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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) - Chairman Speech

Company chairman speech

Dear shareholders

It gives me great pleasure to present the annual report for the financial year 2015-16.

The year witnessed a subdued global economic activity contributed by lower growth inemerging markets and slower recovery in advanced economies .The world economy grew by 3.11percent in 2015 which is 0.31 percent lower from the previous year. Rebalancingin the Chinese economy and lower oil prices impacted world economy growth.

Chinese economy continued to report slower growth representing weaker investment andmanufacturing climate. Commodity prices remained under stress and financial markets sawincreased volatility. Oil prices continued to remain at lower level impacting fiscalpositions of oil exporting economies . Many of oil exporting nations experienced currencydepreciation and drop in currency reserves . On the other hand oil importing nations sawa favorable trade deficit

In spite of challenging global economic environment Indian economy performed wellduring last year GDP grew by 7.62 percent as compared to 7.32percent for the previous year. This was the fastest growth for Indian economy in last fiveyears. Fiscal deficit showed an improving trend . Headline inflation based on All Indiaconsumer price index recorded 4.93 percent in FY 2015-16 as compared to 5.93percent during previous year. Lower global oil prices helped to keep inflation undercontrol though the imports and exports both contracted by about 153 percent.

The performance of your company during last year was not up to the expectations Thesales declined by 14 3 percent due to drop in polyester chips business and lower rawmaterial prices . Despite drop in sales your company was able to improve EBITDA margin by1.2 percent

BOPET film BU continued to witness oversupply situation with global capacity operatingat the level around 70%. Lower margin and lower raw material costs caused a drop inoverall selling price as compared to the previous year. Your company has been transformingitself into technology driven enterprise to mitigate the impact of commoditization &cyclicality. Last year your company did selective capital investments for enhancing itscapability for offering value added products and as a result of these initiatives yourcompany was able to significantly grow its portfolio of its value added products . Lastyear your company improved its capacity utilization and implemented various cost savingsand efficiency improvement initiatives. With the help of these initiatives your companycontinued to build upon on its strategy of Innovation and Cost Leadership

After an impressive growth journey for three consecutive years the EngineeringPlastics SBU witnessed a negative sales growth of 10.5% and 4.9% in value and volumetricterms respectively. A significant drop in polymer prices consequent to declining crudeprices resulted in a greater drop in value terms. Our focused customer acquisitionprocess and new product development initiatives resulted in sustained sales growth of EPcompounds - catering to end-use segments such as automotive electrical & electronicsand appliances - despite the sluggish market conditions and increased competition. Salesinto the Optical Fiber Cable industry dropped significantly - owing to slowdown inimplementation of the BharatNet (earlier NOFN) project - resulting in overall drop insales . The EP SBU was however successful in improving unit contribution levels throughconcerted supply chain initiatives and enhanced customer mix

We have engaged the services of global consultants to enhance our applicationdevelopment as well as compounding/new product development capability which would help usin further strengthening our OEM relationship. With considerable efforts through the yeartowards finalising our growth strategy we would now be focusing on implementation of thesame to get back on the growth track in the domestic as well as exports markets .

The Specialty Polymer SBU continues to be the front runner in the company in terms oftransformation from being a commodity player to a technology player. The entire focus ofthe specialty Polymer SBU is to create niche products through extensive R&D to caterto the special needs in terms of properties required by the consuming industries. I amhappy to report that the efforts put in by the company over last four years has startedyielding results . Last year your company was successful in getting various technicalapprovals for many of its grades including the pertinent products like Stain ResistantMaster Batch and Hot Fill resin. While the volume development has been slower than desiredwe are happy with the overall acceptance of the products by customers and expect a fasterrate of increase in volumes over the next few quarters .We will continue to invest in thisbusiness to take advantage of the apparent potential that it promises .

Your company continues to foster an entrepreneurial spirit and create a performanceculture which encourages empowerment and ownership in every Esterian. Investing in peoplethrough scientific and focused development programs has always been one of the keyenablers to deliver Ester's strategic agenda. During the previous year cross functionalteams of identified high potential employees were created to drive various productivityenhancement and efficiency improvement projects. The benefits of these projects havealready started to accrue and would continue to contribute towards increasing Ester'scompetitiveness in future .

While the profitability of your company has remained below expectations we areconfident of achieving better operational performance in the future. Your company kept itsfocus on its journey to transform itself from a commodity enterprise to a technologycompany

I would like to take this opportunity to thank our dedicated Esterians whose hard workpassion and commitment is the key success factor for creating value for our investors .

I express my sincere gratitude to our shareholders investors and banks who continue tosupport us . I wish to express my appreciation to my colleagues on the Board for yourcontinued support and confidence in your company. We solicit your continued support totransform Ester into a robust business.

With regards Arvind Singhania

Chairman & CEO