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Ester Industries Ltd.

BSE: 500136 Sector: Industrials
NSE: ESTER ISIN Code: INE778B01029
BSE LIVE 15:43 | 18 Aug 32.50 -1.35
(-3.99%)
OPEN

32.60

HIGH

33.75

LOW

32.00

NSE 15:29 | 18 Aug 32.35 -1.35
(-4.01%)
OPEN

32.80

HIGH

33.70

LOW

32.10

OPEN 32.60
PREVIOUS CLOSE 33.85
VOLUME 17869
52-Week high 59.00
52-Week low 30.00
P/E
Mkt Cap.(Rs cr) 271
Buy Price 32.50
Buy Qty 37.00
Sell Price 0.00
Sell Qty 0.00
OPEN 32.60
CLOSE 33.85
VOLUME 17869
52-Week high 59.00
52-Week low 30.00
P/E
Mkt Cap.(Rs cr) 271
Buy Price 32.50
Buy Qty 37.00
Sell Price 0.00
Sell Qty 0.00

Ester Industries Ltd. (ESTER) - Auditors Report

Company auditors report

To the members of Ester Industries Limited Report on the financial statements

We have audited the accompanying standalone financial statements of Ester IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 312016the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information. Management'sresponsibility for the financial statements The Company's Board of Directors isresponsible for the matters stated in Section 134(5) of the Companies Act 2013 ("theAct") with respect to the preparation of these standalone financial statements thatgive a true and fair view of the financial position financial performance and cash flowsof the Company in accordance with accounting principles generally accepted in Indiaincluding the Accounting Standards specified under section 133 of the Act read with Rule7 of the Companies (Accounts) Rules 2014 . This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial control that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India as specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances . An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2016 its profit and its cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order.

2 . As required by section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

(e) On the basis of written representations received from the directors as on March312016 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312016 from being appointed as a director in terms of section164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure 2" to this report;

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i The Company has disclosed the impact of pending litigations on its financial positionin its financial statements - Refer Note 27 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Atul Seksaria
Place of Signature : New Delhi Partner
Date : May 25 2016 Membership Number: 086370

Annexure referred to in paragraph 1 of our report of even date under section 'Report onother legal and regulatory requirements'

Re: Ester Industries Limited ('the Company')

(i) (a) The Company has maintained proper records showing full

particulars including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification

(c) According to information and explanations given by the management the title deedsof immovable properties included in fixed assets are held in the name of the Company. Ithas been explained to us that the title deeds and possession letters of the freehold landand building has been given as security (mortgage and charge) against the term loans andworking capital loans taken from banks and that original title deeds are kept with thelead Bank- Bank of India and Tata Capital Financial Services Ltd as security for thelenders and therefore the same could not be made available to us for our verification andhas also not been independently confirmed by the banks .

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 . Accordingly the provisions of clause 3(iii)

(a) (b) and (c) of the Order are not applicable to the Company and hence not commentedupon.

(iv) In our opinion and according to the information and explanations given to usprovisions of section 186 of the Companies Act 2013 in respect of investments made havebeen complied by the Company. There are no other loans guarantees and securities grantedin respect of which provisions of section 185 and 186 of the Companies Act 2013 areapplicable .

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of polyester filmsand engineering plastics and are of the opinion that prima facie the specified accountsand records have been made and maintained. We have not however made a detailedexamination of the same.

(vii) (a) Undisputed statutory dues including provident fund

employees' state insurance income-tax sales- tax service tax duty of custom dutyof excise value added tax cess and other material statutory dues have generally beenregularly deposited with the appropriate authorities though there has been a slight delayin a few cases .

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of custom duty of excise value added tax and cess onaccount of any dispute are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Dispute on MODVAT credit taken on chips used in yarn and on exempted clearance of chips. Demand raised for duty on removal of PET Chips in custody 30.04 July 87 to June 93 and Jan 95 Commissioner Central Excise (Noida)
Central Excise Act 1944 Dispute on MODVAT credit taken on inputs and Capital Goods used in chips which were cleared at NIL duty. 173.86 March 90 to Feb 92 and Oct 94 to Feb 95 Commissioner (Appeals) Central Excise Ghaziabad
Central Excise Act 1944 Dispute on disallowance of MODVAT on TEG as documents were more than six months old. 4.80 March 92 Customs Excise Service Tax Appellate Tribunal (Delhi)
The Customs Act 1962 Demand for Custom Duty forgone on value based advance license . 57.71 June 93 to April 95 Commissioner/Additional Commissioner Customs (DEEC) Mumbai
Name of the Statute Nature of Dues Amount (Rs. in lacs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Demand on PET Chips waste cleared at nil rate of duty. MEG received under chapter X after rescinding of Notification No. 34/87 CE . Inadmissibility of MODVAT credit against PBT Chips and Polyester films . 4.57 July 93 to May 94 and Feb to Aug 2000 Deputy Commissioner Central Excise Rampur
Central Excise Act 1944 Demand raised on account of differences in stocks as per physical and book records . 7.72 November 1992 Commissioner Meerut II
Central Excise Act 1944 Reversal of Cenvat credit availed on HSD. 206.92 March 1994 to February 1997 and March 1997 to March 1998 High Court Delhi
Central Excise Act 1944 Demand on shortages on inputs on department physical verification 3.09 July 2010 Assistant Commissioner Rampur
The Customs Act 1962 Dispute on disallowance of remission on MEG lost in Transit and utilization of MODVAT credit 32.99 June 87 to Oct 88 March 91 to May 91 and 1993 Assistant Commissioner Rampur
Finance Act 1944 Demand for short payment of Service Tax against brokerage and commission 13.54 F. Y. 2011-12 Additional Commissioner Meerut
Income Tax Act 1961 Dispute on Disallowance of advertisement expenditure pursuant to Rule 6B of IT Rules 1962 by ITAT 1.16 A . Y. 1993-94 to 1997-98 Income Tax - Assessing officer
Income Tax Act 1961 Dispute on Disallowances of club expenditure on the contention that expenses not incurred wholly and exclusively for the business needs . 0.47 A . Y. 1993-94 to 1994-95 Income Tax - Assessing officer & Commissioner of Income Tax (Appeals) Delhi
Income Tax Act 1961 Dispute on Disallowances of 50% of entertainment expenses on the contention of non participation of the employee for incurring such expenditure 5.10 A . Y. 1993-94 to 1997-98 Income Tax - Assessing officer
Income Tax Act 1961 Dispute on disallowances of expenses relating to previous year 14.68 A . Y. 1993-94 to 1997-98 Income Tax - Assessing officer
Income Tax Act 1961 Dispute on disallowances of excess depreciation claimed by company commission paid to agent club expenses provision for doubtful debts and expenses incurred on earning exempt income by invoking section 14A of the Act 16.94 A . Y. 2004-05 to 2005-06 Income Tax Appellate Tribunal Delhi
Income Tax Act 1961 Dispute on disallowances of excess depreciation claimed by company bonus provision expenses incurred on earning exempt income by invoking section 14A of the Act 18 .15 A.Y. 2006-07 to A.Y. 2013-14 Commissioner of Income Tax (Appeals) Delhi & Income Tax Appellate Tribunal Delhi

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionand banks . The Company does not have any dues outstanding to debenture holders

(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of term loans for thepurposes for which they were raised. The Company has not raised any money way of initialpublic offer / further public offer / debt instruments during the year.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements

and according to the information and explanations given by the management we reportthat no fraud by the company or no fraud / material fraud on the company by the officersand employees of the Company has been noticed or reported during the year

(xi) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the Company has paid managerial remuneration whichis over and above the amount mandated by the provisions of section 197 read with ScheduleV to the Companies Act 2013 by Rs . 16.31 lacs as at March 312016 . As represented tous the Company has applied

to the Central Government seeking approval for the managerial remuneration paid inexcess and pending receipt of the same has not taken any steps to recover the excessamount so paid:

Name of the Managing Director to whom remuneration is provided or paid which is not in accordance with section 197 Amount involved (in excess of the limit prescribed) Amount due for recovery as at Balance sheet date Steps taken to recover the amount
Mr. Arvind Kumar Singhania 16.31 lacs 16.31 lacs The Company has applied to the Central Government seeking approval for the managerial remuneration paid in excess. Refer no. 28 of the financial statements

(xii) In our opinion the Company is not a nidhi company.Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given by the management theCompany has complied with provisions of section 42 of the Companies Act 2013 in respectof the preferential allotment or private placement of shares during the year According tothe information and explanations given by the management we report that the amountsraised have been used for the purposes for which the funds were raised

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013 .

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E /E300005 per Atul Seksaria
Place of Signature : New Delhi Partner
Date : May 25 2016 Membership Number: 086370

Annexure 2 to the Independent Auditor's report of even date on the Standalone FinancialStatements of Ester Industries Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of EsterIndustries Limited ("the Company") as of March 31 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate . Management's responsibility for internal financial controls The Company'sManagement is responsible for establishing and maintaining internal financial controlsbased on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013 .

Auditor's responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects .

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting .

Meaning of internal financial controls over financial reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements

Inherent limitations of internal financial controls over financial reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected .Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate .

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For S.R. Batliboi & Co. LLP
ICAI Firm Registration Number: 301003E/E300005 Chartered Accountants
Place of Signature : New Del Date : May 25 2016 per Atul Seksaria

hi Partner Membership Number: 086370