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Ester Industries Ltd.

BSE: 500136 Sector: Industrials
NSE: ESTER ISIN Code: INE778B01029
BSE 00:00 | 20 Jul 43.15 -0.35






NSE 00:00 | 20 Jul 43.25 -0.40






OPEN 44.00
52-Week high 78.00
52-Week low 30.00
P/E 68.49
Mkt Cap.(Rs cr) 360
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 44.00
CLOSE 43.50
52-Week high 78.00
52-Week low 30.00
P/E 68.49
Mkt Cap.(Rs cr) 360
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ester Industries Ltd. (ESTER) - Director Report

Company director report

To The Members

Your directors are pleased to present the Thirty First Annual Report together withAudited Statement of Accounts of your Company for the year ended 31st March 2017.


(Rs. in lacs)

For the year ended 31.03.2017 For the year ended 31.03.2016
Sales and Other Income 77757.73 84541.74
Profit before Financial Expenses Depreciation and Tax 4616.77 7520.95
Less: Interest & Other Financial Expenses 3302.78 3601.43
Profit / (Loss) before Depreciation Extra Ordinary Items and Tax 1313.99 3919.52
Depreciation 2952.78 3236.25
Profit / (Loss) before Tax (1638.79) 683.27
Deferred Tax (544.15) 227.21
Profit / (Loss) after Tax (1094.64) 456.06
Balance brought forward from previous year 13157.37 12701.31
Balance Carried to Balance Sheet 12062.73 13157.37
Basic Earnings Per Share (Rupees) (1.31) 0.57
Diluted Earnings Per Share (Rupees) (1.31) 0.57


Your directors have not recommended payment of dividend as the Company has incurred NetLoss after Tax during the year under review. Your Company has not transferred any amountof Profit & Loss account to any reserve.


During the year under review your Company incurred a Net Loss after Tax of Rs. 1094.64lacs as compared to Net Profit after Tax of Rs. 456.06 lacs earned during the FY 2015-16.Revenue from Operations during the year under review stood at Rs. 77757.73 lacs ascompared to Rs. 84541.74 lacs during FY 2015-16 a reduction of 8.0% One of the mainreasons for reduced revenue from operations was no sale of Polyester Chips as compared to2940 MT sold during FY 2015-16 with corresponding reduction in revenue from operations byRs. 2249.56 lacs. Reduction in sales of Polyester Chips did not have major adverse impacton the financial performance of the Company as Polyester Chips being an intermediateproduct fetched marginal contribution.

Your company was successful in enhancing sales – in quantitative terms – ofPolyester Film by 4.6% despite depressed market conditions caused by significant capacityexpansion in India during the year under review. This growth would have been higher butfor shutdown of Film Plant # 1 & 3 necessitated for installation of Twin ScrewExtruder and major maintenance respectively. Reduction in unit selling price resulted in amarginal drop of 1.65% in value terms. Moreover owing to demand supply imbalancereduction in selling price was greater than the reduction in feedstock prices causingpressure on margins and thereby adversely affecting the profitability of the PolyesterFilm SBU. Domestic and global annual demand growth of 10% - 12% and 6% - 6.5% respectivelyprovides a ray of hope for a brighter future.

While sales of Engineering Plastics Compounds – in quantitative terms –reduced by 3.53% due to depressed market further aggravated by the demonetizationinitiative sales of Engineering Plastics for OFC application grew by 7.53% on the back ofincreased demand. Engineering Plastics SBU registered a marginal improvement inprofitability albeit at sales value lower by 7.02% and 6.31% respectively consequent toa significant reduction in prices of base polymers during second half of the FY 2016-17.

Specialty Polymers SBU witnessed a significant drop of 24.54% - in quantitative terms– owing to change in marketing strategy adopted by an overseas customer and also dueto quality issues in one of the high selling grades of FY 2015-16. Efforts to offset thesame through ramp up of sales volume of the other approved products did not yield thedesired level of success. Moreover an adverse product mix resulted in a higher drop of36.76% from Rs. 6581.65 lacs during FY 2015-16 to Rs. 4162.46 lacs in value terms.

Extra-ordinary items of expense as stated below further impacted performance of theCompany:

1. Payment of Rs. 169 lacs (Administrative & Other Expenses – part of Rates& Taxes) on account of reversal of Modvat Credit availed on HSD during the years1996-98 pursuant to Court Order.

2. Settlement of Euro 275000 (Rs. 192 lacs) towards addressing quality claim of anoverseas customer of Specialty Polymers.

While the Company's financial performance was sub-optimal due to various factors statedabove focus towards its strategic objective of enhancing sales of Value Added &Specialty products was sustained across all SBUs. The adverse impact of sub-optimalfinancial performance was mitigated partially through Business Improvement initiatives toimprove operating efficiencies and reduce costs. Various initiatives taken over the lastseven years – supported by capacity expansions – have resulted in Net Sales ofthe Company growing at a CAGR of 8.52% pa from Rs. 39537.06 lacs in FY2009-10 to Rs.70057.82 lacs in FY2016-17. This CAGR has been achieved despite significant reduction inthe prices of Company's products due to fall in feedstock prices consequent to fall in theprices of crude oil. During the year under review capacity utilization in Polyester Filmswas about 91% with production higher at 51778 MT as compared to 49430 MT during the FY2015-16. Capacity utilization would have been better but for loss of production due toreasons stated above. Your Company continues to make investments towards modernizationtechnical upgradation and debottlenecking initiatives in all the business segments toimprove productivity production efficiency and reduce wastages.


The Company has complied with the mandatory provisions of Corporate Governance asprescribed in the SEBI (LODR) Regulations 2015. We consider it our inherentresponsibility to disclose timely and accurate information regarding our financials andperformance as well as the leadership and governance of the Company.

Pursuant to SEBI (LODR) Regulations 2015 the Corporate Governance Report and theCertificate regarding compliance of conditions of Corporate Governance are made part ofthe Annual Report.


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 the Annual Report.


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 year2016-17.


Appointment of Directors

Mr. Arvind Singhania

Mr. Arvind Singhania was appointed as Whole-time Director (designated as ExecutiveChairman) of the Company from 21st May 2014 to 31st March 2017 by resolution ofNomination & Remuneration Committee and Board of Directors in their meeting held on21st May 2014. With effect from 11th February 2015 he was appointed as ManagingDirector (designated as "Chairman & CEO") till the end of his tenure i.e. 31stMarch 2017 by resolution passed in the Nomination & Remuneration Committee Meetingand Board of Directors Meeting and was approved by the shareholders vide specialresolution passed through Postal Ballot on 20th May 2015.

The tenure of office of Mr. Arvind Singhania expired on 31st March 2017. Thereforehis appointment for another period of 3 years i.e. from 1st April 2017 till 31stMarch 2020 on recommendation of the Nomination and Remuneration Committee was approvedby Board in its meeting held on 7th February 2017 subject to the approval ofshareholders. Accordingly requisite resolution forms part of the notice conveningforthcoming Annual General Meeting.

Mr. Pradeep Kumar Rustagi

Mr. Pradeep Kumar Rustagi was appointed as Whole-time Director of the Company from 1stApril 2014 to 31st March 2017 by Board of Directors and Nomination &Remuneration Committee Members. The tenure of office of Mr. Pradeep Kumar Rustagi expiredon 31st March 2017. Therefore his appointment for another period of 3 years i.e. from 1stApril 2017 till 31st March 2020 on recommendation of the Nomination andRemuneration Committee was approved by Board in its meeting held on 7thFebruary 2017 subject to the approval of shareholders. Accordingly requisite resolutionforms part of the notice convening forthcoming Annual General Meeting.

Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. ArvindSinghania will retire by rotation at the forthcoming AGM of Company and being eligibleoffers himself for re-election.

Key Managerial Personnel (KMP)

Mr. Arvind Singhania Chairman & Managing Director (designated as Chairman &CEO) Mr. Pradeep Kumar Rustagi Executive Director & CFO and Mr. Diwaker DineshCompany Secretary are the Key Managerial Personnel of your Company in accordance with theprovisions of Section 2(51) read with Section 203 of the Companies Act 2013 and rulesmade thereunder.


The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 2013 that he meets the criteria ofindependence as laid out in sub-section (6) of Section 149 of the Companies Act 2013 andother applicable provisions if any of Companies Act 2013 read with the Schedules andRules issued thereunder as well as SEBI (LODR) Regulations 2015.


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 the Annual Report.


M/s S. R. Batliboi & Company LLP Chartered Accountants was appointed as StatutoryAuditors by the Shareholders in their Annual General Meeting (AGM) held on 22nd September2014 to hold office from 28th AGM till 31st AGM. As required by the provisions of theCompanies Act 2013 their appointment was ratified by members each year at the AGM till31st AGM. Accordingly their appointment tenure will be expiring on 31stAGM.

In terms of Section 139 140 and other applicable provisions of Companies Act 2013 andrules made thereunder the Audit Committee and the Board of Directors have recommended forthe appointment of M/s Walker Chandiok & Co. LLP (Regn No. 001076N/N500013) toShareholders in this AGM in place of earlier Statutory Auditor for a period of 5 (five)years and a resolution related thereto forms part of the notice convening the forthcomingAGM.

The Auditors' Report for the year under review read together with Annexures do notcontain any qualification of significant nature and do not call for anyexplanation/clarification.

Cost Audit

In accordance with the Section 148 and other applicable provisions if any of theCompanies Act 2013 and rules made thereunder the Company is required to have the auditof its cost records conducted by a Cost Accountant in practice.

The Board has re-appointed M/s. R. J. Goel & Co. Cost Accountants as the CostAuditor for the Financial year 2017-18. In terms of the provisions of Section 148(3) ofthe Act read with the Companies (Audit and Auditors) Rules 2014 as amended theremuneration payable to the Cost Auditors has to be ratified by the Members of theCompany. Accordingly the Board seeks ratification of the remuneration payable to the CostAuditors for the financial year 2017-18. A resolution seeking your ratification of theremuneration of M/s. R. J. Goel & Co. is provided in the Notice of AGM.

Secretarial Audit

Section 204 of the Companies Act 2013 inter-alia requires every listed company toannex with its Board's report a Secretarial Audit Report given by a Company Secretary inpractice in the prescribed form. M/s Sanjay Grover & Associates Company Secretarieshas conducted secretarial audit of the Company for the financial year ended 31st March2017. The Report of M/s Sanjay Grover & Associates 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) read with Section 134(5) of theCompanies Act 2013 with respect (including any statutory modification(s) orre-enactment(s) for the time being in force) the Directors of your company on the basisof information placed before them by the Management and Auditors confirm that:-

1. in the preparation of the annual accounts for the Financial Year ended 31st March2017 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 judgement 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;

4. they have prepared the accounts of the Company for the financial year ended 31stMarch 2017 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; and6. 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's internal control procedures are adequate to ensure compliance withvarious policies practices and statutes. Your Company maintains a system of internalcontrols designed to provide reasonable assurance regarding the following:

• Effectiveness and efficiency of operations

• Adequacy of safeguards for assets

• Prevention and detection of frauds and errors

• Accuracy and completeness of the accounting records

• Timely and accurate preparation of reliable financial information Key controlshave been tested during the year and necessary corrective and preventive actions taken toaddress identified improvement areas. Few internal controls have been modified to alignwith change in scenario. Your Company has put in place adequate internal financialcontrols with reference to the financial statements.

Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014. These are in accordancewith generally accepted accounting principles in India. Changes in policies if any areapproved by the Audit Committee in consultation with the Statutory Auditors.

Your company operates in SAP an ERP system and has many of its accounting recordsstored in electronic form with periodic back up. The ERP system is configured to ensurethat all transactions are integrated seamlessly with the underlying books of accounts.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 SinghaniaChairman & CEO is enclosed as a part of the Corporate Governance Report which formspart of the Annual Report. A copy of the Code of Conduct is available on the Company'swebsite viz.

The Code of Conduct is based on the fundamental principles of good corporate governanceand corporate citizenship. The Code covers the

Company's commitment to sustainable development concern for occupational healthsafety and environment a gender friendly workplace vigil mechanism transparencyauditability and legal compliance etc.


During the financial year 2016-17 there was no change in the Capital of the Company.


Your Company's Equity Shares are currently listed with BSE Limited (BSE) and NationalStock Exchange of India Limited (NSE). The Company has paid the listing fees to BSE andNSE for the financial year 2017-18.


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 the Annual Report. The Committee has adopted a Corporate SocialResponsibility Policy. Brief outline of the CSR Policy of the Company along with totalamount spent on CSR and reason for unspent amounts are set out in "Annexure–C" of this report as prescribed in the Companies (Corporate SocialResponsibility Policy) Rules 2014.

The Policy is uploaded on Company's website and the same can be accessed at thefollowing link–


The Company has a Policy for performance evaluation of all the Directors Board as awhole 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 2013 aswell as SEBI (LODR) Regulations 2015.

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 evaluating 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 –


The Nomination and Remuneration Committee has framed a Nomination and Remunerationpolicy for determining criteria of 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 mattershave been outlined in the Corporate Governance Report which forms part of this Report.

The Policy is uploaded on Company's website and the same can be accessed at thefollowing link – The information required under Section 197 of the CompaniesAct 2013 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in "Annexure – D" of this report.The same is open for inspection at the Registered Office of your Company at all workingdays except Saturday till the date of AGM.


The Company has framed a Risk Management Policy covering risk management processgovernance and execution of the same. Under risk policy and risk management processdocument a monitoring process has been institutionalized to ensure periodic review oforganization risk profile identify emerging risks and assess the implementation status ofmitigation plans and propose change in the mitigation strategy. Major risks identified bythe businesses and functions are systematically addressed through mitigating actions on acontinuing 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 contract or arrangement with related partieswas entered into during the year under review. The company has not entered any transactionwith the Related parties which are not at arm's length. Accordingly no transactions arebeing reported in Form No. AOC-2 provided in "Annexure – E" pursuantto Section 134 of the Companies Act 2013 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 thefollowing link les/Related_Party_Transactions_Policy.pdf


Since Ester International (USA) Limited (EIUL) a wholly owned subsidiary of theCompany in USA did not have any operation since last many years the Board of Directors ofthe Company decided to dissolve EIUL. Accordingly EIUL was voluntarily dissolved videdissolution certificate dated 20th September 2016 issued by Department ofTreasury State of New Jersey USA.


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"forming part 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 Companyincorrect or misrepresentation of any financial statements and reports etc. The purposeof this Policy is to encourage employees and directors who have concerns about suspectedmisconduct to come forward and express these concerns without fear of punishment or unfairtreatment. The policy aims to provide an avenue for employees and directors to raiseconcerns and reassure them that they will be protected from reprisals or victimization forwhistle 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 – blower_policy.pdf


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 was no incident of sexualharassment reported in the Company during FY2016-17. For protection against sexualharassment Company has formed an internal complaints committee to which employees canwrite their complaints. The Company has a Prevention of Sexual Harassment Policy which haslaid down a process for dealing 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 co-operation 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 ensuringsatisfactory management of the Company. Your Directors also thank the shareholders fortheir continued support.

For and on behalf of the Board
Date: 2nd June 2017 Arvind Singhania
Place: New Delhi Chairman & CEO