ester industries ltd share price Directors report

To The Members

Your directors are pleased to present the 36th Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2022.


For the year ended 31.03.2022 For the year ended 31.03.2021
(Rs. / crores) (Rs. / crores)
Net Sales Revenue 1392.25 984.86
Other Operating Revenue 13.40 6.90
Other Income 8.80 7.98
Pro t before Financial Expenses, Depreciation and Tax 251.77 243.75
Less: Interest & Other Financial Expenses 24.86 18.55
Pro t / (Loss) before Depreciation and Tax 226.91 225.20
Depreciation and amortization expenses 38.56 35.22
Pro t / (Loss) before Tax 188.35 189.98
Current & Deferred Tax expense / (credit) 49.49 47.90
Pro t / (Loss) after Tax 138.86 142.08
Other Comprehensive Income (net of income tax effect) (0.11) (0.25)
Total Comprehensive Income 138.75 141.83
Basic Earnings Per Equity Share (Rupees) 16.65 17.04
Diluted Earnings Per Equity Share (Rupees) 16.65 17.04


In addition to payment of Interim Dividend of Rs. 1.40 per equity share, your directors have recommended payment of Final Dividend at the rate of Rs. 1.90 per equity share as the Company has earned Net Pro t after Tax of Rs. 138.86 Crores during the year under review. Your Company has not transferred any amount of Pro t & Loss account to any reserve. In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI (LODR) Regulations, 2015"), the Dividend Distribution Policy is available on the Company?s website at OPERATIONS REVIEW

Revenue from Operations during the year under review stood at Rs. 1405.66 crores as compared to Rs. 991.76 crores during FY 2020-21, an increase of 41.7% on account increase in per unit selling price and increase in volume of sales of Polyester Chips, Specialty Polymers and Polyester Film. While the EBITDA earned during the year under review is higher than last year by 3.3%, Net Pro t after Tax (NPAT) of Rs. 138.86 crores is marginally lower than NPAT of Rs. 142.08 crores earned during FY 2020-21 due to higher financial expenses and depreciation. Net Pro t after Tax (NPAT) earned during FY 2021-22 turned out to be comparable to highest ever NPAT earned during FY 2020-21, a year wherein your company delivered its best financial performance till date / best in over a decade. Film SBU continued to drive the bulk of revenue for the Company though EBIT of the business was lower due to commissioning of new capacities which caused margin compression. EBIT for the business reduced from Rs. 218.71 crores to Rs. 152.59 crores despite marginally higher volume of sales. Capacity utilization in Polyester Films was about 102%. Revenue from operations improved by 28.8% from Rs. 726.28 crores to Rs. 935.64 crores on account of higher selling prices and resumption of sales of Polyester Chips post restoration of Primary Heater #5 that caught re in March 20.

Specialty Polymer business witnessed major revival during FY 2021-22 after a relatively soft FY 2020-21 given the Covid 19 related lockdowns & restrictions which were imposed during that year in some of key customer markets (including USA). Specialty Polymers business registered healthy growth in both revenues and pro tability. Revenue from operations increased by 190.9% from Rs. 59.34 crores to Rs. 172.64 crores while sales in volumetric terms increased by 55.5%. EBIT margin for the business improved from 23.2% to 32.2% on account of better product mix.

For Engineering Plastics business, FY 2021-22 turned out to be second consecutive year of landmark performance. It delivered its best ever annual performance till date. On account of higher selling prices, revenue from operations increased from Rs. 204.99 crores to Rs. 295.41 crores, an improvement of 44.1% though sales in volumetric terms reduced by 14.1% from 13419 MT to 11529 MT mainly due to reduction in volumetric sales of OFC grade engineering plastics. Rising trend in polymer prices as well as shortage of base polymers have resulted in higher sales realizations & unprecedented margin expansion. EBIT from the business improved from Rs. 40.65 crores to Rs. 68.22 crores - EBIT margin improving from 19.8% to 23.1%.

EBIT margins that started to improve from September 20 quarter reached its peak during June 21 quarter and then started to gradually moderate with business witnessing almost normal margins during March 22 quarter.

Main factors contributing towards sustained performance of the company are improvement in the performance of Specialty Polymer and Engineering Plastics business with both businesses compensating for lower performance of Film business. Various initiatives taken over the last ten years supported by capacity expansions & higher productivity in Polyester Film have resulted in revenues from operations growing at a CAGR of 7.68% pa, from Rs. 683.94 crores in FY 2011-12 to Rs. 1405.66 crores in FY 2021-22.

Your Company continues to make investments towards modernization, technical upgradation and debottlenecking initiatives in all the business segments to improve productivity, production efficiency and reduce wastages. As regards expansion of BOPET Film capacity through Wholly Owned Subsidiary (WOS) namely Ester Filmtech Limited, we are on course in implementation of the project in the state of Telangana. Commercial production is likely to commence from 1st October 2022, as originally scheduled. Your company has already invested Rs. 197.88 crores till 31st July 2022 as equity in the WOS.

On 6th May, 2022, the Company has entered into Business Transfer Agreement (BTA) for slump sale of its Engineering Plastics Business as a ‘Going Concern? for a consideration of Rs. 289.33 Crores (subject to adjustments specified in the BTA and other agreements). Date of completion of sales (closing) is subject to certain conditions precedent which are required to be completed on or before 15th October 2022. Engineering Plastics business is non core business for the Company. The divestment of Engineering Plastics business will further strengthen the Balance Sheet / Financial Position and allow faster growth & focus on its core competencies in Polyester Film and Specialty Polymers businesses.


The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the SEBI (LODR) Regulations, 2015. We consider it our inherent responsibility to disclose timely and accurate information regarding our nancials and performance, as well as the leadership and governance of the Company. Pursuant to SEBI (LODR) Regulations, 2015, Report on Corporate Governance and Practicing Company Secretary?s Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.


The Company is in compliance with all applicable Secretarial Standards as issued by the Institute of Company Secretaries of India (ICSI).


The Management?s Discussion and Analysis Report on performance, state of a airs of the company, risk management system, industry trends and other material changes and commitments, if any, affecting the financial position of the company forms an integral part of the Annual Report.


The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on public deposits was outstanding at the end of financial year 2021-22.


In accordance with the provisions of Section 152 of the Companies Act, 2013 (the Act), Mr. Ayush Vardhan Singhania (DIN 05176205) will retire by rotation at the forthcoming Annual General Meeting (AGM) of Company and being eligible, offers himself for re-election.

Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 196, 197, 203 read with Schedule V and all other applicable provisions of the Companies Act, 2013 (including any statutory modi cation or re-enactment thereof, for the time being in force) (Act) and Regulation 17 of SEBI (LODR) Regulations, 2015, Mr. Ayush Vardhan Singhania (DIN 05176205) was appointed as Whole-time Director of the Company for a period of 3 years w.e.f. 1st June, 2021, as approved by the shareholders in the Annual general Meeting held on 27th September, 2021. During the year Mr. Pradeep Kumar Rustagi ceased from the position of Chief Financial o cer w.e.f. 3rd February 2022 and was designated as Executive Director- Corporate A airs. During the year Mr. Manish Gupta was appointed as Chief Financial Officer of the company w.e.f. 4th February 2022. Mr. Arvind Singhania, Chairman & Managing Director (designated as Chairman & CEO), Mr. Pradeep Kumar Rustagi, Executive Director- Corporate A airs, Mr. Ayush Vardhan Singhania, Whole-time Director, Mr. Manish Gupta, Chief Financial Officer and Mr. Diwaker Dinesh, Head-Legal & Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) read with Section 203 of the Act and rules made thereunder.


The Independent Directors of your Company have con rmed that they meet the criteria of Independence as prescribed under Section 149 of the Act read with Regulation 16 of the SEBI (LODR) Regulations, 2015 and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external in uence. Further, in the opinion of the Board, the Independent Directors fulfill the conditions prescribed under the SEBI (LODR) Regulations, 2015 and are independent of the management of the Company.


The details of the composition of Board of Directors and Audit Committee and number of Board and Audit Committee meetings held during the year are given in the Report on Corporate Governance which forms part of the Annual Report.


M/s Walker Chandiok & Co. LLP, Chartered Accountants, is the Statutory Auditors of the Company appointed by the Shareholders in their Annual General Meeting held on 4th September, 2017, to hold officefrom 31st AGM till 36th AGM.

Since the term of their appointment is valid till the conclusion of this Annual General Meeting. Accordingly, in terms of Section 139, 140 and other applicable provisions of Companies Act, 2013 and rules made thereunder, the Audit Committee and the Board of Directors have recommended for the re-appointment of M/s Walker Chandiok & Co. LLP (Registration No. 001076N/ N500013) to Shareholders in this AGM for a period of 5 ( ve) years and a resolution related thereto forms part of the notice convening the forthcoming AGM.

The Auditors? Report for the year under review read together with Annexures do not contain any quali cation, reservation or adverse remark and do not call for any explanation/clari cation.

Cost Audit

In terms of Section 148(1) and other applicable provisions, if any, of the Act and rules made thereunder, the Company is required to maintain the Cost records and accordingly such accounts and records are made and maintained.

At the recommendation of the Audit Committee, the Board has re-appointed M/s. R. J. Goel & Co., Cost Accountants, as the Cost Auditor for the financial year 2022-23. In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company.

Accordingly, the Board seeks rati cation of the remuneration payable to the Cost Auditors for the financial year 2022-23. A resolution seeking your rati cation of the remuneration of M/s. R. J. Goel & Co. for financial year 2022-23, forms part of the Notice convening the forthcoming Annual General Meeting.

Secretarial Audit

In terms of Section 204 of the Act, M/s. Dhananjay Shukla & Associates, Company Secretaries, has conducted secretarial audit of the Company for the financial year ended 31st March, 2022. The Report of M/s Dhananjay Shukla & Associates is provided in the "Annexure-A" forming part of this Report. There are no quali cations, reservation or adverse remark made by the Secretarial auditor in the report for the year under review. Pursuant to provision of Section 143(12) of the Act there were no frauds reported by Auditors of the Company during the year under review, to the Audit Committee or the Board of Directors, therefore no disclosure is required to be made under section 134(3)(ca) of the Companies Act, 2013


Pursuant to the requirement under Section 134(3)(c) read with Section 134(5) of the Act (including any statutory modi cation(s) or re-enactment(s) for the time being in force), the Directors of your company, on the basis of information placed before them by the Management and Auditors, con rm that:-

1. in the preparation of the annual accounts for the Financial Year ended 31st March 2022, the applicable Accounting Standards have been followed along with proper explanation relating to material departure, if any.

2. they have selected appropriate accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent, so as to give a true and fair view of the state of the a airs of the Company at the end of the financial year and of the Pro t and Loss of the Company for the year under review;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. they have prepared the accounts of the Company for the financial year ended 31st March 2022 on a going concern basis.

5. proper internal financial controls laid down by them were followed by the Company and that such internal financial controls are adequate and were operating effectively; and 6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


Ester Filmtech Limited is the wholly-owned subsidiary, incorporated on 21st July, 2020. Ester Filmtech Limited is setting up a new BOPET Film Line in the state of Telangana. The consolidated financial statements of the Company for the financial year ended 31st March 2022 have been prepared in accordance with the provisions of the Act, SEBI (LODR) Regulations, 2015 and the applicable Accounting Standards. The audited consolidated financial statements, together with the Auditors? Report, and Form AOC-1 form a part of the Annual Report. Pursuant to the provisions of Section 136 of the Act the standalone financial statements, the consolidated financial statements, Auditors? Report along with relevant documents and separate audited accounts in respect of subsidiary, are available on the website of the Company. During the financial year under review, no Company is ceased to be Company?s subsidiary. The Company does not have any Joint Venture or associate.


The Company has laid down well defined and documented Internal Controls.

Your company?s internal control procedures are adequate to ensure compliance with various policies, practices, laws, rules, regulations and statutes. Internal Controls in your company have been designed & implemented in such a manner that it provides reasonable assurance regarding the following:

E ectiveness and efficiency of operations

Adequacy of safeguards for assets

Prevention and detection of frauds, errors & misappropriations

Accuracy and completeness of the accounting data & records

IT security controls

System, policies, practices & procedures adopted for adequate and fair financial reporting

Timely and accurate preparation of reliable financial information & reports. During the year under review, few internal controls have been modified to align with change in scenario.

Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Indian Accounting Standards) Rules, 2015 that continue to apply under Section 133 and other applicable provisions, if any, of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India.

Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The Company?s Internal Auditors have conducted periodic audits to evaluate the existence, adequacy & effectiveness of financial and operating internal controls, to report significant findings to the Audit Committee of the Board and to provide reasonable assurance that the Company?s established systems, policies, practices and procedures have been followed. The Audit Committee constituted by the Board reviews the internal controls and financial reporting issues with Internal Auditors on a regular basis.

The Company uses an ERP (S/4 HANA 2021) which is supplemented by internal controls framework to ensure reliable and timely financial reporting.

Compliance with laws, rules and regulations is also monitored through a well laid down framework which requires individual functions to con rm and report statutory compliances on all laws and regulations concerning their respective functions. This gets integrated with the overall compliance reporting on all laws and regulations for the purpose of review and monitoring by the Board.


The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and Senior Management of the Company. They have a rmed compliance with the Code of Conduct. A declaration to this effect duly signed by Mr. Arvind Singhania, Chairman & CEO is enclosed as a part of the Report on Corporate Governance which forms part of the Annual Report. A copy of the Code of Conduct is available on the Company?s website viz.

The Code of Conduct is based on the fundamental principles of good corporate governance and corporate citizenship. The Code covers the Company?s commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, vigil mechanism, transparency, auditability and legal compliance etc.


During the financial year 2021-22, there was no change in the Capital of the Company.


In previous Financial year 2020-21, the Nomination and Remuneration Committee and Board had approved the Employee Stock Option Scheme, namely, ESTER EMPLOYEES STOCK OPTION PLAN-2021(ESOP-2021), in its meeting held on 25th February, 2021, and same was approved by shareholders of the company in the Extra-Ordinary General Meeting held on 26th March, 2021.

The Board granted 248179 stock Options to eligible employees under ESOP-2021 in its meeting held on 1st April, 2021. Company had obtained in principal approval from BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). During the year 2021-22, no allotment of Equity Share was made by Company under the ESOP-2021.

Details pursuant to Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2021 are given under "Annexure-B" LISTING OF SECURITIES

Your Company?s Equity Shares are currently listed with BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the listing fees to BSE and NSE for the financial year 2022-23.


Pursuant to section 92(3) of the Act, Annual Return for previous financial years, led with the Registrar of Companies, Ministry of Corporate a airs, pursuant to Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 are available on website of the Company


The particulars of the loan, if any (along with the purpose of utilization by recipient of loan) and investments covered under Section 186 of the Act are provided in Notes 7 and 8 to financial statements.

Pursuant to Section 186 of the Companies Act, 2013, during the year the company has executed corporate guarantee of Rs. 182.94 Crores in favour of Indian Bank and for an amount upto EUR 26,952,108.10 in favour of OLB Bank, Germany, for extending credit facilities in favour of its wholly-owned Subsidiary company "M/s. Ester Filmtech Limited".


Pursuant to Section 135 of the Act and rule made thereunder, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The details of the Composition of the Committee is set out in Report on Corporate Governance which forms part of the Annual Report. The Committee has adopted a Corporate Social Responsibility Policy. Annual Report on CSR activities containing brief outline of the CSR Policy of the Company along with total amount spent on CSR and other details is set out in "Annexure C" of this report as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Policy is uploaded on Company?s website and the same can be accessed at the following link les/Corporate_ Social_Responsibility_Policy.pdf


The Company has a Policy for performance evaluation of all the Directors, Chairperson of Board as a whole and Committees of the Board.

An annual evaluation was carried out of the performance of the Board, Board?s committees, all the directors and Chairperson pursuant to the provisions of the Act as well as SEBI (LODR) Regulations, 2015.

The following evaluation process has been adopted by the Company

1. Independent Directors at their separate meeting without the presence of Non-Independent Director, had reviewed the performance of the Chairperson, Non-Independent Directors and the Board. While evaluating the performance of the Chairperson, the views of Executive Directors and Non-executive Directors were also taken into account.

2. Nomination and Remuneration Committee carried out the performance evaluation of all the Directors, Committees of the Board and the Board as a whole.

3. The Board had evaluated its own performance, performance of its Committees and each Director.

The process of performance evaluation was based on the criteria prescribed in the Policy on Performance Evaluation. The Policy is uploaded on Company?s website and the same can be accessed at the following link Performance_Evaluation_Policy.pdf


Nomination and Remuneration Committee has framed a Nomination and Remuneration policy for determining criteria of selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel including determining quali cations, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Act. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Report on Corporate Governance which forms part of the Annual Report.

The Policy is uploaded on Company?s website and the same can be accessed at the following link Nomination%20and%20Remuneration%20Policy%20Ver%20 2%2017%20June%202020.pdf The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in "Annexure - D" of this report.


Pursuant to requirements of SEBI (LODR) Regulations, 2015 the Company has constituted the Risk Management Committee of the Company. The constitution and the terms and reference of the Committee are given in Report on Corporate Governance which forms part of this Annual report. A detailed note on Risk Management System has been provided under the Management Discussion and Analysis (MDA) Report.


All contracts or arrangements with related parties, entered into or modified during the financial year, were on an arm?s length basis and in the ordinary course of business. All such contracts or arrangements, wherever required, have been approved by the Audit Committee and the Board. However, no material contract or arrangement with related parties was entered into during the year under review. The company has not entered any transaction with the Related parties, which are not at arm?s length. Accordingly, no transactions are being reported in Form No. AOC-2 provided in "Annexure-E" pursuant to Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. The details of the related party transactions as required under IND AS 24 are set out in Note 36 to the standalone financial statements forming part of this Annual Report. The Policy on Related Party Transactions, can be accessed on the Company website at the following link Clean_Ver.pdf


The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as prescribed under Section 134 of the Act read with the Companies (Accounts) Rules, 2014 is set out in the "Annexure F" forming part of this report.


The Company has a Vigil Mechanism/Whistle Blower Policy with a view to provide a mechanism for employees of the Company to raise concerns of suspected frauds, instances for leakage or suspected leakage of Unpublished Price Sensitive Information, any violations of legal/ regulatory requirements or code of conduct/policy of the Company, incorrect or misrepresentation of any financial statements and reports, etc. The purpose of this Policy is to encourage employees and directors who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. The policy aims to provide an avenue for employees and directors to raise concerns and reassure them that they will be protected from reprisals or victimization for whistle blowing in good faith. The practice of the Whistle Blower Policy is overseen by the Audit Committee of the Board and no employee has been denied access to the Committee. The Policy can be accessed on the Company?s website at following link blower_policy.pdf


There was no incident of sexual harassment reported and pending for investigation during the financial year 2021-22. For protection against sexual harassment, Company has formed an internal complaints committee to which employees can write their complaints. The Company has a Prevention of Sexual Harassment Policy which has laid down a process for dealing with such issues.

The Company has complied with provisions relating to the constitution of Internal Complaint Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.


There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.


Your Directors acknowledge the co-operation and assistance received from various departments of the Central & State Government, banks and Non-banking finance companies. Directors also express their gratitude and thanks to Customers, Suppliers and other Business Associates for their continued cooperation and patronage.

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, sta and executives of the Company at all levels ensuring satisfactory management of the Company. Your Directors also thank the shareholders for their continued support.

For and on behalf of the Board
Arvind Singhania
(Chairman & CEO)
Place: Gurugram
Date: 10th August, 2022