After missteps, Thermax puts energy back on growth path: Ashish Bhandari, MD & CEO

Thermax's push into new-age energy and clean-tech businesses has not been without missteps. But it has learnt from its mistakes and has begun to put the house in order. Its MD & CEO Ashish Bhandari details the transformation and the direction it is taking in an interview with ET. Edited excerpts:

Over the past few years Thermax has had a bumpy ride. Why and how are you fixing it?

Right after Covid, it was also a period when, for several years, we had not grown. The question was: how would we want to look at the future? With that idea, in 2020-21, we wanted to create Thermax as a trusted partner to our customers in energy transition. That was an important statement because it meant we would actively work on energy transition and everything around energy efficiency.


What did not go well for Thermax?

On the industrial project side, we took a couple of government projects that involved a high amount of civil and construction work. We did not do a good job of execution or of managing the customer. The last time we did a project was in 2022. We are cutting down on businesses that are long-cycle, government-related, L1 tenders and have high civil and construction requirements.

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Is that only for government contracts or others too?

Even otherwise. There are systematic changes taking place. Executing projects is getting tougher if you do it the old way. Labour in India is becoming tougher to find, while weather-related issues are getting worse. Even if you are executing a project in Gujarat, you suddenly get rains that would traditionally happen once in a decade or so. They are happening more frequently. Migrant labour that you could trust is very transient now. Your ability to train them, build them up, and get them to be productive is therefore no longer something you can take for granted.

You entered the bio-CNG space too, which did not go well. What is the direction it is taking?

We entered this space with the expectation that we could execute the plan with a certain capability, based on achieving a certain feedstock availability. Within that was 'parali' grass. We set up projects, but the feedstock was not what was promised. And therefore, the output was not what we had committed. In trying to get this right, we lost some amount of money. For three years now, we have not taken a single order in bio-CNG. But now, we are ready.

Then there is First Energy, the platform we started for renewables. We could have executed it better. It involved getting into right-of-way issues and working with state governments. That is something we are realising is not something we excel at.

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How did you overcome these setbacks?

We reorganised the company around industrial products, which are product-related businesses; industrial infra, which is project-related; green solutions; and chemicals. These became four parts of Thermax, and that is how we now operate and report the company. When we did this, a few things started to work well and a few less so.

Historically, Thermax is mostly a boiler company for the common man. What are the building blocks that you are putting in place now?

There are numerous stories that are working extremely well. Even in the last four years, each year we have been able to grow our top line and bottom line year-on-year. Despite the first quarter we had this year, we expect to recover nicely. Today, we have a backlog of Rs 14,000 crore, which is by far the highest we have had in the last 12 months. After the Covid year, this is the highest growth we have had on orders side. As that starts to show up in the backlog, the numbers will start to look better. We also really like the quality of orders we have had in the last couple of years. We have also made a big shift into biomass, biomass boilers and build-own-operate models around biomass. We are not only among the best in local markets but can compete with anybody globally.

You have global businesses too. How are they faring?

You will see a different part of Thermax starting to show up regularly, backed by many of these growth levers. The last lever of growth is international. In multiple geographies, Thermax is setting up local legal entities capable of providing services and executing projects locally. We are qualified to deliver projects for most of the big names in Middle East in oil and gas. International orders comprise 30% of Thermax's orders. From both a top-line and bottom-line perspective, this is becoming very relevant to how we look at the future.

What makes your international business?

I am bullish on our international orders. They are driven by three large sectors. One is the US, particularly data centres. The second is Middle East oil and gas. The third is Africa, where we are working with larger downstream customers. We continue to build our product portfolio across Southeast Asia, Bangladesh, Sri Lanka and other Middle Eastern markets. Water, for example, was previously a small international business for us. Now it is the fastest-growing business internationally because our product quality is improving.

These new businesses must also have their set of challenges...

First, project execution. We need to be better here. Second, product capability. We need to compete on a global scale and say our product is the best for customer. Third, our innovation engine needs to produce more products. We need to address tech risks, and come out the other side having managed those risks well, while proving the tech. That is the journey for Thermax.