The Directors are pleased to present the Thirtieth Annual Report
 together with the audited accounts of your company for the year ended
 March 31, 2011.
 
 FINANCIAL RESULTS
 
                                                (Rupees in crore)
 
                                              2010-11    2009-10
 
 Total income                                 4935.49    3235.23
 
 Profit before interest, depreciation,
 tax and extraordinary items                   618.34     433.88
 
 Interest & depreciation                        45.37      41.94
 
 Profit before tax & before 
 extraordinary items                           572.97     391.94
 
 Extraordinary items of expenses /(income)        Nil     114.86
 (Net of tax)
 
 Provision for taxation (incl. deferred tax)   190.55     135.64
 
 Profit after tax & extraordinary items        382.42     141.44
 
 Balance carried forward from last year        605.76     548.00
 
 Profit available for appropriation 
 (cumulative)                                  988.18     689.44
 
 Proposed equity dividend                      107.24      59.58
 
 Tax on dividend                                17.40       9.90
 
 Transfer to general reserves                   40.00      14.20
 
 Surplus carried forward                       823.54     605.76
 
 ANNUAL PERFORMANCE
 
 You will be happy to know that this year, at Rs. 4935 crore, the total
 income of your company has exceeded US $ one billion, a 52.6% increase
 over last years income of Rs. 3235 crore.
 
 Thermaxs energy business comprising Boiler & Heater, Power and Cooling
 & Heating contributed 77.3% of its income while the environment
 business comprising Air Pollution Control, Chemicals, along with Water
 and Wastewater Solutions accounted for the remaining 22.7%.
 
 In terms of profitability, the company had an EBITDA of 11.6% (12.1%
 last year). The variation has been due to the rising cost of raw
 materials, higher share of Power EPC business and the acceptance of
 certain strategic orders at lower margins.
 
 Your companys performance during fiscal 2010- 11 straddled two
 distinctly dissimilar phases in the economic environment – a first half
 of robust growth followed by six months of economic uncertainties.
 While the first phase saw the continuing surge in our order
 finalisation, the latter six months saw credit drying up due to high
 interest rates, resulting in a slowing down of orders. Due to the
 slow-down in new orders in the last two quarters of 2010-11, your
 companys performance next year is likely to be subdued.  However,
 being positioned in the crucial areas of energy and environment, with
 the continuing vibrancy of the national economy, the medium to long
 term outlook for the company is positive.
 
 Profit before tax and extraordinary items was also higher at Rs. 573
 crore as compared to Rs. 391.9 crore in the previous year. Profit after
 tax and extraordinary items was at Rs. 382.4 crore compared to Rs.
 141.4 crore in the previous year (after providing for extraordinary
 item of Rs. 114.9 crore). Earnings per share (EPS) rose to Rs. 32.09
 from Rs. 11.87 (after extraordinary item)in 2009-10.
 
 Order booking for the year was Rs. 5318 crore against Rs. 5794 crore,
 last year. Your company completed the year with an order backlog of Rs.
 5605 crore as against Rs. 5381 crore in the previous year.
 
 During the year, exports, including deemed exports, were higher at Rs.
 1065.9 crore from Rs. 656.5 crore last year, an increase of 62.4%.
 
 A detailed review of performance and future prospects is included in
 the section Management Discussion and Analysis of the Annual Report.
 
 The consolidated total income of the Thermax Group was Rs. 5395 crore
 (Rs. 3422.2 crore, previous year) recording a 58% increase. Income from
 international business including deemed exports was up 74% to Rs.
 1250.5 crore from Rs. 720.4 crore. The Group registered a profit before
 tax of Rs. 573.7 crore (Rs. 400.4 crore, previous year). Profit after
 tax and extraordinary items and minority interest was Rs. 381.7 crore
 for the year. Consequently, earnings per share (EPS) also increased to
 Rs. 32.03 (Rs. 12.11 after extraordinary item, previous year).
 
 By a general circular (No. 2/ 2011 dated February 8, 2011), the
 Ministry of Corporate Affairs, Government of India, under Section
 212(8) of the Companies Act, 1956, has permitted companies to not
 attach copies of the Balance Sheets and Profit and Loss Accounts,
 Directors Reports, Auditors Reports and other documents of all their
 subsidiaries, to the Accounts. The company has acted accordingly.
 
 However, annual accounts of the subsidiary companies and the related
 detailed information are available at any time to shareholders of the
 parent company and subsidiary companies and to statutory authorities.
 On request, these documents will be made available for inspection at
 the companys corporate office.
 
 The audited consolidated financial statements presented by the company
 include the financial result of the workings of all subsidiary
 companies, prepared in accordance with Accounting Standard 21 issued by
 The Institute of Chartered Accountants of India. In addition, a
 statement of summarised financials of all the subsidiaries is included.
 Further, the accounts of individual subsidiary companies shall also be
 posted on the companys website.
 
 STRATEGIC ACQUISITION
 
 During the year, your company acquired Danstoker A/S, a leading
 European boiler
 
 manufacturer and its German subsidiary, Omnical Kessel for a
 consideration of Rs. 186.6 crore. The acquisition offers a strategic
 fit for the companys packaged boiler business, under the Cooling &
 Heating Business Unit. Providing state-of-the-art technology and
 process know-how for the companys heating business, this acquisition
 will enable the division to enhance its product portfolio and extend it
 to new, untapped markets.  The Danstoker and Omnical brands will help
 your company expand its reach in Europe, South East Asia and the Middle
 East.
 
 The acquisition will also help in expanding your companys green
 initiatives, as a significant portion of the revenues of Danstoker and
 Omnical come from biomass and waste heat recovery boilers. It will
 enable Thermax to gain from the ongoing renewable energy movement of
 Europe aimed at generating 20% of its overall energy generation from
 renewables by 2020.
 
 Details of the acquired entities are provided in the Subsidiaries
 section of this report.
 
 DIVIDEND
 
 The Directors have recommended a dividend of Rs. 9/- (450%) per equity
 share of face value Rs. 2/-.
 
 The dividend, if approved by the shareholders, will entail a payout of
 Rs. 124.6 crore, including dividend distribution tax of Rs. 17.4 crore.
 
 DOMESTIC SUBSIDIARIES
 
 Joint Ventures
 
 Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd.
 
 Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. was incorporated on
 June 26, 2010, following the joint venture agreement signed last year
 with Babcock & Wilcox (B&W), USA to manufacture supercritical boilers.
 
 A manufacturing facility is being set up at Shirwal in Satara District,
 Maharashtra State to manufacture 3,000 MW of supercritical and sub-
 critical boilers per year, in the first phase, with a provision to
 expand the annual capacity to 5,000 M W. The plant will be ready for
 commercial operations during the financial year 2012-13. As over 60% of
 the coal based power projects coming up in the 12th Plan are likely to
 be based on supercritical technology, the subsidiary is confident of
 its business prospects.
 
 Your company has currently contributed Rs. 49.2 crore in various
 tranches towards its 51% share of the equity share capital in the joint
 venture.
 
 Thermax SPX Energy Technologies Ltd.
 
 The company is a joint venture (JV) between Thermax Limited and SPX
 Netherlands B.V., a wholly owned subsidiary of SPX Corporation, USA.
 Thermax has a 51% stake in the JV.
 
 The JV would supply equipment to help power plants meet stringent
 emission norms and improve thermal efficiencies in boiler islands.
 During the year, the JV has commenced execution of its first order won
 last year from a leading oil refinery.
 
 The total revenue for the year were Rs. 9.2 crore (Rs. 0.05 crore,
 previous year). Net loss after tax was Rs. 0.4 crore (Rs. 0.9 crore).
 
 The companys prospects look promising in the medium to long term.
 
 Wholly owned
 
 Thermax Engineering Construction Co. Ltd.
 
 Thermax Engineering Construction Co. Ltd.  (TECC) undertakes and
 executes engineering construction projects mainly for the Boiler and
 Heater (B&H) business unit.
 
 During 2010-11, the company earned a total income of Rs. 120.1 crore
 (Rs. 96.8 crore, previous year). It achieved a profit after tax of Rs.
 6.4 crore (Rs. 3 crore), resulting from better cost management and
 favourable settlement of liquidated damages provided in earlier years.
 
 The year-end order balance is Rs. 244 crore, the highest in its
 history.
 
 Thermax Instrumentation Ltd.
 
 Thermax Instrumentation Limited (TIL) is engaged in the installation
 and commissioning of power and cogeneration plants, including civil
 construction, that have been built by the parent companys Power
 division.
 
 During the year, the company earned a total income of Rs. 236.5 crore
 and profit after tax of Rs. 3.4 crore (Rs. 129.1 crore and Rs. 2 crore
 respectively, last year).
 
 TIL has an order balance of Rs. 440 crore at the end of FY 2011.
 
 Thermax Sustainable Energy Solutions Ltd.
 
 Thermax Sustainable Energy Solutions Limited
 
 has been created to develop business related to clean development
 mechanism (CDM). During the year, the subsidiary received registration
 for its Programme of Activities from the United Nations Framework
 Convention on Climate Change (UNFCCC).
 
 The company earned an income of Rs. 0.3 crore (Rs. 0.7 crore, previous
 year). This mainly comprised CDM consultancy services provided to
 project owners. The company has incurred a net loss of Rs. 1.2 crore
 (Rs. 1.2 crore), due to expenses for development, validation and
 registration of the CDM project and investments in IT infrastructure.
 As this is an entirely new business for India with its attendant
 uncertainties, the subsidiary will need the necessary gestation time to
 establish itself.
 
 The company will be investing substantially in the coming year to
 accredit many projects under its Programme for carbon credit
 entitlements in the future.
 
 Thermax Onsite Energy Solutions Ltd.
 
 The company is focused on delivering utilities – green energy from
 biomass and other renewable sources that it supplies to customers – on
 a unit consumption basis. As a first step the company has commenced the
 business of supplying process steam / heat.
 
 Apart from two projects undertaken the previous year, this subsidiary
 had a lean 2010-11. However, as the business model is conducive for the
 emerging business environment, it plans to take up more projects this
 year.
 
 The company had a total income of Rs. 6.1 crore and profit after tax of
 Rs. 0.6 crore.
 
 Your company has infused Rs. 3.6 crore equity capital into this
 subsidiary and will invest more, based on the needs of the new
 contracts.
 
 WHOLLY OWNED OVERSEAS SUBSIDIARIES
 
 Thermax Inc., USA
 
 This step-down subsidiary, which provides the Group access to US
 markets, currently focuses on ion exchange resins and vapour absorption
 chillers.
 
 2010-11 witnessed a challenging environment in the US market with
 slashed production and shrinking investments. The steep rise in
 hydrocarbon prices increased the input costs of chemical operations.
 Though these are passed on to customers, sharing the general industry
 experience, there is a lag between cost increase and price increase
 that is borne by the producer.
 
 Despite these difficult circumstances, the subsidiary recorded a sales
 of USD 13.1 mn (USD 14.9 mn, previous year) and a profit of USD 0.04 mn
 ( USD 0.96 mn, previous year).
 
 Thermax Europe Ltd., UK
 
 Although the market has remained flat in comparison to last year, this
 subsidiarys focus on specialised market segments and new applications
 helped it to retain and improve its market share.  The company achieved
 a turnover of GBP 4.3 mn (USD 7 mn) compared to GBP 3.8 mn (USD 5.8 mn)
 in the previous year. The profit after tax stands at GBP 0.4 mn (USD
 0.7 mn) against the previous years profit of GBP 0.4 mn (USD 0.7 mn).
 The year also saw one of the highest order intake of GBP 5 mn.
 
 Although the market is expected to remain subdued in the short term,
 the company will continue to focus on its niche segments for the coming
 year.
 
 Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China
 
 2010-11 was the second full year of its operation.  It doubled its
 production during the period and has plans to ramp it up this year. The
 company faced the challenge of rising costs in a market recovering
 after the 2009 global recession. It has taken initiatives to optimise
 designs and achieve benchmark performance at reduced costs.
 
 In 2010-11 the company achieved total revenues of RMB 47 mn (USD 7.2
 mn), an increase of 143% compared to the previous year (RMB 19.3 mn).
 Loss for the year was RMB 11.4 mn (USD 1.7 mn) after accounting for
 interest and depreciation, compared to RMB 10.4 mn (USD 1.5 mn), last
 year.
 
 The final tranche of equity infusion of USD 1.12 mn from the total
 approved USD 14.4 mn has been remitted in the last quarter.
 
 Thermax Denmark ApS
 
 Thermax Denmark ApS was incorporated on October 29, 2010 with
 authorised capital of DKK 75 mn (USD 14.3 mn), to acquire the European
 entity Danstoker A/S along with its subsidiaries.  The company is the
 holding company of Danstoker AS and EIN.
 
 Thermax Netherlands B.V.
 
 Thermax Netherlands B.V. was incorporated on November 4, 2010 with an
 initial authorised capital of EUR 30 mn (USD 42.5 mn) and is the
 holding company of Thermax Denmark ApS.
 
 Danstoker A/S, Denmark
 
 The acquisition of Danstoker A/S, a leading European boiler
 manufacturer and its German subsidiary, Omnical Kessel was completed on
 November 8, 2010 and was valued at Euro 29.5 mn (USD 41.8 mn).
 
 Danstoker, headquartered in Herning, Denmark has a 75 year tradition in
 manufacturing. Its manufacturing facilities are located in Denmark and
 in Omnical, Germany, that it acquired in 2003. Professionally managed
 and profitable, the company has current annual sales of Euro 40 mn.
 Danstoker is a respected brand in the renewable energy space and has a
 strong presence in the Nordic countries, Germany, UK, France and
 Russia.
 
 Operating predominantly within Germany, Omnical has supplier
 relationships with European and Japanese gas turbine manufacturers for
 their requirements of waste heat recovery systems.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A Management Discussion and Analysis report, highlighting the
 performance and prospects of the companys energy and environment
 businesses is attached.
 
 CORPORATE GOVERNANCE
 
 It has been the endeavour of your company to follow and implement best
 practices in corporate governance, in letter and spirit. A detailed
 Corporate Governance Report is included in this report.
 
 A certificate from the auditors of the company regarding compliance
 with the conditions of corporate governance as required under Clause 49
 of the Listing Agreement is part of this report.
 
 LISTING ON STOCK EXCHANGES
 
 The companys equity shares are listed on two stock exchanges –
 National Stock Exchange of India Limited (NSE) and Bombay Stock
 Exchange Limited (BSE).
 
 FINANCE, ACCOUNTS AND SYSTEMS
 
 As on March 31, 2011, the companys cash and cash equivalents stood at
 Rs. 752 crore.
 
 One of the major investments made during the year was the infusion of
 Rs. 130 crore as equity in Thermax Netherlands B. V. for the
 acquisition of Danstoker Group. The company had also paid an amount of
 Rs. 159 crore towards the successful out-of-court settlement concluded
 in the previous year with a US based company.  Besides these the
 company had also made an investment of Rs. 55 crore in fixed assets and
 Rs. 49 crore as equity in Thermax Babcock Wilcox Energy Solutions
 Private Limited – the Joint Venture with Babcock & Wilcox Power
 Generation Group, USA. The net cash outflow after factoring the above
 was Rs. 164 crore in the current year as against an inflow of Rs. 452
 crore in the previous year.
 
 The companys net working capital was negative at Rs. 150 crore as
 against a negative Rs. 381 crore in the previous year. The companys
 management continues to monitor and control the working capital
 position closely.
 
 ICRA Ltd. has reaffirmed its assigned LAA+ and A1+ rating for fund
 based and non fund based banking facilities, respectively. The long
 term rating carries a Stable outlook.
 
 Public Deposits
 
 The company had no unpaid / unclaimed deposit(s) as on March 31, 2011.
 It has not accepted any fixed deposits during the year.
 
 EMPLOYEE STRENGTH
 
 The total number of permanent employees on the rolls of the company was
 3920 as on March 31, 2011 (3631 previous year).
 
 PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956
 
 A statement of the particulars required under Section 217(1) of the
 Companies Act, 1956, read with the Companies (Disclosure of Particulars
 in the Report of the Board of Directors) Rules, 1988, is annexed and
 forms part of this Report.
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the rules framed thereunder as amended, the names and
 other particulars of the employees are set out in the annexure to the
 Directors Report. Having regard to the provisions of Section 219(1)(b)
 (IV) of the Companies Act, 1956, the Annual Report excluding the
 aforesaid information is being sent to all the members of the company
 and others entitled thereto. Any shareholder interested in obtaining
 such particulars may write to the company secretary at the corporate
 office of the company. The statement is also available for inspection
 at the corporate office, during working hours up to the date of the
 Annual General Meeting.
 
 DIRECTORS
 
 Mr. Nawshir Mirza has been inducted on the Board of your company as an
 Additional Director with effect from May 3, 2011. He holds office till
 the ensuing Annual General Meeting in accordance with the provisions of
 Section 260 of the Companies Act, 1956 (the Act). The requisite notice,
 with necessary deposit has been received pursuant to Section 257 of the
 Act, proposing him as a Director of the company. A resolution
 appointing him as Director has been set out in the notice of the
 ensuing Annual General Meeting for the approval of the shareholders.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 companys Articles of Association, Mrs. A. R. Aga and Mr. Tapan Mitra
 retire by rotation at the ensuing Annual
 
 General Meeting and being eligible, offer themselves for reappointment
 as directors.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors accept responsibility for the integrity and objectivity
 of the Profit & Loss Account for the financial year ended March 31,
 2011 and the Balance Sheet as at that date (“financial statements”) and
 confirm that:
 
 1. The financial statements have been prepared on a going concern
 basis. In the preparation of the financial statements the generally
 accepted accounting principles (GAAP) of India and applicable
 accounting standards issued by The Institute of Chartered Accountants
 of India have been followed.
 
 2. Appropriate accounting policies have been selected and are being
 applied consistently.  Judgments and estimates that are reasonable and
 prudent have been made so as to give a true and fair view of the state
 of affairs of the company as at the end of the financial year and of
 the profit of the company for that period. Significant accounting
 policies and other required disclosures have been made in Schedule 17
 annexed to the Financial Statements.
 
 3. Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, for safeguarding the assets of the company and for
 preventing and detecting fraud and other irregularities. To ensure
 this, the company has established internal control systems, consistent
 with its size and nature of operations. In weighing the assurance
 provided by any such system, its inherent limitations should be
 recognised.  These systems are reviewed and updated on an ongoing
 basis. Periodic internal audits are conducted to provide reasonable
 assurance of compliance with these systems. The company has an Internal
 Audit department, which coordinates the internal audit process. The
 Audit Committee of the Board meets at periodic intervals to review the
 internal audit function.
 
 4. The financial statements have been audited by M/s. B. K. Khare &
 Co., the statutory auditors and their report is appended thereto.
 
 COMMITTEES OF THE BOARD
 
 During the year, changes have been effected in the following committees
 of the Board:
 
 International Investment Committee: The Overseas Investment Committee
 of the Board was renamed as International Investment Committee on July
 21, 2010. The Corporate Governance Report gives details of the
 aforesaid committee.
 
 Audit Committee: Dr. Valentin von Massow was co-opted as a member of
 the committee for the meeting on October 26, 2010. This was
 necessitated owing to Dr. Jairam Varadarajs inability to attend the
 meeting.
 
 AUDITORS
 
 M/s. B. K. Khare & Co., Chartered Accountants, retire as statutory
 auditors at the ensuing Annual General Meeting and are eligible for
 reappointment. As required under the provisions of Section 224(1B) of
 the Companies Act, 1956, the company has obtained a written certificate
 from them to the effect that their reappointment, if made, would be in
 conformity with the limits specified in the said section.
 
 AWARDS AND RECOGNITION
 
 As a company striving for excellence, we are proud to receive the
 following awards and recognition during this fiscal year:
 
 - Customer Service Excellence award in water treatment chemicals by
 Frost and Sullivan.
 
 - Bry Air award for innovative product design.
 
 - Top prizes at 35th International Convention on Quality Control
 Circles, 2010.
 
 - The ‘CII National HR Excellence Award for 2009 in recognition of
 Thermaxs leadership in HR excellence.
 
 ACKNOWLEDGEMENTS
 
 Your Directors place on record their appreciation of the continued
 support extended during the year
 
 by the companys clients, business associates, supplier partners,
 bankers, investors, government authorities and its joint venture
 partners. Your Directors also place on record their appreciation of the
 dedication and contributions made by employees at all levels including
 the workmen, who through their commitment, hard work and support have
 steered the company.
 
 Your Directors would also like to thank all their shareholders for
 their faith in the company and its future.
 
                                   For and on behalf of the Board
 
                                                   Meher Pudumjee
                                                      Chairperson
 
 Pune: May 3, 2011