MOSL: THE CORNER OFFICE (THERMAX) — Targeting INR160b sales in 10 years, 14% CAGR over FY18-28

THE CORNER OFFICE (Thermax) — Targeting INR160b sales in 10 years, 14% CAGR over FY18-28; Four-tier strategy to reduce sales volatility from large projects

Mr MS Unnikrishnan, Managing Director and CEO

Mr MS Unnikrishnan, 57, is the Managing Director & CEO since July 1, 2007. He began his career with Thermax after graduating in Mechanical Engineering from VNIT, Nagpur in 1982. He has also completed an Advanced Management Program from the Harvard Business School, USA. He worked with the EID-Parry group for five years as the Head of its Engineering business and with Terrazzo Inc, UAE from 1992 to 1997 as its Assistant General Manager. He re-joined Thermax as General Manager in 1997. Since then, he has headed the Waste Management and Absorption Cooling divisions. In 2000, he became a member of the newly formed Executive Council. He has also led the human resources function and spearheaded the transformation initiative. Under Mr Unnikrishnan’s leadership, Thermax grew to be a billion dollar company in 2010-11. During the period, Thermax extended its reach through two acquisitions in Europe. It also positioned itself as a leading supplier of power systems and equipment through two joint ventures, one of them for the niche area of supercritical boilers.

 We met Mr MS Unnikrishnan, Managing Director and CEO of Thermax. He highlighted that the company targets annual sales of INR160b by 2028 (translating into a CAGR of 14%). We also discussed the company’s four-tier strategy to reduce sales volatility from large projects. Our key takeaways:

Four-tier strategy to reduce revenue volatility from large projects

Over the past five years, Thermax has witnessed drying up of large orders from the core sectors (Power, Steel, Cement and Refining), leading to volatility in its sales. To de-risk itself, the company has identified a four-tier strategy:

1. Thermax is primarily in absorption chillers. It is looking at an acquisition to enter process cooling, which is 2-3x the size of the absorption chiller market.
2. Thermax is the market leader in the B2B segment but has <1% share in the commercial segment. It targets a double-digit market share in the commercial segment.
3. Rooftop solar (INR10b industry) is an emerging market and Thermax would be present in the industrial and commercial segments.
4. After three years of difficulty, its water business is now profitable. Thermax intends to expand footprint and achieve double-digit profit in this segment.