Thermax has announced that its subsidiary First Energy has established a new wholly owned step-down subsidiary named First Energy 15 Pvt Ltd. This development represents a strategic expansion of the company's corporate structure through its existing subsidiary network.

Corporate Structure Enhancement

The creation of First Energy 15 Pvt Ltd marks a significant step in organizational development within the Thermax group. As a wholly owned step-down subsidiary of First Energy, the new entity will operate under the broader umbrella of Thermax's business operations.

Strategic Business Development

This subsidiary formation demonstrates Thermax's continued focus on expanding its operational capabilities through structured corporate entities. The establishment of First Energy 15 Pvt Ltd provides the company with additional flexibility in its business operations and strategic initiatives.

The new subsidiary structure allows for focused business activities while maintaining the benefits of being part of the larger Thermax ecosystem. This approach enables specialized operations while leveraging the parent company's resources and expertise.

Thermax has achieved a significant legal victory as the Bombay High Court set aside an arbitral award that was previously passed against the company. The court's decision reverses a substantial financial liability and instead orders the customer to refund the deposited amount along with interest.

Arbitral Award Background

The original arbitral award dated June 5, 2023, had directed Thermax to undertake costly remedial work and pay substantial compensation to a customer. The arbitral tribunal, consisting of a sole arbitrator, had ruled that the company must repair and reinstate two Gas Turbo Generators (GTGs) at the customer's plant at Thermax's own cost under the defect liability clause.

High Court Judgment

The Bombay High Court has completely overturned the arbitral award, delivering a favorable outcome for Thermax. The court's judgment not only sets aside the previous award but also mandates the customer to refund the entire deposit amount that Thermax had made during the arbitration proceedings.

Legal Timeline and Next Steps

Following the High Court's ruling, the customer has sought a stay on the judgment's operation. The court has granted a four-week stay period to allow the customer to pursue their appellate remedy. This temporary stay provides the customer with time to file an appeal in a higher court if they choose to challenge the High Court's decision.

Financial Impact

The court's decision represents a substantial positive financial development for Thermax. The company will receive ₹218.46 crores along with 6% per annum interest, marking a significant cash inflow once the stay period concludes and payment is processed. This outcome eliminates the estimated ₹250 crore financial impact that the original arbitral award would have imposed on the company.