Hi @Ajay P ,
you can apply the settings hiding the drives in explorer in the local policy as well. An AD is not required but makes it easier to deploy the setting via GPO.
Hiding the drive in Explorer doesn't affect the functionality of the VM OS. At least I haven't noticed that in any customer environment so far.
Another option might be to use a VM SKU that doesn't have a temp drive. The statement of DipakSanadi-2633 isn't right. There are Azure VM SKUs available without a temp drive.
Dv4 and Dsv4-series doesn't have a temp drive - https://learn.microsoft.com/en-us/azure/virtual-machines/dv4-dsv4-series
Dv5 and Dsv5-series doesn't have a temp drive - https://learn.microsoft.com/en-us/azure/virtual-machines/dv5-dsv5-series
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Regards
Andreas Baumgarten