Ester Industries Ltd Management Discussions

o The line will enable backward integration into recycled feedstock, enhancing product sustainability and supporting compliance with evolving global and domestic regulations on plastic recycling.

At Ester, sustainability is embedded into our purpose and growth strategy. Our ESG roadmap is aligned with global needs. We intend to lead the global trends, national regulations, and customer expectations, enabling us to improve resource efficiency, reduce emissions, and create long-term stakeholder value. FY2024-25 saw tangible progress across our environmental initiatives, energy transition efforts, and social impact programs.

We are in the process of implementing multiple carbon reduction initiatives. These initiatives include process optimization, transition to renewable sources of energy, and circular raw material usage. As these programs scale, we expect to achieve measurable reductions in Scope 1 and Scope 2 emissions over the next few years.

Ester executed targeted efficiency improvements across its manufacturing units, leading to notable energy savings:

• Installation of high-efficiency air blower in Film Plant-1: 1,05,120 kWh saved annually

• Replacement of chilled water pump with energy efficient pump: 59,640 kWh saved annually

• Optimized PH-3 Heater operations: 57,865 kWh saved annually

• Intermittent use of ETP root blower: 50,400 kWh saved annually

• Improved vapour absorption chiller efficiency: 1,760 MT steam saved annually

• Installed a new air dryer unit to improve energy efficiency: 80,000 kWh saved annually

We recycled approximately 15% of total water consumed in FY 2024-25, enabled by efficient effluent treatment and reuse processes. This reduces our freshwater dependency and aligns with responsible water use in industrial operations.

FY 2024-25 was a transformative year for Ester Industries, showcasing a strong rebound in profitability, diversification of revenue base, and visible momentum in sustainable solutions. Backed by its capex strategy, innovation pipeline, and focus on specialty markets, Ester is well-positioned for structurally higher growth and returns in the coming years.

We sourced approximately 3 million kWh of electricity from renewable sources during the year. This transition supports both cost optimization and compliance with evolving energy regulations.

Our ESG practices are validated through industry-leading certifications that reinforce our commitment to responsible operations and global

standards. These include:

• ISO 14001 (Environmental Management)

• ISO 45001 (Occupational Health & Safety)

• FSSAI, FSSC 22000 (Food Safety)

• GRS (Global Recycled Standard)

• ISCC Plus (Sustainable Circular Certification)

• REACH, RoHS, Prop65 (Chemical and Product Safety Standards)

During the year under review, the Company contributed Rs. 7.78 lacs to the Prime Ministers National Relief Fund (PMNRF)

The Company remains committed to promoting inclusive and equitable education through its ongoing project with Saraf Public School. As part of Esters Navsrijan Programme, initiated in FY 2021-22, the Company has entered into an agreement with Saraf Education Society to support the education of underprivileged and economically weaker section students residing in and around Khatima. The initiative includes the provision of free education, books, uniforms, and transportation, thereby enabling access to quality education for marginalized children.

Our CSR initiatives are strategically focused on education, healthcare & sanitation, especially in regions where we have a business presence. Key initiatives undertaken during FY 2024-25 included:

• Improving Living Conditions: Enhancing the quality of life for migrant Odia populations in Telanganas brick-making units by providing essential amenities and medical services.

• Supporting Education: Prioritizing the education of children from migrant communities to ensure long-term development and empowerment.

• Provided scholarship support to over 40 deserving girls from underprivileged backgrounds in Uttarakhand, enabling them to pursue higher education in STEM fields and fostering future leaders.

• Installation and supply of critical medical and administrative equipment at Civil Hospital, Khatima, including blood cross matching systems, split ACs for the patient ward, water coolers with RO, and steel benches for patient comfort.

• Donated to Nagar Palika, Khatima to support local sanitation efforts

Forward-Looking statements are based on certain assumptions and expectations, which may not materialize. Actual results could differ significantly. The Company is under no obLigation to update or revise these statements in light of future developments.

Thin BOPET films are the largest and one of the fastest-growing sub-segments within the gLobaL flexible packaging industry. For Ester, this segment represents a strategic opportunity driven by scaLe, sustainabiLity mandates, and the shift towards high-performance packaging.

BOPET (Biaxiafly Oriented Polyethylene Terephthalate) is a versatile polymeric film known for its strength, clarity, barrier properties, and thermal stability. It is widely used in flexible packaging, labels, insulation, and industrial applications. Within the broader BOPET category, thin BOPET films—typically under 50

microns—represent the most widely consumed segment due to their Lightweight structure, high-speed processabiLity, and broad appLicabiLity in fast-moving consumer goods (FMCG), e-commerce packaging, and retaiL formats.

The analysis below focuses on thin BOPET films to highlight the segments growth potential,

demand-suppLy evoLution, and strategic reLevance in the gLobaL packaging Landscape.

Growth in thin BOPET films is being driven by rising consumption across packaged food, organized retaiL, and personal care—particularly in emerging economies. StructuraL shifts Like urbanization, smaLLer househoLd sizes, and consumer preference for safe, Long-sheLf-Life packaging are strengthening demand. BOPET is the most recycLabLe substrate in comparison to any other aLternate substrate. As a recycLabLe, high-performance substrate, thin BOPET is increasingly becoming the preferred packaging materiaL across muLtipLe industries.

MateriaL substitution trends, rising packaging penetration, and sustainabiLity-Led reguLation continue to expand BOPETs relevance. Ester is well-positioned to serve this demand with its certified product range, innovation pipeLine, and growing gLobaL reach.

Robust growth in packaged food and FMCG consumption is driving gLobaL demand for thin BOPET films. Expanding middle-class populations in Asia and Africa, increasing access to modern retaiL, and the shift toward on-the-go and ready-to-eat products are fueling the need for durable, safe, and high-barrier packaging materials.

Regulatory mandates—such as Indias 10% PCR content rule effective April 2025—are also expected to drive a

premiumization of demand toward recyclable BOPET films. This creates margin-accretive opportunities for compliant and innovation-led producers like Ester.

The global thin BOPET film demand is expected to increase from ~5.2 million tonnes in 2025 to ~6.7 million tonnes by 2030, reflecting consistent application growth. Asia remains the largest demand center, contributing over 80% of global consumption.

Capacity additions in recent years—primarily from China—Led to a temporary oversuppLy situation, with utilization dropping to ~49% in 2025. However, utilization is expected to recover to ~58% by 2030 as demand graduaLLy aLigns with capacity.

• Market moving toward equilibrium post-capacity surge

• Demand resilient across geographies and applications

• Improving CUF indicates operational recovery

Asia remains the global demand powerhouse, with volumes expected to grow from 4,085 KT in 2025 to 5,227 KT in 2030—driven by domestic consumption, rapid urbanization, and retaiL expansion. MeanwhiLe, deveLoped markets Like North America and Europe show steady demand but offer higher pricing and margins due to Limited LocaL suppLy and stricter quaLity requirements. Emerging markets such as Africa and the MiddLe East are aLso showing promising growth, graduaLLy scaLing up their share in gLobaL consumption.

While Asia drives volume, developed and supply-constrained regions present an attractive realization opportunity. Export-focused players with reliable quality and delivery capabilities are well-positioned to benefit from this margin arbitrage.

• Asia continues to be the largest market, with demand expected to grow from 4,085 KT in 2025 to 5,227 KT by 2030. This growth is driven by rising packaged food consumption, urbanisation, and growing middle-class needs.

• Developed regions offer stronger margin potential, supported by high quality expectations and constrained local supply.

• Exporters with reliable supply and good quality can benefit from stronger margins in regions that depend on imports for their packaging needs.

Supply continues to track the demand trend but with notable regional concentrations. Asia, particularly China and India, has emerged as the epicenter of capacity growth due to lower input costs, proximity to demand centers, and policy support for manufacturing.

Supply growth between 2025 and 2030 is expected to remain focused in low-cost manufacturing hubs. However, structural challenges—like limited export orientation and trade restrictions—continue to limit Chinese supply penetration into the West.

• Asia will continue to Lead global supply, increasing its share from 82% in 2025 to 84% in 2030, mainly due to China and Indias cost advantages and large production capacities.

• Most of the new supply being added is in commodity-grade films, where competition is high and margins are under pressure.

• The real opportunity lies in specialty films—such as high-barrier or lidding films - which offer better prices and more stable demand, especially from large global brands.

• Producing these specialty films requires technical know-how, R&D, and consistent quality—areas where Ester has strong capabilities.

• With China facing trade barriers and focused more on its domestic market, Indian manufacturers have a good chance to grow exports, especially in high-margin, value-added segments.

PET resin—the primary raw material for BOPET films—is derived from PTA and MEG, both of which are linked to global crude oil prices and their own supply-demand dynamics. Resin cost remains the largest component of film production expenses, and fluctuations can impact margins.

However, film prices generally adjust to reflect resin cost movements, albeit with a 1 - 3 month lag depending on market conditions. Value addition in standard films is more influenced by industry demand-supply than raw material price swings.

Specialty and downstream-coated products (like siliconized, extrusion, holography films) offer greater margin stability and are less sensitive to resin cost volatility. Overall, raw material volatility affects the entire industry. The Company closely tracks global and regional input price trends to shape its raw material strategy. Being vertically integrated from PET manufacturing down to specialty films , having diversified product mix and widespread geographic presence help mitigate its impact.

The global market for Biaxially Oriented Polyethylene Terephthalate (BOPET) films, especially the thin film segment, is significantly shaped by the needs of industries served by converters, with a strong emphasis on Fast-Moving Consumer Goods (FMCG).

The packaging sector is the largest application for BOPET films. Within this, the food and beverage industry alone drives more than 76% of flexible packaging consumption. (Source - Global Growth Insights).

Segment highlights include (Source - Global Growth Insights):

• Frozen foods packaging expanding at 6.0% CAGR,

where BOPET-based laminates offer both protection and printability.

• Savoury snacks and dried foods—two large BOPET film users—are expected to grow at 4.1% and 3.5% CAGR, respectively, benefiting from BOPETs metallization and sealing advantages.

FMCG companies rely on thin BOPET films for several

critical reasons:

effective barrier against moisture, oxygen, and UV light, essential for preserving freshness and extending shelf life for food, beverages, and personal care products.

allows product visibility, enhancing marketing , and offers excellent printability for vibrant graphics.

increasingly replacing conventional packaging, with new FMCG products adopting BOPET-based multilayer flexible films. Metallized BOPET films are driven by their use in snacks and dairy packaging.

FMCG companies prioritize environmentally friendly packaging, with over 38% of consumers preferring recyclable formats. This prompts over 35% of manufacturers to explore bio-based or post-consumer recycled (PCR) BOPET film.

Source- https://www.globalgrowthinsights.com/mar- ket-reports/bopet-films-market-11Z681#regionalTab

India has emerged as both a leading consumer and exporter of thin BOPET films, supported by sustained growth in flexible packaging applications and a regulatory environment favoring recyclable substrates. Thin BOPET films are increasingly positioned as a preferred choice for high-barrier, multi-layer laminates in food, personal care, and home care applications.

India Thin BOPET Market: Demand vs Exports (2025-2030)

Source: Ester internal estimates

The flexible packaging films market in India has witnessed robust growth, fueled by rising consumer demand and the expansion of domestic brand owners. Specifically, the BOPET (biaxially oriented polyethylene terephthalate) segment is projected to grow from 780 KT in 2025 to 1,256 KT by 2030, reflecting a CAGR of 9-10%. While Exports are expected to be 240 KT in 2025 and expected to reach 386 KT in 2030 with a CAGR of 9-10%.

Moreover, the market is expecting increased demand for BOPET films in the flexible packaging structures as 10% recycling mandate in category 2 (flexible packaging) has come into effect in 2025. This requires FMCG companies and other users of flexible packaging to incorporate 10% recycled content. The mandate will become 20% from FY 27-28 ensuring sustained demand for the BOPET films.

FMCG sector in India is very robust and FMCG sales in the country is expected to grow by 6-8% in Fiscal 2026 (https://economictimes.indiatimes.com/indust rv/cons-products/fmcg/fmcg-sector-mav-see- mild-revenue-rebound-to-6-8-in-fy26-crisil-rat ings/ articleshow/119204672.cms?from=mdr). BOPET films are increasingly preferred due to their durability and compatibility with fast-moving product lines as well as their unique ability to incorporate recycled content.

The F&B sector accounts for nearly 75% of the demand for flexible packaging films (Markets and markets report), with key applications in:

Salty snacks (25% share of F&B flexible film demand), Chocolates, biscuits, confectionery, and milk pouches further contribute to the dominant position of the F&B segment.

BOPET is gaining traction in this segment due to its dimensional stability, which minimizes warping and shrinkage during production and filling. This reduces material waste and improves operational efficiency. Key applications include Hair oil, liquid handwash, skin care creams and toothpaste etc.

Indias regulatory landscape is increasingly supportive of sustainable packaging practices:

• PET stands out as a highly recyclable material with a mature infrastructure for collection, sorting, cleaning, and reprocessing into high-quality recycled PET (rPET).

• The Plastic Waste Management Act mandates the inclusion of at least 10% recycled content in flexible packaging for the initial two financial years, with a planned increase to 20% in subsequent years.

New product launches by FMCG giants require versatile packaging solutions that can cater to variety of product types. Flexible packaging with its adaptability by different shape, size and product requirements, becomes an ideal choice. Moreover, FMCG brands continually innovate to differentiate their products in a competitive market. Flexible packaging allows for a high degree of customization and innovation. This capability supports the launch of new and differentiated products, further boosting the demand for flexible packaging.

India is experiencing rapid urbanization and an increase in the number of working professionals with busy lifestyles. This shift has led to a greater demand for convenient, ready-to-eat food products, snacks, and beverages that are easy to carry and consume on the go. Disposable income also witnessed the rise; per capita disposable income grew 7% in FY25 (IMF Data) in the previous year. Plastic flexible packaging is ideal for these products due to its lightweight and portability.

The global shift toward higher-performance, recyclable, and application-specific materials is driving demand for specialty polymers across diverse sectors. These trends—fueled by sustainability mandates and

functional performance—are reshaping the materials landscape across packaging, textiles, industrials, and electronics.

Esters specialty polymer business is strategically aligned with this transformation. With strong formulation capabilities, patented technologies, and deep application engineering, Ester is positioned to benefit from structural growth in four key end-user segments: Textiles, Carpets, Consumer Electronics and BOPET Films.

These industries are projected to witness steady to strong growth through 2030, reinforcing the long-term opportunity for Esters specialty polymers:

The flexible packaging industry is rapidly evolving, with growing emphasis on food safety, extended shelf life, and recyclability. PET-based films are emerging as a go-to material for converters and brands seeking clarity, barrier protection, and environmental compliance.

Ester is closely integrated into this value chain through its specialty polymer grades, supporting advanced film performance and compliance with circular packaging mandates.

Consumer preference for affordable, durable, and functional textiles continues to rise, with sustainability becoming a central buying criterion. Polyester leads this transformation due to its versatility and cost- effectiveness. The global polyester fiber market is

projected to grow at 7-8% CAGR, with rising adoption of recycled content by fashion and home textile brands.

Esters polymers are enabling high-quality rPET fiber production, helping global brands meet recycled content targets while maintaining performance, consistency, and efficiency.

The carpet sector is steadily transitioning from traditional materials to polyester systems—valued for their dyeability, stain resistance, and cost advantage. Ester supplies polyester raw materials specifically for use in nylon-based commercial carpets, enabling hybrid constructions that combine durability with sustainability. With tightening sustainability regulations in Western markets, Esters customizable polymers offer a dual benefit: regulatory compliance and performance

enhancement for both backing and fiber systems.

As devices become more compact, connected, and thermally demanding, the need for engineering polymers like PBT and LCP is rising—especially in 5G

infrastructure, connectors, and wearables. The global consumer electronics market is projected to grow at 6-7% CAGR, while Indias market is expected to expand at a similar 6-7% CAGR (Average taken based on multiple research reports), driven by digital adoption and rising disposable incomes.

Esters specialty polymers are engineered for high-performance applications, offering thermal

stability, flame retardancy, and reliability in line with global OEM requirements.

Esters specialty polymer business is positioned at the intersection of material innovation and market transition. Whether its enabling recyclable packaging, supporting circular fashion, or powering next-gen electronics, Esters solutions are deeply embedded in future-ready industries.

With strong technical credentials, an innovation-led mindset, and deep customer engagement, Ester is primed to lead the specialty polymer wave across its focus sectors.

Ester Industries is building on its strong foundation in specialty polymers and polyester films to drive an ambitious next phase of growth. Our current strengths has been built on top of decades of manufacturing excellence, deep R&D expertise and - provide a solid base. Achieving our aspirations requires a decisive shift toward a more value-added product portfolio. We are focusing our strategy to capitalize on innovation and specialization, moving beyond commodities to higher-margin sustainable solutions in both specialty polymers and polyester films.

This strategic roadmap is captured in our "4G Model" (Growth, Gain, Granularity, Guardrails) framework". It aligns Esters long-term ambition with four strategic pillars, supported by four critical enablers, and

anchored in a robust foundation of people and processes.

At its core, the 4G Model ensures:

Together, these elements form an integrated pathway to sustainable value creation and margin resilience as Ester enters its next phase of growth.

Our six strategic themes that will help us achieve our vision are:

Accelerating high-margin specialty film sales and innovation.

Scaling up our Specialty Polymers business globally.

Each of these themes has dedicated initiatives and targets, forming a cohesive strategy that connects todays capabilities to tomorrows ambitions. Global reach, innovation, and sustainability are cross-cutting themes: we already serve 50+ countries and are one of Indias largest exporter of packaging films, giving us a strong global supply capability. Our culture of R&D and innovation (evidenced by 18+ granted patents and a JV with Loop Industries to advance circular chemistry) ensures we continue developing specialized solutions that meet emerging market needs. In the following sections, we outline each strategic theme and how it positions Ester to achieve our goals.

Shifting to value-added specialty films is central to our strategy for enhancing margins and global competitiveness. Ester is leveraging its expertise in specialty polyester films to significantly grow the share of high-value products in its portfolio.

Our approach is twofold:

This pivot to specialty films is expected to significantly enhance revenue contribution from specialties, drive margin improvement, and reinforce Esters position as a niche technology leader in the polyester film industry.

Parallel to our films business, we are scaling our high-margin Specialty Polymers segment, leveraging deep domain expertise and our broad portfolio. Our strategy focuses on driving volume growth and global market expansion while strengthening our innovation engine.

Market Expansion: We are deepening SP presence in both domestic and global markets. In India, targeted marketing and application development are unlocking new customers. Internationally, strong distribution partnerships are helping us enter high-potential geographies.

Innovation & Technical Services: Investments in R&D infrastructure and talent are accelerating innovation in polymer chemistry. Dedicated technical service teams are collaborating with customer R&D teams to co-develop tailored solutions and strengthen long-term engagement.

Quality & Capacity Enhancements: We are

modernizing our legacy polymer plant and upgrading quality systems to ensure reliability and higher utlisation. These improvements, along with recent capacity additions, including recycling capabilities - position us to meet rising demand with agility and quality.

With limited competition in select niches and a robust innovation pipeline, Specialty Polymers is poised to be a key value contributor in Esters long-term growth journey.

Improving cost efficiency is a critical element of our strategy to boost margins. Ester has launched a company-wide cost optimization program. This program spans operational efficiencies, input cost reduction, and fixed cost optimization to ensure we expand profitability even as we grow. Key focus areas include:

embracing process improvements and digitalization to automate workflows across functions. By increasing automation in manufacturing and support processes, we aim to improve throughput.

Together, these cost optimization levers will not only improve our bottom line but also create a leaner, more agile organization. The savings generated will be reinvested in growth and technology, creating a virtuous cycle of efficiency feeding innovation.

Ester operates three advanced manufacturing facilities across India and is committed to achieving world-class efficiency, safety, and quality standards. Through our structured Manufacturing Excellence program, we are strengthening operational reliability to support growth in specialty volumes.

practices are being embedded across plants to boost asset uptime, reduce defects, and maintain high utilization—especially as we modernize legacy equipment through targeted investments.

By enhancing yield, uptime, and safety, this initiative reinforces customer trust, supports scalable delivery, and positions us for reliable, high-quality growth.

Our people are central to Esters success, and we are strengthening our position as a people-first organization to support our growth ambitions. We are enhancing talent development, engagement, and organizational culture to foster innovation and operational excellence.

initiatives are underway to deepen leadership pipelines, retain top talent, and enhance employee engagement through targeted development, recognition, and work-life balance programs.

investing in a collaborative, inclusive, and high-trust work environment through wellness programs, continuous feedback, and culture-building initiatives.

This ongoing focus on people enables Ester to build a resilient, future-ready organization capable of executing on all strategic priorities with agility and excellence.

Ester is adopting a digital-first operating model to enhance agility, efficiency, and decision-making across the organization. Our digital transformation is a key enabler of growth, focused on building a scalable, data-driven enterprise.

automating core workflows and deploying real-time dashboards to reduce manual effort, improve accuracy, and enable faster, insight-led decisions across operations, sales, and finance.

Digital transformation is a key focus for next 18 months and investments have been committed towards this initiative in partnership with a leading business consultant of global repute. Together, these initiatives position Ester to manage greater scale with speed and efficiency—giving us a competitive edge in an evolving global landscape.

With the Esters 4G Model as our foundation, we are executing a bold and focused transformation. From scaling value-added segments and innovating new materials, to reducing costs and digitizing processes, our efforts are aligned to deliver higher profitability, increased customer stickiness, and stronger global competitiveness.

Ester is not just adapting to change, we are actively shaping the future of specialty materials, backed by technology, sustainability, and a relentless focus on excellence.

At Ester, we believe that disciplined execution stems from structured governance. Our three-tier governance model ensures strategic alignment, cross-functional coordination, and accountability across all levels of the organization.

This framework is central to how Ester drives transformation, manages risk, and delivers on its long-term growth ambitions.

Central Leadership Team

(CLT) Chairman, ED Corporate

Affairs, Deputy CEO, CFO

Process Owners Function Heads

Sets the companys strategic direction, monitors long-term objectives, and ensures oversight on key risks and compliance matters.

Comprising the Chairman, ED Corporate Affairs, Deputy CEO, and CFO, the CLT translates strategy into actionable priorities and drives enterprise-wide decision-making and alignment.

Responsible for operational execution, performance delivery, and process improvement across their respective areas. They serve as anchors for driving initiatives and ensuring feedback loops to leadership.

This structure enables Ester to operate with agility and discipline—ensuring that every initiative, from innovation to cost transformation, is aligned to our strategic goals and executed with shared ownership.

Production of Polyester Chips increased by 9.13% during the year under review. During FY 2023-24, the production of polyester chips was adversely affected by a 28-day shutdown of the Continuous Polymerization plant due to a technical breakdown. Additionally, production rates were reduced due to specific technical issues that impacted throughput. However, the plant has been operating at optimal capacity since then and during the financial year 2024-25.

Production of both non-metallized and metallized PET Film decreased marginally though demand supply imbalance improved during the year as demand continues to grow consistently.

On account of revival of economic scenario, demand for Specialty Polymer products increased in United States, which is our primary market for these products. Consequently, sales in terms of both volume and value increased significantly during the year under review.

Standalone net revenues from the operations for the year increased by 25.14% from Rs. 855.39 crores to Rs. 1,070.46 crores, due to the following factors:

a. Increase in sales of Polyester Chips by 88% in volumetric terms and by 84% in value terms.

b. Significant improvement in per unit sales realization and margins in BOPET Films driven by improved demand supply scenario.

c. Increase in the sales value of BOPET Films driven by higher realization & margins and higher proportion of Value Added & Specialty Films despite marginal reduction in volume of sales.

e. Increase in sales of Specialty Polymers by 92% in volumetric terms and 73% in value terms as United States witnessed tapering of recessionary trends.

During the year under review, sales of R-PET increased significantly both in volumetric and value terms. R-PET is reported as part of the Specialty Polymers segment.

Turnaround in operating and financial performance was mainly driven by significant improvement in the performance of Specialty Polymers SBU and margin improvement in BOPET Films while expenses remained rangebound due to tight control exercised by the management.

Additionally, the company raised Rs. 99.90 crores in new equity (including premium) in the month of March 2024. Receipt of Rs. 43.75 crores under Share Warrants issue of Rs. 175.00 crores resulted in improved liquidity position for the company. The company maintained a disciplined approach to debt repayment, adhering strictly to the repayment schedule for term borrowings. As a result, the financial leverage, as indicated by the Total Outside Liabilities to Total Net Worth ratio, stood at 0.42 as of 31^st March 2025. The book value per equity share was Rs. 96.54.

The Current Ratio is a Liquidity ratio that measures a Companys ability to pay short - term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities.

The ratio is used to evaluate a Companys financial leverage. It is a measure of the degree to which a Company is financing its operations through debt versus wholly owned funds. It is calculated by dividing sum totaL of totaL borrowings and totaL Lease LiabiLities by its shareholders equity.

The above ratio is used to evaluate debt service capabiLity of the Company. Higher ratio indicates better debt service capabiLity. It is measured by dividing the sum totaL of NPAT, Non-cash operating expenses Like depreciation & other amortizations, interest on term Loans & Lease LiabiLities and other adjustments Like Loss on sale of fixed assets etc. by sum total of Interest & lease payments and Principal Repayments during the year.

Return on Equity (ROE) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing NPAT for the year by average sharehoLders equity. Average shareholders equity is calculated by dividing sum totaL of sharehoLders equity at the beginning and at the end of the year by two.

Inventory Turnover is the number of times a Company sells and replaces its inventory during a period. It is caLcuLated by dividing cost of goods soLd by average inventory

The above ratio is used to quantify a Companys effectiveness in coLLecting its receivabLes or money owed by customers. The ratio shows how well a Company uses and manages the credit it extends to customers and how quickly that short - term debt is collected or is paid. It is calculated by dividing net sales turnover by average trade receivabLes.

The above ratio is used to quantify a Companys effectiveness in being abLe to use trade payabLes or money owed to suppliers as source for financing working capitaL needs of the Company. It is caLcuLated by dividing Net Purchases by Average Trade Payables. Net purchases are sum total of cost of material consumed, consumption of stores & spares, consumption of packing material, power & fuel and increase / decrease in raw material & stores & spares inventories.

It is calculated by dividing Net Sales by Working Capital.

The Net Profit Ratio is equal to how much net income or profit is generated as a percentage of Net Sales. It is calculated by dividing NPAT for the year by Net Sales during the year.

Return on Capital Employed (ROCE) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing NPAT for the year by capital employed. Capital employed is sum total of Tangible Net Worth, Total Debt and Deferred Tax Liability.

Return on Investment is a measure of profits earned on investments expressed in percentage. It is calculated by dividing sum of returns on CPs & others, profit on sale of investments and gain on fair valuation of financial assets by average investments. Average investment is caLcuLated by dividing sum totaL of investments (net of unrealized profits) at the beginning of year and at the end of the year by two.

It is understood that risk is an integral part of any business. At Ester, we are fuLLy aware of the risks our business faces and have been continuousLy investing in enhancing our risk management capabiLities. The company has estabLished an Enterprise Risk Management (ERM) framework and processes primarily to identify and mitigate risks that matter.

Our ERM framework is based on internationaLLy accepted guideLines, incLuding the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and ISO 31000 (Risk Management Guidelines). The framework comprises several key components: risk identification, risk categorization (viz: strategic risk, operationaL risk, compLiance risk, financial risk, and environmental, social & governance risk), risk assessment and rating, risk response, and risk mitigation.

Out of the library of risks collated, we have identified the top 11 risks (Risks that Matter) that are of the highest priority to our organization. The Risk Management Committee, constituted by the Board, monitors and reviews the identified risk and strategic risk management pLans of our company and provides necessary directions on the same.

We are continuously working on mitigating these identified risks to safeguard our business and ensure Long-term success. Considering ever changing, voLatiLe & dynamic environment, the risks and the mitigation plans are modified to aLign with the changed scenario / environment.

Upon detailed review of the identified risks & mitigation plan thereof, the Board is of the opinion that there are no risks which may threaten very existence of the Company.

The Risk Management Policy is available on the website of the Company at https-://www.esterindustries.com/sites/de- fault/files/Ester%20Risk%20Management%20Policv.pdf

Internal auditors carry out audits across all functions / processes and testing existence & effectiveness of the Internal Financial controls, enabling identification of areas where internal checks & controls may need to be strengthened. The Audit Committee of the Board reviews Internal Audit findings and provides strategic guidance on internal controls. The Audit Committee closely monitors the internal control environment within Company including implementation of the action plans emerging out of internal audit findings.

In an increasingly dynamic and competitive business environment, organizational agility has become a critical differentiator. Across industries, companies are recalibrating strategies, optimizing operations, reducing costs, enhancing quality, and innovating to stand out in the market. Continuous improvement in thinking and execution is now essential for maintaining a competitive edge.

To remain the preferred choice for our customers in terms of timeliness, quality, and cost-effectiveness, we must evolve constantly. This requires driving efficiency across all resource categories to maximize value creation and minimize waste.

At Ester, we continue to invest in our human capital through targeted people initiatives. A key area of focus is fostering a digital, results-oriented, and process-driven culture. Our Talent Management framework and Learning & Development programs are designed to build a workforce capable of navigating a rapidly changing business landscape, while aligning with our operational and strategic objectives.

To ensure consistent customer delivery, we are continuously reviewing and refining our business and functional processes. These processes form the backbone of our training programs, supporting our goal of building an agile and multi-skilled workforce.

We regularly re-evaluate team and individual performance metrics to reflect external realities, while also redefining roles to enhance company performance and support employees career growth. Technology continues to be a major enabler across the organization, with interventions extending to frontline operations to ensure seamless process adoption and performance tracking.

Creating a customer-centric organization demands a shift in culture and mindset. To drive this transformation, our senior management maintains regular communication and engagement across all levels of the workforce, ensuring alignment, motivation, and a shared vision for success.

Statements in this section relating to future status, events, circumstances, plans and objectives are forward - looking statements based on estimates and anticipated effects of future events. Such statements are subject to risks and uncertainties and accordingly are not predictive of future results. Actual results may differ materially from those anticipated in the forward - looking statements. The Company cannot be held responsible in any manner for such statements. The company undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.