It gives me immense pleasure to present the annual report for the financial year2020-21.
The year 2020-21 can be characterized as an year of extraordinary challenges. The worldhas seen a considerable amount of turbulence over the past year due to the globalpandemic. These are testing times not only for the businesses around the world but alsofor humanity in general. We believe that the challenges like these provide us numerousopportunities to innovate and better serve our customers. We have seen countless inspiringexamples of resilience in this past year. organizations assessed their circumstancesrevised their strategic plans and marched towards a better future. We were also able tosuccessfully steer through the pandemic. With our extensive efforts towards businesscontinuity and product innovation your company has delivered the best financialperformance till date in over a decade. As per IMf Global economy contracted by 3.3percent in fY 20-21 owing to CoVID 19 Pandemic. The pandemic disrupted global supplychains operating models and led to a lifelong change in consumer sentiments andbehavior. As the world adapted to a new normal post the pandemic led recession vaccinerollout raised hopes of improved economic outlook. With second wave of CoVID 19 emergingacross major economies lockdowns & travel restrictions undercut an already fragileglobal economy. other issues like Indo-China relations and global container shortage ledto disruptions in international supply chains. With increased vaccine penetration andeased lockdown restrictions economic activities are expected to reach pre-CoVID levels bythe end of 2021. IMf expects global growth to reach 5.6% in 2021 even though uncertaintiespersist on the path to recovery. Indian economy in line with the global economy wasseverely hit by the Pandemic and contracted by 7.3% in fY 20-21. During second half offY20-21 the rural economy has shown impressive growth led by good monsoon season andstrong demand. The projections of a normal monsoon in the current year strengthen therural outlook further. Government and RBIs measures to inject liquidity into thesystem will also support the economic revival in a longer run. According to IMf Indianeconomy is projected to revive strongly and grow by 9.5% in fY 21-22. Amid CoVID-19flexible Packaging Industry continued to play a crucial role in adding value to food &beverages and pharmaceutical industries by delivering preservation of quality and enhancedshelf life of finished products. The Flexible packaging market witnessed a boost in demandduring fY20-21 and is poised to grow by $ 12.72 billion during 2021-2025 progressing at aCAGR of almost 11%.
Despite COVID-19 affecting our business in first quarter of FY21 we proactivelyadopted strategic measures across our operations to counter the adverse impacts of thepandemic. During fY21 your company has shown strong financial performance with profits atan all-time high. Our EBITDA margin has increased to 24.5% in the current year as comparedto 18.4% in fY20 whereas Profit after Tax grew by 43% in FY21 to Rs 142 crores as againstRs 99.5 crores during the last year.
The Polyester film market in India continued to grow to the tune of 10-12 percent infY20-21. The business continued to drive the bulk of the revenue and profitabilitymomentum of the company benefiting from the improved demand supply dynamics. The salesvolume recorded a slight decline from 58033 metric tonnes in fY20 to 56336 metric tonnesin fY21 primarily due to production getting affected in initial months of fY21. Betterproduct margins and richer product mix has led to increased profitability in FY21 ascompared to the previous year.
During the current year we expect the domestic demand growth to remain strong drivenby fMCG and pharmaceutical demand and export demand to remain steady. The supply dynamicsof the industry may get disrupted on a short to medium term with various capacityexpansions planned in the second half of the current year. To offset the impact to thisdynamics your company is continuously working towards increasing the share of value addedproducts & we expect it to reach ~30% of total volumes within next 2 years. Inaddition we are on course in implementing the BOPET film capacity expansion project inthe State of Telangana which is expected to be completed by october 2022. engineeringPlastics industry witnessed de-growth in market in fY 20-21 due to the impact of Covid-19.In the domestic market the Auto Segment largest end-use segment witnessed adecline of 18%. The Electrical segment was flat but OFC segments experienced a growth 15%on account of infrastructure development and connectivity requirement (5G up gradation/work from home). Despite this esters eP SBU registered a sales growth of 27.5% (23%in volumetric terms). An increase of ~5% in unit selling price consequent to asteady increased polymer prices almost throughout H2 of fY21 accounted for thehigher growth in value terms. Sales volumes of eP compounds (catering to end-usesegments such as automotive electrical & electronics and appliances) registered agrowth of 18% whereas volumetric sales to the optical fiber Cable industry grew by ~31%.Your Company grew its sales through new approvals/new customer acquisitions and alsomaintained its steady exports growth journey with volumes into the exports marketregistering a growth of >58%. A good momentum was seen in H2 backed by improved marketconditions in the electrical & ofC segments. Given the prevailing uncertainty onaccount of CoVID-19 in H1of fY22 your company would focus on customer/market retentionprudent working capital management and further reduction in fixed/ variable costs toensure sustained performance of the SBU. We are also implementing the relocation expansionof eP SBU from Khatima to Gujarat which will further bring down operating costs largely onaccount of better logistics. With the eP Industry expected to bounce back in Q2 yourcompany would work aggressively towards growing volumes & profitability.
The Specialty Polymer business witnessed a challenging year largely owing to CoVID-19led disruptions. The business is largely export dependent and given the CoVID relatedrestrictions and lockdowns some of our key markets including USA witnessed severe demandreduction. However the situation has started to improve since last quarter of FY20-21which gives us confidence to perform much better in fY21-22. I am happy to inform that ourproduct deep-dyeable master batch MB07 has finally been approved and significant hasstarted moving in the last few months. We expect this product to contribute significantlyto the business moving going forward.
Similarly our other product cationic dyeable master batch MB16/06 has shown progresstowards customer approval and we expect regular commercial volumes to start duringfY21-22. The marquee product namely stain resistant masterbatch MB-03 has seen substantialimprovement in offtake since Q3 FY21.
The supply of innovative Polybutylene Terephthalate (PBT) has exceeded its minimumcontract volume in fY21 also and we expect the volume to continue growing in coming years.further our new product launch LMC03 the low melt adhesive used in carpet industry hadbeen positively received by clients. We are happy to announce that the commercial sales ofthe product has already commenced and we expect this product to contribute significantlyto both the top line and bottom line going forward. On our efforts towards sustainabilitywe have resumed the erection and commissioning of our recycled polyester productionfacility and we expect that the commercial sales of the product will start from thecurrent financial year. In line with our vision to be a technology driven company we havedeveloped a healthy pipeline of products which are in various stages of research anddevelopment. These line of products are expected to further add to the fortunes of SBU andthe company. We are confident that as this business scales up it will be the premiergrowth driver and will help in enhancing the overall profitability profile of the companyin long run.
We believe that we are well positioned to deliver consistent growth and create valuefor all our stakeholders. All the businesses are well poised to embark on their nextgrowth phase. Beyond the strong financial performance we continue our strategic focus onstrengthening our product portfolio leading innovation serving our customers whilegiving back to the community. The core of our existence is to create value for ourcustomers and stakeholders and this continues to remain our focus. on behalf of esterfamily I would like to extend our sincere gratitude to Corona Warriorsespecially doctors paramedical personnel government workers who continue to fighttirelessly to keep us safe and healthy. I would also like to express my sincere gratitudeto our shareholders investors partners and banks who continue to support us. I expressmy appreciation to colleagues on the Board for their continued support and confidence inEster. We solicit your continued support towards esters transformation.
Arvind Kumar Singhania
Chairman & Ceo