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Ester Industries Ltd.

BSE: 500136 Sector: Industrials
NSE: ESTER ISIN Code: INE778B01029
BSE LIVE 15:40 | 17 Aug 33.85 1.30






NSE 15:32 | 17 Aug 33.70 1.35






OPEN 32.60
VOLUME 12001
52-Week high 59.00
52-Week low 30.00
Mkt Cap.(Rs cr) 282
Buy Price 0.00
Buy Qty 0.00
Sell Price 33.85
Sell Qty 5.00
OPEN 32.60
CLOSE 32.55
VOLUME 12001
52-Week high 59.00
52-Week low 30.00
Mkt Cap.(Rs cr) 282
Buy Price 0.00
Buy Qty 0.00
Sell Price 33.85
Sell Qty 5.00

Ester Industries Ltd. (ESTER) - Director Report

Company director report

To The Members

Your directors are pleased to present the 29th (Twenty Ninth) Annual Reporttogether with Audited Statement of Accounts of your Company for the year ended 31st March2015 .


For the year ended 31.03.2015 For the year ended 31.03.2014
Sales and Other Income 98608.68 101956.88
Profit before Financial Expenses Depreciation and Tax 7407.77 7931.83
Less: Interest & Other Financial Expenses 3709.55 3486.77
Profit / (Loss) before Depreciation Extra Ordinary Items and Tax 3698.22 4445.06
Depreciation 3210.58 3030.39
Profit / (Loss) before Tax 487.64 1414 .67
Deferred Tax 103.73 573.96
Impact of Scheme of amalgamation relating to earlier period -- (3.76)
Profit / (Loss) after Tax 383.91 836.95
Balance brought forward from previous year 12317.40 11846.90
Appropriation: Dividend & Tax on Dividend -- 366.45
Balance Carried to Balance Sheet 12701.31 12317.40
Basic Earnings Per Share (Rupees) 0.61 1.34
Diluted Earnings Per Share (Rupees) 0.57 1.34


Your directors have not recommended payment of dividend as the Net Profit after Taxearned during the year under review is marginal. Your Company has not transferred anyamount of Profit & Loss account to any reserve .


During the year under review your Company earned a Net Profit after Tax albeit atreduced levels as compared to FY 2013-14. Revenue from Operations during the year underreview stood at Rs . 98608.68 lacs as compared to Rs. 101956.88 lacs during FY 2013-14 areduction of 3.3%. A significant reduction was witnessed in the price of feedstock used bythe Company - during the period from August 2014 to January 2015 - on account of theunprecedented fall in the price of Crude Oil . However this benefit could not be realizedas sluggish market conditions coupled with an oversupply situation resulted in a drop inthe Company's product prices which was greater than the fall in feedstock prices. Theconsequential impact on margins together with inventory valuation losses resulted in areduction in profits .

Despite sluggish market conditions your Company was successful in improving sales ofChips Polyester Films and Engineering Plastics - in quantitative terms - by 11% 1. 8%and 21% respectively. In order to mitigate the adverse effect of sluggish marketconditions and an oversupply scenario the Company sustained its focus towards increasingthe proportion of Value Added & Specialty products in its portfolio aligned with itsstrategic objective. Sales of Value Added & Specialty Films contributed about 15% ofthe total sales volume of Polyester Films in FY 2014-15 .

In the Engineering Plastics segment the Company maintained its aggressive growthstrategy registering a compounded annual growth rate - in quantitative terms - of 35%over the last three years This was significantly higher than the industry growth rateDuring the year under review the Company achieved a quantitative growth of 21% over theprevious year in sales of Engineering Plastics products primarily on account of a healthygrowth of about 60% in sales of Engineering Plastics for OFC application . ConsequentlyGross Revenue from sales of Engineering Plastics products increased from Rs . 16191.16lacs in FY 2013-14 to Rs . 19406.17 lacs in FY 201415 translating to a growth of 20% .Continuous growth ahead of industry helped the Company in securing the Plasticon GoldAward for the “Fastest Growing Enterprise - Processing (Engineering Polymers)"at the Plastindia Exhibition in February 2015.

Various initiatives taken over the last five years - supported by capacity expansions -have resulted in Net Sales of the Company growing at a CAGR of 17.9% pa from Rs .39537.10 lacs in FY2009-10 to Rs . 89626.76 lacs in FY2014-15.

During the year under review capacity utilization in Polyester Films was about 77%with production marginally higher at 43788 MT as compared to 42846 MT during the year2013-14 .

Interest and financial expenses during the year under review were 4 .14% of Net Saleswith overall leveraging at prudent levels of 1. 55 .

Details on operations a view on the outlook for the current year and variousstrategies (internal and external) adopted by the Management are provided in the'Management Discussion & Analysis Report' which forms an integral part of this AnnualReport.


Your Company is continuously concerned about ongoing global environmental issues andaccordingly commissioned a Bio-mass (Rice Husk) fuelled Thermic Fluid Heater of 10 MKCalcapacity - during the year under review - to enhance its Thermal Energy generationcapacity whilst reducing dependence on Furnace Oil and also achieving savings in theprocess . In addition to the existing UPS of 7950 KVA a rotary type UPS of 1670 KVA hasalso been commissioned to improve quality and reliability of operations.

Aligned with the strategic objective of increasing the proportion of Value Added &Specialty products the Company is in the process of modifying its Film Line # 1 byinstalling a Twin Screw Extruder and Primary Scanner for measuring Thickness . With thismodification Film Line # 1 will be able to produce various Specialty Films with reducedconversion cost and wastage . The modification is likely to be completed by August 2015.

To exploit opportunities likely to be created in the Optical Fiber Cable segment uponimplementation of Digital India program of the Government of India the Company is likelyto commission two 24 cubic meters SSP dryers to enhance its Solid State Polymerization(SSP) capacity by 1800 TPA during the year 2015-16 .

Your Company continues to make investments towards modernization technical upgradationand debottlenecking initiatives in all the business segments . During the year underreview the Company undertook Business Improvement initiatives towards controlling costsimproving quality and operating efficiency. Your Company would continue to focus onBusiness Improvement initiatives to further improve operating efficiencies and reducecosts


The Company has complied with the mandatory provisions of Corporate Governance asprescribed in the Listing Agreement with the Stock Exchanges A separate report onCorporate Governance which forms part of this Board's Report is included as a part of theAnnual Report along with the Practicing Company Secretary's Certificate on its compliance


The Management's Discussion and Analysis Report on performance state of affairs of thecompany risk management system industry trends and other material changes andcommitments if any affecting the financial position of the company forms an integralpart of this Report.


In accordance with Section 129(3) of the Companies Act 2013 a statement containingsalient features of the financial statements of the subsidiary companies in Form AOC-1 isprovided as part of this Annual Report.

In accordance with Section 136 of the Companies Act 2013 the Annual Report of theCompany containing audited standalone and consolidated financial statements including allother documents required to be attached thereto and financial statements of subsidiarieshave been uploaded on the website of the Company at

Further the financial statement of the Subsidiary Company shall be made available tothe members of the Company on their request. Such Annual Accounts are also kept forinspection by any member at the Corporate Office and Registered Office of the Company onbusiness hours on all working days except Saturday till the date of AGM

The Board has formulated a Policy on Material Subsidiaries to set out the criteria todetermine "Material Subsidiaries" in accordance with provision of Clause 49 ofthe Listing Agreement The policy can be accessed on Company website at the following link-

Policy on material subsidiary .pdf


The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on public deposits was outstanding at the end of financial year2014-15 .


Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under Section 149 and otherapplicable provisions if any of Companies Act 2013 read with the Schedules and Rulesissued thereunder as well as Clause 49 of the Listing Agreement.


The details of the composition of Board of Directors and Audit Committee and number ofBoard and Audit Committee meetings held during the year are given in the CorporateGovernance Report which forms part of this Report .


Statutory Audit

During the year M/s . S. R. Batliboi & Associates LLP Chartered Accountants hadexpressed their unwillingness to be considered for reappointment as Statutory Auditors ofthe Company in the 28th AGM held on 22nd September 2014 .

At the recommendation of Audit Committee and the Board M/s S R Batliboi & CompanyLLP Chartered Accountants was appointed as Statutory Auditors by the Shareholders tohold office from 28th AGM till 31st AGM subject to the ratification by the Shareholdersevery year. The appointment is accordingly proposed in the Notice of AGM for ratificationby the Shareholders .

The Auditors' Report read together with Annexures do not contain any qualification ofsignificant nature and do not call for any explanation/clarification

Cost Audit

The Board of Directors had appointed M/s. Sanjay Gupta & Associates CostAccountants as the Cost Auditor of your Company for the financial year 2014-15 to conductthe audit of the cost records of your Company. The Cost Auditor has submitted the reportof the Audit Committee and the Board There are no qualifications reservation or adverseremark made by the auditor in the report .

In accordance with the Section 148 and other applicable provisions if any of theCompanies Act 2013 and rules made thereunder the Board of Directors of your Company hasappointed M/s . R J . Goel & Co . Cost Accountants as the Cost Auditor for thefinancial year 201516 on the recommendations made by the Audit Committee.

In terms of Section 148 of the Companies Act 2013 and rules made thereunder aresolution seeking your ratification of the remuneration of M/s . RJ . Goel & Co. isprovided in the Notice of AGM .

Secretarial Audit

The Board during the year appointed M/s Sanjay Grover & Associates CompanySecretaries to conduct secretarial audit of the Company for the financial year ended 31stMarch 2015 .The Report of M/s Sanjay Grover & Associates in terms of Section 204 ofthe Act is provided in the “Annexure-A" forming part of this Report.

There are no qualifications reservation or adverse remark made by the auditor in thereport.


Pursuant to the requirement under Section 134(3)(C) of the Companies Act 2013 withrespect to the Directors' Responsibility Statement the Directors confirm that: -

1. in the preparation of the annual accounts for the Financial Year ended 31st March2015 the applicable Accounting Standards have been followed along with proper explanationrelating to material departure if any.

2 they have selected appropriate accounting policies and applied them consistently andmade judgment and estimates that were reasonable and prudent so as to give a true andfair view of the state of the affairs of the Company at the end of the financial year andof the Profit and Loss of the Company for the year under review;

3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and

4 . they have prepared the accounts of the Company for the financial year ended 31stMarch 2015 on a going concern basis .

5. proper internal financial controls laid down by them were followed by the Companyand 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 allapplicable laws and that such systems were adequate and operating effectively.


Your company has put in place adequate internal financial controls . The systems andprocedures adopted by the company ensure the orderly and efficient conduct of its businessand adherence to the Company's policies prevention and detection of frauds and errorsaccuracy and completeness of records and the timely preparation of reliable financialinformation .

Your company operates in SAP an ERP system and has many of its accounting recordsstored in an electronic form and backed up periodically The ERP system is configured toensure that all transactions are integrated seamlessly with the underlying books ofaccounts .

Management periodically reviews the financial performance of your Company against theapproved plans across various parameters and takes necessary actions wherever necessary.

The Company's Internal Auditors have conducted periodic audits to evaluate the adequacy& effectiveness of financial and operating internal controls to report significantfindings to the Audit Committee of the Board and to provide reasonable assurance that theCompany's established systems policies and procedures have been followed The AuditCommittee constituted by the Board reviews the internal controls and financial reportingissues with Internal Auditors on a regular basis

Compliance with laws and regulations is also monitored through a well laid downframework which requires individual functions to confirm and report statutory complianceson all laws and regulations concerning their respective functions This gets integratedwith the overall compliance reporting on all laws and regulations for the purpose ofreview and monitoring by the Board .


The Code of Conduct as adopted by the Board of Directors is applicable to allDirectors and senior management of the Company. They have affirmed compliance with theCode of Conduct. A declaration to this effect duly signed by Mr. Arvind Kumar SinghaniaChairman & CEO is enclosed as a part of the Corporate Governance Report which formspart of this report. A copy of the Code of Conduct is available on the Company's websiteviz.

The Code of Conduct is based on the fundamental principles of good corporate governanceand corporate citizenship. The Code covers the Company's commitment to sustainabledevelopment concern for occupational health safety and environment a gender friendlyworkplace transparency auditability and legal compliance .


During the financial year 2014-15 the following changes were effected in the ShareCapital of your Company:-

1. Scheme of Amalgamation-

Pursuant to Scheme of Amalgamation between the Company and Sriyam Impex Private Limited(SIPL) 9972703 Equity Shares of Rs. 5/- each were issued to the Shareholders of SIPL and10222650 held by SIPL in the Company were cancelled.

2. Preferential Allotment to Non-Promoter entity -

20750000 Warrant of Rs . 10 .10/- each convertible into Equity Shares of Rs . 5/- ata premium of Rs . 5.10/- were issued to a NonPromoter entity. The said warrants have beenconverted into Equity Shares in the Board Meeting held on 25th May 2015.


Your Company's Equity Shares are currently listed with Bombay Stock Exchange Limited(BSE) and National Stock Exchange of India Limited (NSE) .The Company has paid the listingfees to BSE and NSE for the financial year 2015-16 .


The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure - B".


The particulars of the loan if any (along with the purpose of utilization by recipientof loan) and investments covered under Section 186 of the Companies Act 2013 are providedin Notes 12 13 to financial statements. The Company has not issued any guarantee orprovided any security as covered under Section 186 of the Companies Act 2013 .


Pursuant to Section 135 of the Companies Act 2013 and rule made thereunder the Boardof Directors has constituted a Corporate Social Responsibility (CSR) Committee. Thedetails of the Composition of the Committee is set out in Corporate Governance Reportwhich forms part of this report. The Committee has adopted a Corporate SocialResponsibility Policy. Brief outline of the CSR Policy of the

Company are set out in "Annexure -C" of this report as prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. The policy is available onthe website of the Company viz.

As per Section 135(5) of the Act the Company needs to ensure that at least 2% ofaverage net profit of preceding three financial years is spent on CSR activities asmentioned in CSR Policy. However due to losses incurred in past and average of precedingthree financial years (2011-12 2012-13 and 2013-14) being a loss the Company has notincurred amount on CSR activities during financial year 2014-15.


The Company has devised a Policy for performance evaluation of all the Directors Boardas a whole and Committees of the Board .

An annual evaluation was carried out of the performance of the Board Board committeesall the directors and Chairperson pursuant to the provisions of the Companies Act 2013and the requirements of Clause 49 of the Listing Agreement .

During the year the following evaluation process was adopted -

1. Independent Directors at their separate meeting without the presence ofNon-Independent Director had reviewed the performance of the Chairperson Non-IndependentDirectors and the Board While evaluation the performance of the Chairman the views ofexecutive directors and non-executive directors were also taken into account.

2. Nomination and Remuneration Committee carried out the evaluation of every Director'sperformance The Committee while doing so considered the outcome of meeting ofIndependent Directors;

3 The Board had evaluated its own performance performance of its Committees and eachDirector While conducting the evaluation the Board considered and discussed the outcomeof the separate meeting of Independent Directors and the meeting of Nomination &Remuneration Committee

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.

The process of evaluation was based on the criteria prescribed in the Policy onPerformance Evaluation . The Policy is uploaded on Company's website and the same can beaccessed at the following link

Performance Evaluation Policy. pdf


The Nomination and Remuneration Committee has framed a Nomination and Remunerationpolicy for determining criteria selection and appointment of Directors Key ManagerialPersonnel Senior Management Personnel including determining qualifications positiveattributes independence of a Director and other matters provided under Section 178(3) ofthe Companies Act 2013 . The salient aspects covered in the Nomination and RemunerationPolicy covering the policy on appointment and remuneration of Directors

and other matters have been outlined in the Corporate Governance Report which formspart of this Report.

The information required under Section 197 of the Companies Act 2013 read with Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isprovided in "Annexure - D" of this report. The same is open for inspection atthe Registered Office of your Company at all working days except Saturday till the dateof AGM .


As per the requirements of Clause 49 of the Listing Agreement the Board of the Companyhas formed a risk management committee of directors to frame implement and monitor therisk management plan for the Company. The details of the Composition of the Committee isset out in Corporate Governance Report which forms part of this report. The Company hasframed a Risk Management Policy covering risk management process governance and executionof same. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis


All contracts or arrangements with related parties entered into or modified during thefinancial 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 AuditCommittee and the Board. However no material contracts or arrangements with relatedparties were entered into during the year under review Accordingly no transactions arebeing reported in Form No. AOC-2 provided in "Annexure - E" pursuant to Section134 of the Act read with Rule 8 of the Companies (Accounts) Rules 2014.

The details of the related party transactions as required under Accounting Standard -18 are set out in Note 34 to the standalone financial statements forming part of thisAnnual Report.

The Policy on Related Party Transactions can be accessed on the Company website at

Related Party Transactions Policy. pdf


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as prescribed under Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 is set out in the "Annexure - F" formingpart of this report.


The Company has formulated Vigil Mechanism/Whistle Blower Policy with a view to providea mechanism for employees of the Company to raise concerns of suspected frauds anyviolations of legal/regulatory

requirements or code of conduct/policy of the Company incorrect or misrepresentationof any financial statements and reports etc. The purpose of this Policy is to encourageemployees and directors who have concerns about suspected misconduct to come forward andexpress these concerns without fear of punishment or unfair treatment. The policy aims toprovide an avenue for employees and directors to raise concerns and reassure them thatthey 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 theBoard and no employee has been denied access to the Committee. The Policy can be accessedon the Company website at following link -



In terms of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and rules made thereunder it is mandatory to review status of sexualharassment related complaints in the Annual Report There were no incidents of sexualharassment reported in the Company. For protection against sexual harassment Company hasformed an internal complaints committee to which employees can write in their complaintsThe Company has a Prevention of Sexual Harassment Policy which has laid down a process fordealing with such issues


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


Your Directors acknowledge the cooperation and assistance received from variousdepartments of the Central & State Government banks and Non-banking financecompanies. Directors also express their gratitude and thanks to Customers Suppliers andother Business Associates for their continued co-operation and patronage

Your Directors wish to place on record their appreciation of the sincere servicesrendered by the workmen staff and executives of the Company at all levels ensuringsuccessful management of the Company Your Directors also thank the shareholders for theircontinued support

For and on behalf of the Board

New Delhi Arvind Kumar Singhania
27th July 2015 Chairman & CEO