set up a dedicated Green Hydrogen strategic business unit (SBU), which has commenced operations. The SBU has started offering engineering, procurement and construction (EPC) solutions for green hydrogen and will be expanding its operations by selectively setting up build-own-operate (BOO) projects and undertaking localisation of electrolysers, in time.

We continue to face multiple technology scale-up challenges in the bio-CNG space, particularly in converting rice straw to gas. However, the team is working relentlessly to overcome the difficulties, so that hopefully over time, rice straw and municipal solid waste (MSW) can generate a sufficient yield of bio-CNG sustainably. Last year, we reported a negative arbitration award of ~ Rs. 218 crore imposed on the Company. The award has been appealed by the Company before the Hon'ble Bombay High Court. A stay has been granted, and we are awaiting the final outcome of the case. However, overall, I am glad to report that Thermax has delivered a strong performance with the highest-ever revenue and profits.

We are making a strategic shift to navigate the rapidly changing energy landscape driven by our sustainability goals. We have evolved to be a trusted partner to our customers in their energy transition journey. To showcase these green solutions to our stakeholders firsthand, we coined the ‘Thermax Fest' – our first-of-a-kind flagship event. Held in December, the event was a four-day exposition of our innovative and green offerings. It was an excellent platform that helped us open the gates to our stakeholders – media, customers, investors and analysts, as well as our employees – many of whom were not aware of all the new businesses Thermax is into. There was a keen interest in our products and projects, with many questions revolving around bio-CNG, electric boilers, MVR (mechanical vapour recompression), FlexiSource™, chemicals, gas cleaning, coal gasification plants, and green hydrogen. Many of these areas that Thermax is getting into are new, and if done well, can be a game changer over time, for the environment, for our country and our people. Not all may take off, but that's fine, since they need to be viewed as start-ups.

We are creating better work opportunities for our employees, young and older. After restarting the Senior Leadership Development Programme (SLDP) last year, we are also partnering with our young leaders, through the Young Leadership Development Programme (YLDP) to nurture and grow our internal talent pool. YLDP is a comprehensive year-long programme structured to equip our high potential leaders with the required skills, vision, values, and adaptability to lead the Company. We have been taking small but steady steps towards improving the DEI ratio in the organisation. Although still very low, we have begun to move the needle to 9.4% women in our workforce, entirely based on merit, which was 6.5% for years. We would like to increase this to 15%, hopefully by next year. Over and above this, our aim is to foster inclusion, moving beyond just women representation.

Thermax celebrates the completion of 25 years of our employees (both staff and shop floor) with the Company every few years. We had three iterations of the event this year, which provided an opportunity for the family and management to interact with employees and their family members and share heartfelt stories. We are grateful to them and their families for all their contributions.

While navigating through our business priorities, we have remained steadfast in our commitment to society at large. I am very happy to share that our Social Compact or SoCo programme, launched during the pandemic, entered phase 2. Thermax has introduced a toll-free helpline number with regional language support, ensuring grievance redressal for migrant / informal workers in our ecosystem, within 48 hours. The Company has also distributed Yojana cards to these workers, empowering them

"Thermax Foundation, through our longstanding partner NGO Akanksha Foundation, continues to bring economically underserved children under the ambit of education and support their journey towards a promising career path." with seamless access to government social security information and schemes.

Thermax Foundation, through our longstanding partner NGO Akanksha Foundation, continues to bring economically underserved children under the ambit of education and support their journey towards a promising career path. The Foundation has also been running community programmes across sites where we operate and maintain our equipment over long periods of time. During the year, TOESL (Thermax Onsite Energy Solutions Ltd.) inaugurated its first community facilitation centre in Sahibabad, Uttar Pradesh, as part of Mission Judaav, a joint initiative of Thermax Foundation and Saaras Foundation. This initiative supports financially vulnerable and marginalised communities by improving access to government welfare programmes and addressing policy implementation gaps. Our worker facilitation centres (WFC) – one in Pune (Maharashtra) and the other in Savli (Gujarat), facilitate awareness and access to government schemes to all migrant and informal workers in the area. Our endeavour is to expand the reach of these beneficiary schemes to more informal workers by providing them the necessary support, thus alleviating socio-economic challenges coming their way.

On behalf of the Board, I extend my heartfelt thanks to Ashish Bhandari, our MD and CEO, who is spearheading our transition towards becoming a trusted partner to our

(From left) Non-Executive Director Pheroz Pudumjee, Former Chairperson Anu Aga and Chairperson Meher Pudumjee receive the IMD Global Family Business Award at the 32^nd Family Business Network (FBN) Global Summit held in Paris, France customers in their energy transition journey. Thank you to all our EC & SBU Heads and all our employees for their hard work, dedication, and belief in the organisation. I would also like to express my sincere appreciation to the Board of Directors for their guidance and support throughout the year. This year marks the superannuation of Nawshir Mirza, Independent Director and Chairman of the Audit Committee and Risk Management Committee, who has been a strong guiding force for the company for the last 13 years. His leadership and vision have been instrumental in shaping the Company's growth with strong internal controls and a constant emphasis on sustainability – carbon and water footprint, as well as corporate governance. As he transitions into retirement, I thank him on behalf of our Board and wish him and his family all the very best. Along with Nawshir, we also have Dr. Jairam Varadaraj superannuating this year. He has been an Independent Director of the Company for 21 years and has played a very active role in four Board committees. Even though he manages his own Company very successfully, Jay has always taken time out for Thermax. Since assuming the role of Chairperson, I have been working very closely with him. His depth of experience, strategic insights, people management skills, and attention to detail have been pivotal in shaping the direction of our Company. We extend our heartfelt thanks and wish them the best of health and happiness. We will all miss Nawshir and Jay immensely, but know that they are always a phone call away.

I am very happy to welcome

Shyamak Tata to the Thermax Board. Shyamak brings with him 35 years of experience, and holds expertise in finance, strategic planning, board governance, policy shaping, audit & assurance, and accounting. His multi-disciplinary industrial experience will be invaluable as we navigate the exciting opportunities that lie ahead. Thank you Shyamak.

I also take this opportunity to express my deep gratitude to all our stakeholders - our employees, customers, vendor partners, investors, and business associates, for their continued trust and support. Together, let us continue to build a brighter, more sustainable future.

Warmly,

Chairperson