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Directors Report of Ester Industries Ltd.

Mar 31, 2015

The directors are pleased to present the 29th (Twenty Ninth) Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2015

FINANCIAL RESULTS (Rs in lacs)

For the year ended For the year ended

31.03.2015 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

DIVIDEND AND RESERVES

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

OPERATIONS REVIEW

During the year under review, your Company earned a Net Profit after Tax, albeit at reduced levels as compared to FY 2013-14 Revenue from Operations during the year under review stood at Rs 98608 68 lacs as compared to Rs 101956 88 lacs during FY 2013-14, a reduction of 3 3% A significant reduction was witnessed in the price of feedstock used by the Company – during the period from August 2014 to January 2015 – on account of the unprecedented fall in the price of Crude Oil However, this benefit could not be realized as sluggish market conditions, coupled with an oversupply situation, resulted in a drop in the Company's product prices which was greater than the fall in feedstock prices The consequential impact on margins, together with inventory valuation losses, resulted in a reduction in Profits

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

In the Engineering Plastics segment, the Company maintained its aggressive growth strategy, registering a compounded annual growth rate – in quantitative terms – of 35% over the last three years This was significantly higher than the industry growth rate During the year under review, the Company achieved a quantitative growth of 21% over the previous year in sales of Engineering Plastics products, primarily on account of a healthy growth of about 60% in sales of Engineering Plastics for OFC application Consequently, Gross Revenue from sales of Engineering Plastics products increased from Rs 16191 16 lacs in FY 2013-14 to Rs 19406 17 lacs in FY 2014- 15, translating to a growth of 20% Continuous growth ahead of industry helped the Company in securing the Plasticon Gold Award 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 year 2013-14

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

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

EXPENDITURE ON PLANT & MACHINERIES AND PROJECTS UNDER IMPEMENTATION

Your Company is continuously concerned about ongoing global environmental issues and accordingly commissioned a Bio-mass (Rice Husk) fuelled Thermic Fluid Heater of 10 MKCal capacity – during the year under review – to enhance its Thermal Energy generation capacity whilst reducing dependence on Furnace Oil and also achieving savings in the process In addition to the existing UPS of 7950 KVA, a rotary type UPS of 1670 KVA has also 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 by installing a Twin Screw Extruder and Primary Scanner for measuring Thickness With this modification, Film Line # 1 will be able to produce various Specialty Films with reduced conversion 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 upon implementation of Digital India program of the Government of India, the Company is likely to 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 upgradation and debottlenecking initiatives in all the business segments During the year under review, the Company undertook Business Improvement initiatives towards controlling costs, improving quality and operating efficiency Your Company would continue to focus on Business Improvement initiatives to further improve operating efficiencies' and reduce costs

CORPORATE GOVERNANCE

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

MANAGEMENT DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis Report on performance, state of afairs of the company, risk management system, industry trends and other material changes and commitments, if any, affecting the financial position of the company forms an integral part of this Report

SUBSIDIARY COMPANIES

In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is provided as part of this Annual Report

In accordance with Section 136 of the Companies Act, 2013, the Annual Report of the Company containing audited standalone and consolidated financial statements including all other documents required to be attached thereto and financial statements of subsidiaries have been uploaded on the website of the Company at www.esterindustries.com.

Further the financial statement of the Subsidiary Company shall be made available to the members of the Company on their request Such Annual Accounts are also kept for inspection by any member at the Corporate Office and Registered Office of the Company on business 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 to determine "Material Subsidiaries" in accordance with provision of Clause 49 of the Listing Agreement The policy can be accessed on Company website at the following link -

http://www.esterindustries.com/ester_cms/userfiles/file/policies/ Policy_on_material_subsidiary.pdf

PUBLIC DEPOSIT

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on public deposits was outstanding at the end of financial year 2014-15

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr Arvind Kumar Singhania has been appointed as Whole-time Director from 21st May 2014 till 31st March 2017 by the Board in the meeting held on 21st May, 2014 and by the Shareholders in the AGM held on 22nd September, 2014 In the Board Meeting held on 11th February, 2015, he has been appointed as Managing Director of the company for the remaining tenure viz from 11th February, 2015 till 31st March 2017 and designated as Chairman & CEO by the Board of Directors and the appointment was approved by the Shareholder through Postal Ballot

Mrs Archana Singhania was appointed as Additional Director (Non- Executive) of your Company at the meeting of the Board of Directors held on 4th August, 2014 and subsequently appointed as a Non- Executive Director by the shareholders at the AGM held on 22nd September, 2014

In the last Annual General Meeting of the Company held on 22nd September, 2014, Mr V B Haribhakti, Mr M S Ramachandran, Mr Dinesh Kothari, Mr P S Dasgupta, Mr Anand Chand Burman, Mr Ashok Newatia were appointed as Independent Directors to hold Office till 31st March, 2019 in accordance with the requirement of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement

During the year Mr V B Haribhakti has resigned from the directorship of the Company He was also the Chairman of the Audit Committee and Nomination & Remuneration Committee Your Directors record appreciation for the services and guidance rendered by him

Mr Sandeep Dinodia, Chartered Accountant was appointed as the Additional Director of the Company w e f 25th May, 2015 in the capacity of Independent Director He has also been appointed as the Chairman of Audit Committee A resolution proposing his appointment as Independent Director to hold Office up to 5 (fve) consecutive years up to 31st March, 2020 forms part of the Notice of the forthcoming AGM

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr Pradeep Rustagi will retire by rotation at the forthcoming AGM of Company and being eligible, ofer themselves for re-election

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

DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149 and other applicable provisions, if any, of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement

COMPOSITION AND MEETING OF THE BOARD AND AUDIT COMMITTEE

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

AUDITORS AND AUDIT REPORT

Statutory Audit

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

At the recommendation of Audit Committee and the Board, M/s S R Batliboi & Company LLP, Chartered Accountants, was appointed as Statutory Auditors by the Shareholders to hold Office from 28th AGM till 31st AGM subject to the ratification by the Shareholders every year The appointment is accordingly proposed in the Notice of AGM for ratification by the Shareholders

The Auditors' Report read together with Annexure do not contain any qualification of significant nature and do not call for any explanation/clarification

Cost Audit

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

In accordance with the Section 148 and other applicable provisions, if any, of the Companies Act, 2013 and rules made thereunder, the Board of Directors of your Company has appointed M/s R J Goel & Co , Cost Accountants as the Cost Auditor for the financial year 2015- 16 on the recommendations made by the Audit Committee

In terms of Section 148 of the Companies Act, 2013 and rules made thereunder, a resolution seeking your ratification of the remuneration of M/s R J Goel & Co is provided in the Notice of AGM

Secretarial Audit

The Board, during the year, appointed M/s Sanjay Grover & Associates, Company Secretaries, to conduct secretarial audit of the Company for the financial year ended 31st March, 2015 The Report of M/s Sanjay Grover & Associates in terms of Section 204 of the 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 the report

DIRECTORS' RESPONSIBILITY STATEMENT

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

1 in the preparation of the annual accounts for the Financial Year ended 31st March 2015, the applicable Accounting Standards have been followed along with proper explanation relating to material departure, if any

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

3 they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

5 proper internal financial controls laid down by them were followed by the Company and 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 all applicable laws and that such systems were adequate and operating effectively

INTERNAL CONTROLS

Your company has put in place adequate internal financial controls The systems and procedures adopted by the company ensure the orderly and efcient conduct of its business and adherence to the Company's policies, prevention and detection of frauds and errors, accuracy and completeness of records and the timely preparation of reliable financial information

Your company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of accounts

Management periodically reviews the financial performance of your Company against the approved 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 significant findings to the Audit Committee of the Board and to provide reasonable assurance that the Company's established systems, policies and procedures have been followed The Audit Committee constituted by the Board reviews the internal controls and financial reporting issues with Internal Auditors on a regular basis Compliance with laws and regulations is also monitored through a well laid down framework which requires individual functions to confirm and report statutory compliances on all laws and regulations concerning their respective functions This gets integrated with the overall compliance reporting on all laws and regulations for the purpose of review and monitoring by the Board

CODE OF CONDUCT

The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company They have affirmed compliance with the Code of Conduct A declaration to this effect duly signed by Mr Arvind Kumar Singhania, Chairman & CEO is enclosed as a part of the Corporate Governance Report which forms part of this report A copy of the Code of Conduct is available on the Company's website viz www.esterindustries.com

The Code of Conduct is based on the fundamental principles of good corporate governance and corporate citizenship The Code covers the Company's commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency, auditability and legal compliance

CHANGES IN CAPITAL

During the financial year 2014-15 the following changes were effected in the Share Capital 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 and 1,02,22,650 held by SIPL in the Company were cancelled

2. Preferential Allotment to Non-Promoter entity –

2,07,50,000 Warrant of Rs 10 10/- each convertible into Equity Shares of Rs 5/- at a premium of Rs 5 10/- were issued to a Non- Promoter entity The said warrants have been converted into Equity Shares in the Board Meeting held on 25th May, 2015

LISTING OF SECURITIES

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 listing fees to BSE and NSE for the financial year 2015-16

EXTRACT OF ANNUAL RETURNS

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

PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES

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

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 and rule made thereunder, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee The details of the Composition of the Committee is set out in Corporate Governance Report which forms part of this report The Committee has adopted a Corporate Social Responsibility Policy Brief outline of the CSR Policy of the Company are set out in Annexure –C" of this report as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 The policy is available on the website of the Company viz www.esterindustries.com

As per Section 135(5) of the Act, the Company needs to ensure that at least 2% of average net Profit of preceding three financial years is spent on CSR activities as mentioned in CSR Policy However, due to losses incurred in past and average of preceding three financial years (2011-12, 2012-13 and 2013-14) being a loss, the Company has not incurred amount on CSR activities during financial year 2014-15

PERFORMANCE EVALUATION

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

An annual evaluation was carried out of the performance of the Board, Board committees, all the directors and Chairperson pursuant to the provisions of the Companies Act, 2013 and 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 of Non-Independent Director, had reviewed the performance of the Chairperson, Non-Independent Directors and the Board While evaluation the performance of the Chairman, the views of executive directors and non-executive directors were also taken into account

2 Nomination and Remuneration Committee carried out the evaluation of every Director's performance The Committee, while doing so, considered the outcome of meeting of Independent Directors;

3 The Board had evaluated its own performance, performance of its Committees and each Director While conducting the evaluation, the Board considered and discussed the outcome of 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 all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc

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

http://www.esterindustries.com/ester_cms/userfiles/file/policies/ Performance_Evaluation_Policy.pdf

POLICY AND DISCOSURE RELATING TO THE NOMINATION AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNELS AND OTHER EMPLOYEES

The Nomination and Remuneration Committee has framed a Nomination and Remuneration policy for determining criteria selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel including determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Companies Act, 2013 The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) 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 working days except Saturday, till the date of AGM

RISK MANAGEMENT SYSTEM

As per the requirements of Clause 49 of the Listing Agreement, the Board of the Company has formed a risk management committee of directors to frame, implement and monitor the risk management plan for the Company The details of the Composition of the Committee is set out in Corporate Governance Report which forms part of this report The Company has framed a Risk Management Policy covering risk management process, governance and execution of same Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis

RELATED PARTY TRANSACTIONS

All contracts or arrangements with related parties, entered into or modified during the financial 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 Audit Committee and the Board However no material contracts or arrangements with related parties were entered into during the year under review Accordingly, no transactions are being reported in Form No AOC-2 provided in "Annexure – E" pursuant to Section 134 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 this Annual Report

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

http://www.esterindustries.com/ester_cms/userfiles/file/policies/ Related_Party_Transactions_Policy.pdf

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as prescribed under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules 2014 is set out in the "Annexure – F" forming part of this report

VIGIL MECHANISM

The Company has formulated Vigil Mechanism/Whistle Blower Policy with a view to provide a mechanism for employees of the Company to raise concerns of suspected frauds, any violations of legal/regulatory requirements or code of conduct/policy of the Company, incorrect or misrepresentation of any financial statements and reports, etc The purpose of this Policy is to encourage employees and directors who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment The policy aims to provide an avenue for employees and directors to raise concerns and reassure them that they 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 the Board and no employee has been denied access to the Committee The Policy can be accessed on the Company website at following link -

http://www.esterindustries.com/ester_cms/userfiles/file/policies/ Whistle_blower_policy.pdf

INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

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

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

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

ACKNOWLEDGEMENT

Your Directors acknowledge the cooperation and assistance received from various departments of the Central & State Government, banks and Non-banking finance companies Directors also express their gratitude and thanks to Customers, Suppliers and other Business Associates for their continued co-operation and patronage

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, staff and executives of the Company at all levels ensuring successful management of the Company Your Directors also thank the shareholders for their continued support

For and on behalf of the Board

Sd/-

New Delhi Arvind Kumar Singhania

27th July 2015 Chairman & CEO


Mar 31, 2014

To The Members

The directors are pleased to present the Twenty Eighth Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2014.

FINANCIAL RESULTS

(Rs. in lacs)

For the year ended For the year ended 31.03.2014 31.03.2013

Sales and Other Income 101956.88 96442.59

Profit before Financial Expenses, Depreciation and Tax 7931.83 4724.44

Less: Interest & Other Financial Expenses 3486.77 2646.81

Profit / (Loss) before Depreciation, Extra Ordinary Items and Tax 4445.06 2077.63

Depreciation 3030.39 2858.52

Profit / (Loss) before Tax 1414.67 (780.89)

Deferred Tax 573.96 (253.90)

Impact of Scheme of amalgamation relating to earlier period (3.76)

Profit / (Loss) after Tax 836.95 (526.99)

Balance brought forward from previous year 11846.90 12373.89

Appropriation : Dividend & Tax on Dividend 366.45 --

Balance Carried to Balance Sheet 12317.40 11846.90

Basic Earnings Per Share (Rupees) 1.34 (0.84)

DIVIDEND

In respect of financial year 2013-14, your directors are pleased to recommend, subject to the approval of the shareholders, a dividend of 10% on the paid up equity share capital.

OPERATIONS REVIEW

After two years of sub optimal performance, the Company has been able to earn Net Profit after Tax of Rs. 836.95 lacs. During the year under review, Gross Revenue from operations crossed landmark of Rs. 1000 crores. The Gross Revenue from operations is Rs. 101,956.88 lacs as compared to Rs. 96,442.59 lacs in the previous year, an increase of 5.7%. The increase is primarily on account of higher sales volume of Engineering Plastics. Though the sales volume of Polyester Films decreased by 14%, revenues of Polyester Film increased by 1.8%. The year under review witnessed improvement in margins in Polyester Film due to bridging of demand supply gap and increase in share of Value Added & Specialty products in overall product portfolio. Drop in the demand for Polyester Film in India caused by ban on use of Plastics Films in packing of Pan Masala and Gutkha in the year 2011 has been completely of set by increase in demand from other applications during 2012 to 2014.To mitigate the adverse effect of ban and cyclicality, Company continued to implement the defined strategy of increasing the proportion of Value Added & Specialty products in its portfolio. The sales of Value Added and Specialty film increased by 15% from 5285 MT in 2012-13 to 6064 MT in 2013-14.

In Engineering Plastics segment, following an aggressive growth strategy, the Company achieved volume growth at a compounded annual rate of 43% over the last two years which is significantly higher than the industry annual growth rate of about 8%. During the year under review, the Company, in quantitative terms, witnessed a growth of 37% in sales of Engineering Plastics products. Consequently, Gross Revenue from sale of Engineering Plastics products increased by 37% from Rs. 11807.17 lacs to Rs. 16191.16 lacs. Volatility in forex market and liquidity crunch faced by customers had adverse effect on the prof tability of Engineering Plastics segment.

As a result of various initiatives and capacity expansions over the last five years, the Net Sales have grown at a CAGR of 20% pa, viz from Rs. 37241 lacs in FY2008-09 to Rs. 91868 lacs in FY2013-14.

Interest and financial expenses during the year under review were 3.76% of Net Sales with overall leveraging at prudent levels of 1.59.

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

CAPACITY EXPANSION

During the year under review, the Company enhanced operating capacity in Engineering Plastics to 16500 TPA by installing state of the art compounding extruder of 8000 TPA capacity.

To exploit the opportunity in the Optical Fiber Cable segment created by several government & private projects including National Optic Fiber Network''s plan to connect all 250,000 gram panchayats in the country, the Company has enhanced its Solid State Polymerization (SSP) capacity by 4800 TPA by installing a 32 cubic meters SSP dryer during the year under review.

Company continued to make investment in modernization and debottlenecking initiatives during the year under review.

PROJECTS UNDER IMPEMENTATION

Enthused by the performance of its first Bio-mass based Thermal Energy generation unit and awareness of ongoing global warming concerns, the Company is enhancing its Thermal Energy generation capacity by installing an additional Bio-mass based Thermal Energy generation unit of 10 million kilo calories. Company would be able to further reduce its dependence on Furnace Oil based thermal energy generation after commissioning of Bio-mass based Thermal Energy generation project by August 2014.

In order to achieve objective of increasing proportion of Value Added & Specialty products, Company has decided to modify Film Line # 1 by installing Twin Screw Extruder and Primary Scanner for measuring Thickness. With this modification, Film Line # 1 will be able to produce various Specialty Films, reduce conversion cost and wastage. The modification is likely to be completed by March 2015.

In addition to existing UPS of 7590 KVA, a rotary type UPS of 1670 KVA will be installed during 2014-15. This will ensure uninterrupted supply of power resulting into improvement in the quality of production and reliability of operations.

Company has also undertaken Business Improvement initiatives that will result into reduced cost, improved quality and operating ef ciency.

SCHEME OF ARRANGEMENT

Ester Industries Limited (Transferee) has entered into a Scheme of Arrangement with M/s. Sriyam Impex Private Limited (Transferor). The Hon''ble High Court of Uttarakhand, Nainital has approved the said Scheme of Arrangement vide its order dated 25th March 2014. The ef ective date of the Scheme is 7th May 2014. Company has filed necessary intimations and forms with the concerned authorities. effect of the Scheme has been incorporated in the accounts for the FY 2013-14.

SUBSIDIARY COMPANIES

Pursuant to Circular no. 2/2011 dated 8th February, 2011 of Ministry of Corporate Af airs (MCA), the Company has not attached Annual Accounts and Directors'' Report of Ester International (USA) Limited(Subsidiary of Ester Industries Limited) for financial year 2013-14, subject to compliance of conditions stated in the Circular.

Further the Annual Accounts of the Subsidiary Company and the related detailed information shall be made available to the membersof the Company or its subsidiary on their request. Such Annual Accounts shall also be kept for inspection by any member at the Corporate office and Registered office of the Company and its subsidiary.

FIXED DEPOSIT

The Company has not accepted any deposit during the year.

DIRECTORS

Mr. Ashok Kumar Agrawal resigned from the Directorship of the Company w.e.f. 31st March, 2014 to pursue his career growth aspiration.

Mr. Pradeep Kumar Rustagi has been re-appointed as Whole-time Director for 3 years w.e.f. 1st April, 2014 and Mr. Arvind Singhania has been appointed as Whole-time Director from 21st May 2014 till 31st March 2017. Their appointments are subject to the approval of the shareholders in the forthcoming Annual General Meeting.

As per the provisions of the Companies Act, 2013 and rules/ circulars made thereunder, Independent Directors are required to be appointed for a term upto five consecutive years and shall not be liable to retire by rotation. Accordingly, resolutions proposing appointment of Independent Directors till 31st March 2019, form part of the Notice of the Annual General Meeting

CORPORATE GOVERNANCE

The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance is included as a part of the Annual Report along with the practicing Company Secretary''s Certif cate on its compliance.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, the Directors confirm the following, on the basis of information placed before them by the Management and Auditors: -

1. That in the preparation of the annual accounts for the Financial Year ended 31st March 2014 the applicable Accounting Standards have been followed;

2. That the Company has selected appropriate accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent, so as to give a true and fair state of the af airs of the Company at the end of the financial year and of the Profit and Loss of the Company for the year under review;

3. That the Company has taken proper and suf cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. That the accounts of the Company for the financial year ended 31st March 2014 have been prepared on a going concern basis.

INTERNAL CONTROLS

The Company''s Internal Auditors have conducted periodic audit to evaluate the adequacy & effectiveness of internal controls and to provide reasonable assurance that the Company''s established systems, policies and procedures have been followed. The Audit Committee constituted by the Board reviews the internal controls and financial reporting issues with Internal Auditors on regular basis.

CODE OF CONDUCT

The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company. They have af rmed compliance with the Code of Conduct. A declaration to this effect duly signed by Mr. Arvind Singhania, Executive Chairman is enclosed as a part of the Corporate Governance Report. A copy of the Code of Conduct is available on the Company''s website viz. www.esterindustries.com

The Code of Conduct is based on the fundamental principles of good corporate governance and corporate citizenship. The Code covers the Company''s commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency, auditability and legal compliance.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, your directors have made available the audited Consolidated Financial Statements in the Annual Report.

AUDITORS'' REPORT

The Auditors'' Report read together with Annexures referred to in Paragraph 3 of the Auditors'' Report do not contain any qualification of signif cant nature and do not call for any explanation/clarif cation.

STATUTORY AUDITORS

M/s. S.R. Batliboi & Associates LLP, Chartered Accountants have expressed their unwillingness to be considered for reappointment as Statutory Auditors of the Company for the ensuing term.

Your directors recommend the appointment of M/s S R Batliboi & Company LLP, Chartered Accountants, as Statutory Auditors from the forthcoming ie 28th Annual General Meeting till 31st Annual General Meeting. M/s S R Batliboi & Company LLP, Chartered Accountants, have confirmed that their appointment, if made, shall be as per Section 139 and other applicable provisions of the Companies Act, 2013.

COST AUDITORS

During the year under review, with the approval of the Central Government, your directors re-appointed M/s. Sanjay Gupta & Associates, Cost Accountants as Cost Auditor to carry out the cost audit for year FY 2013-14. The cost audit for the year 2013- 2014 shall be completed within the statutory time limit i.e. 27th September, 2014.

The particulars of Cost Auditor and Cost Audit Report, as required vide General Circular No. 15/2011 dated 11th April, 2011 issued by Cost Audit Branch, Ministry of Corporate Af airs, Government of India, are as under:

Name of the Cost Auditor for 2012-2013

M/s. Sanjay Gupta & Associates, Cost Accountants C4E/135, Janak Puri, New Delhi- 110058

Firm Registration Number of Cost Auditor

00212

Due date for filing of Cost Audit Report for the financial 2012-13 by the Cost Auditor with the Central Government

Within 180 days from the close of the Company''s financial year, i.e. upto 27th September, 2013

Actual date for filing of Cost Audit Report for the financial year 2012-13 by the Cost Auditor with the Central Government

Cost Auditor filed the Cost Audit Report on 13th November, 2013

LISTING OF SECURITIES

Your Company''s securities are currently listed with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the listing fees to BSE and NSE for the financial year 2014-15.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The prescribed details as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure ''A'' forming part of this report. Your Company was a net foreign exchange earner during the year under review.

PARTICULARS OF THE EMPLOYEES

The particulars of the employees drawing the salary as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report.

As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all shareholders of the Company excluding the statement of particulars of the employees. Any shareholder interested in obtaining a copy may write to the Company Secretary of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge the cooperation and assistance received from various departments of the Central & State Government, banks and Non-banking finance companies. Directors also express their gratitude and thanks to Customers, Suppliers and other Business Associates for their continued co- operation and patronage.

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, staf and executives of the Company at all levels ensuring successful management of the Company. Your Directors also thank the shareholders for their continued support.

On behalf of the Board

Place : New Delhi A.K. Singhania

Date : 4th August, 2014 Chairman


Mar 31, 2013

To The Members

The directors are pleased to present the Twenty Seventh Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2013.

FINANCIAL RESULTS

(Rs. in lacs)

For the year ended For the year ended 31.03.2013 31.03.2012

Sales and Other Income 96442.59 74785.38

Proft before Financial Expenses, Depreciation and Tax 4724.44 4106.41

Less: Interest & Other Financial Expenses 2646.81 3549.48

Proft / (Loss) before Depreciation, Extra Ordinary Items and Tax 2077.63 556.93

Depreciation 2858.52 2653.54

Proft / (Loss) before Tax (780.89) (2096.61)

Deferred Tax (253.90) (704.70)

Proft / (Loss) after Tax (526.99) (1391.91)

Balance brought forward from previous year 12373.89 13765.80

Appropriation : General Reserve - -

: Dividend & Tax on Dividend - -

Balance Carried to Balance Sheet 11846.90 12373.89

Basic Earnings Per Share (Rupees) (0.84) (2.21)

DIVIDEND

In the absence of profts, your directors do not recommend any dividend.

OPERATIONS REVIEW

The Gross Revenue from operations during the year under review is Rs. 96,442.59 lacs as compared to Rs. 74,785.38 lacs in the previous year, an increase of 29%. The increase is primarily on account of higher sales volume of Polyester Chips, Engineering Plastics and Specialty Polymers. Though the sales volume of Polyester Films decreased marginally, revenues of Polyester Film increased by 5.9%. The margins in the Polyester Film business remained under pressure due to an adverse demand supply situation caused by commissioning of further new capacities in 2012-13. The collective demand for Polyester Film in India in FY 2012-13 and FY 2011-12 increased to such an extent that all the loss of demand caused in the domestic market due to the ban on use of Plastics Films in packing of Pan Masala and Gutkha during FY 2010-11, was more than recovered. To mitigate the efect of loss of sales volumes due to the aforesaid ban and cyclicality in its markets, the Company continued to focus on increasing the proportion of Value Added and specialty products in its portfolio and also initiated engagements with key accounts to ink long term sales agreements indexed to the raw material. The sales of Value Added products and Specialty flms increased from 8898 MT in 2011-12 to 10493 MT in 2012-13

To counter the threat of cheaper imports of Engineering Plastics in CFL segment, development of cost efective formulations yielded the desired results and the Company could regain erstwhile lost market share. The Company witnessed a material growth of 49% in sales of Engineering Plastics products. Consequently, the Net Sales of Engineering Plastics increased from Rs. 7,036.84 lacs to Rs. 10,528.07 lacs.

As a result of a focused strategy adopted by the management, the sales of Polyester Chips increased by about 180% both in quantity and value terms.

The Company''s initiative to diversify into Specialty Polymers is on track and is likely to yield good results in the following years. The Sales volume of Specialty Polymers increased from 472 MT in FY2011-12 to 2241 MT in FY2012-13, an increase of 375% with corresponding sales value increasing from Rs. 568.98 lacs to Rs. 3983.68 lacs.

As a result of various initiatives and capacity expansions over the last fve years, the Net Sales have grown at a CAGR of 22% pa, viz from Rs. 31,918.21 lacs in FY2007-08 to Rs. 87,129.44 lacs in FY2012-13.

The production of Polyester Film was marginally lower at 50,076 MT as compared to 51,744 MT during the year 2011-12. The capacity utilization in Polyester Films was approx. 88%, which is a good performance considering that the capacity was enhanced in FY 2010-11.

Pursuant to the clarifcation issued by Ministry of Corporate Afairs, Government of India dated 9th August 2012, the foreign exchange fuctuation on foreign currency borrowings for Capital goods has been capitalized. Interest and fnancial expenses during the year under review were 2.99% of Net Sales with overall leveraging at prudent levels of 1.48.

Subsequent to the registration of Bio-mass based Thermal Energy generation project of the Company by the Executive Board of the Clean Development Mechanism (CDM) under United Nations Framework Convention on Climate Change in its meeting dated 15th April 2011, the Company has started to earn Certifed Emissions Reductions (CERs) with efect from November 2010. As the Company is aware of ongoing global environment concerns, it has committed to enhance its Thermal Energy generation capacity by installing an additional Bio-mass based Thermal Energy generation project of 10 million kilo calories during FY2013-14 to reduce its dependence on Furnace Oil based thermal energy generation.

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

CORPORATE OFFICE BUILDING

During the year under review, the Company moved its Corporate Ofce from a rented premises in the Central Business District of Gurgaon to a self owned premises in the upcoming area of Infocity, Gurgaon.

DEBOTTLENECKING AND MODERNIZATION PROJECTS

The Company has undertaken to invest about Rs. 60 crores during FY 2013-14 in various initiatives that will enhance capability / capacity to increase production of Value Added products, reduce Power & Fuel cost and improve operating efciency. By the end of FY2013-14, Company would be commissioning additional extrusion capacity of 8000 MT per annum in Engineering Plastics. With this expansion, the operating capacity in Engineering Plastics will increase from 8500 MT per annum to 16500 MT per annum.

SCHEME OF ARRANGEMENT

Ester Industries Limited (Transferee) has entered into a Scheme of Amalgamation with M/s. Sriyam Impex Private Limited (Transferor). Your directors have already approved the Scheme. After the implementation of the Scheme, M/s. Sriyam Impex Private Limited will be merged into your company. The Company has obtained ''No Objection Certifcates'' from NSE and BSE as per Listing Agreement and as on date, the company is in process to fle the petition to Hon''ble High Court of Uttarakhand.

SUBSIDIARY COMPANIES

Pursuant to Circular no. 2/2011 dated 8th February, 2011 of Ministry of Corporate Afairs (MCA), the Company has not attached Annual Accounts and other statutory reports of Ester International (USA) Limited (Subsidiary of Ester Industries Limited) for fnancial year 2012-13, subject to compliance of conditions stated in the Circular.

Further the Annual Accounts of the Subsidiary Company and the related detailed information shall be made available to the members of the Company or its subsidiary on their request. Such Annual Accounts shall also be kept for inspection by any member at the Corporate Ofce and Registered Ofce of the Company and its subsidiary. The same is also available on company''s website viz. www.esterindustries.com.

FIXED DEPOSIT

The Company has not accepted any deposit during the year.

DIRECTORS

Mr. P S Dasgupta and Dr. Anand Chand Burman, directors of the Company, retire by rotation and being eligible, ofer themselves for reappointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance is included as a part of the Annual Report along with the practicing Company Secretary''s Certifcate on its compliance.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, the Directors confrm the following, on the basis of information placed before them by the Management and Auditors: -

1. That in the preparation of the annual accounts for the Financial Year ended 31st March 2013 the applicable Accounting Standards has been followed;

2. That the Company has selected appropriate accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent, so as to give a true and fair state of the afairs of the Company at the end of the fnancial year and of the Proft and Loss of the Company for the year under review;

3. That the Company has taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. That the accounts of the Company for the fnancial year ended 31st March 2013 have been prepared on a going concern basis.

The Company''s Internal Auditors have conducted periodic audit to evaluate the adequacy & efectiveness of internal controls and to provide reasonable assurance that the Company''s established systems, policies and procedures have been followed. The Audit Committee constituted by the Board reviews the internal controls and fnancial reporting issues with Internal Auditors on regular basis.

CODE OF CONDUCT

The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company. They have afrmed compliance with the Code of Conduct. A declaration to this efect duly signed by Executive Director – Operations & Projects is enclosed as a part of the Corporate Governance Report. A copy of the Code of Conduct is available on the Company''s website viz. www.esterindustries.com

The Code of Conduct is based on the fundamental principles of good corporate governance and corporate citizenship. The Code covers the Company''s commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency, auditability and legal compliance.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, your directors have made available the audited Consolidated Financial Statements in the Annual Report.

AUDITORS'' REPORT

The Auditors'' Report read together with Annexures referred to in Paragraph 3 of the Auditors'' Report do not contain any qualifcation of signifcant nature and do not call for any explanation/clarifcation.

STATUTORY AUDITORS

M/s S.R. Batliboi & Co. LLP, Chartered Accountants who retires at this Annual General Meeting has shown its unwillingness for reappointment as Statutory Auditors of the Company and has not ofered themselves for reappointment.

The Company has received special notice of a resolution from a Member of the Company, in terms of the applicable provisions of the Act, signifying his intention to propose the appointment of M/s. S. R. Batliboi & Associates LLP as the statutory auditors, in place of existing Statutory Auditors, of the Company from the conclusion of this AGM till the conclusion of the next AGM of the Company.

Your Directors recommend the appointment of M/s. S. R. Batliboi & Associates LLP, Chartered Accountants as Statutory Auditors.

M/s. S. R. Batliboi & Associates LLP has expressed its willingness to act as statutory auditors of the Company, if appointed, and have further confrmed that the said appointment would be in conformity with the provisions of Section 224(1B) of the Act.

COST AUDITORS

During the year under review, with the approval of the Central Government, your directors re-appointed M/s. Sanjay Gupta & Associates, Cost Accountants as Cost Auditor to carry out the cost audit for the year 2013-14. The cost audit for the year 2012-2013 shall be completed within the stipulated time as prescribed in the Companies Act, 1956 read with Cost Audit (Report) Rules, 2001.

The particulars of Cost Auditor and Cost Audit Report, as required vide General Circular No. 15/2011 dated 11th April, 2011 issued by Cost Audit Branch, Ministry of Corporate Afairs, Government of India, are as under:

Name of the Cost Auditor M/s. Sanjay Gupta &

Associates, Cost Accountants

C4E/135, Janak Puri,

New Delhi - 110058

Firm Registration Number of Cost Auditor 00212

Due date for fling of Cost Audit Report for the fnancial year 2012-13 by the Cost Auditor with the Central Government Within 180 days from the close of the Company''s fnancial year, i.e. upto 27th September, 2013

Actual date for fling of Cost Audit Report for the fnancial year 2012-13 by the Cost Auditor with the Central Government The report shall be fled to the Central Government within due date.

LISTING OF SECURITIES

Your Company''s securities are currently listed with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the listing fees to BSE and NSE for the fnancial year 2013-14.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The prescribed details as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure ''A'' forming part of this report. Your Company was a net foreign exchange earner during the year under review.

PARTICULARS OF THE EMPLOYEES

The particulars of the employees drawing the salary as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report.

As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all shareholders of the Company excluding the statement of particulars of the employees. Any shareholder interested in obtaining a copy may write to the Company Secretary of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge the cooperation and assistance received from various departments of the Central & State Government, banks and Non-banking fnance companies.

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, staf and executives of the Company at all levels ensuring successful management of the Company. Your Directors also thank the shareholders for their continued support.



On behalf of the Board



Place : Gurgaon (A.K. Singhania)

Date : 5th August, 2013 Chairman


Mar 31, 2012

The directors are pleased to present the 26th Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2012.

FINANCIAL RESULTS

(Rs. in lacs)

For the year ended For the year ended 31.03.2012 31.03.2011

Sales and Other Income 74785.38 71900.94

Profit before Financial Expenses, Depreciation and Tax 4106.41 22408.30

Less: Interest & Other Financial Expenses 3549.48 1276.40

Profit / (Loss) before Depreciation, Extra Ordinary Items and Tax 556.93 21131.90

Depreciation 2653.54 1792.58

Profit / (Loss) before Tax (2096.61) 19339.32

Current Tax - 5339.81

MAT Credit Entitlement - -

Deferred Tax (704.70) 1052.74

Profit / (Loss) after Tax (1391.91) 12946.77

Balance brought forward from previous year 13765.80 5042.44

Appropriation : General Reserve _ 1294.68

: Dividend & Tax on Dividend _ 2928.73

Balance Carried to Balance Sheet 12373.89 13765.80

Basic Earnings Per Share (Rupees) (2.21) 20.59

DIVIDEND

In the absence of profits, your directors do not recommend any dividend.

OPERATIONS REVIEW

Gross Revenue from operations during the year under review is Rs. 747,85.38 lacs as compared to Rs. 719,00.94 lacs in the previous year, an increase of 4.01%. The increase is primarily on account of larger sales volume of Polyester Film (Current Year - 50,207 MT, Previous Year - 31,210 MT). Though the volume of sales of Polyester Film increased by 60.9%, the sales of Polyester Film in value terms increased by only 5.9%. The increase in value terms was not proportionate to increase in volume terms on account of drastic reduction in per unit realization, due to adverse demand supply situation. Adverse demand supply situation was caused mainly due to commissioning of new capacities both in India & Overseas and on account of ban on use of plastic films in packing of Pan Masala & Gutkha. Consumption of Polyester Film in Pan Masala & Gutkha accounted for 30% - 35% of the domestic demand, though the demand of Polyester Film for other applications continued to grow at about 15%. Drastic reduction in unit realization and margins resulted in Net Loss after Tax of Rs. 13,91.91 lacs during the current year as compared to Profit of Rs. 129,46.76 lacs in the previous year.

Due to cheaper imports coming in from China, the sale of Engineering Plastics in CFL segment was lower by 40.6% as compared to previous year. Consequently, Net Sales of Engineering Plastics decreased by 8.6% from Rs. 7698.35 lacs to Rs. 7035.39 lacs, Due to adverse demand supply situation, the sale of Polyester Chips was also lower than the previous year by 26.2%.

Company responded well to the adverse impact on domestic demand for Polyester Film caused due to ban and increased its focus on exports. During the year, Exports of Polyester Film increased by 78.7% in quantitative terms and by 27.4% in value terms. Exports accounted for 40.2% of the Net Sales Turnover of the company during the year.

The production of Polyester Film was higher at 51744 MT as compared to 32116 MT during the year 2010-11 on account of commissioning of new Polyester Film plant in January 2011 and successful operation of enhanced capacity resulted in capacity utilization of approx. 91% in Polyester Film.

On account of borrowings including foreign currency borrowings for the expansion projects and higher utilization of working capital facilities, interest and other financial expenses increased from Rs. 1276.40 lacs to Rs. 3549.48 lacs. During the year 2011-12, Finance cost includes loss of Rs. 906.01 Lacs representing exchange losses arising on restatement of foreign currency borrowings to the extent they are regarded as an adjustment to finance cost, in accordance with paragraph 4(e) of Accounting Standard 16 - 'Borrowing Cost'. Interest and financial expenses during the year under review were 5.07% of Net Sales though overall leveraging was still at prudent levels of 1.32.

Executive Board of the Clean Development Mechanism (CDM) under United Nations Framework Convention on Climate Change in its meeting dated 15th April 2011 has approved registration of Biomass based Thermal energy generation project of the company. Company would now be entitled to earn Certified Emissions Reductions (CERs) with effect from November 2010.

Details on operations, a view on the outlook for the current year and mitigation strategies adopted by the Management are provided in the 'Management Discussion & Analysis Report' which forms an integral part of this Annual Report.

DEBOTTLENECKING PROJECTS

During the year under review, Company successfully commissioned Recycling Extruder, Off - Line Coater and Thermic Fluid Heating system. The initiatives would enable the Company to improve operating efficiency, inventory management and production of Value Added products.

SUBSIDIARY COMPANIES

Pursuant to Circular no. 2/2011 dated 8th February, 2011 of Ministry of Corporate Affairs (MCA), the Company has not attached Annual Accounts and other statutory reports of Ester International (USA) Limited (Subsidiary of Ester Industries Limited) for financial year 2011-12 subject to compliance of conditions stated in the Circular.

Further the Annual Accounts of the Subsidiary Company and the related detailed information shall be made available to the members of the Company or its subsidiary on their request. Such Annual Accounts shall also be kept for inspection by any member at the Corporate Office and Registered Office of the Company and its subsidiary.

FIXED DEPOSIT

The Company has not accepted any deposit during the year.

DIRECTORS

The terms and conditions of appointment of Mr. Pradeep Kumar Rustagi, Executive Director & CFO and Mr. Ashok Kumar Agarwal, Executive Director - Operations & Projects were modified in the Board Meeting held on 14th February, 2012 with approval of shareholders in the Extra-Ordinary General Meeting held on 7th April, 2012.

Mr. V. B. Haribhakti, Mr. Dinesh Chandra Kothari and Mr. Arvind Kumar Singhania, directors of the Company, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance is included as a part of the Annual Report along with the practicing Company Secretary's Certificate on its compliance.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to the Directors' Responsibility Statement, the Directors confirm on the basis of information placed before them by the Management and Auditors:-

1. That in the preparation of the annual accounts for the Financial Year ended 31st March 2012 the applicable Accounting Standards has been followed;

2. That the Company has selected appropriate accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair state of the affairs of the Company at the end of the financial year and of the Profit and Loss of the Company for the year under review;

3. That the Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. That the accounts of the Company for the financial year ended 31st March 2012 has been prepared on a going concern basis.

The Company's Internal Auditors have conducted periodic audit to evaluate the adequacy of internal controls and to provide reasonable assurance that the Company's established policies and procedures have been followed. The Audit Committee constituted by the Board reviews the internal controls and financial reporting issues with Internal Auditors on regular basis.

CODE OF CONDUCT

The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company. They have affirmed compliance with the Code of Conduct. A declaration to this effect duly signed by Executive Director-Operations & Projects is enclosed as a part of the Corporate Governance Report. A copy of the Code of Conduct is available on the Company's website viz. www.esterindustries. com

Code is based on fundamental principles, viz. good corporate governance and corporate citizenship. The Code covers Company's commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency and auditability and legal compliance.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, your directors provide the audited Consolidated Financial Statements in the Annual Report.

AUDITORS' REPORT

Auditors' Report read together with Annexures referred to in Paragraph 3 of the Auditors' Report do not contain any qualification of significant nature and do not call for any explanation/clarification.

AUDITORS

M/s. S.R. Batliboi & Company, Chartered Accountants retire at the forthcoming Annual General Meeting and are eligible for reappointment. M/s S. R. Batliboi & Company has confirmed that their appointment, if made, shall be within the limits of Section 224(1B) of the Companies Act, 1956.

COST AUDITOR

During the year under review, Ministry of Corporate Affairs (MCA) had issued orders and notification under which the Company is required to appoint Cost Auditor in terms of section 233B of the Companies Act, 1956 to get the cost Records audited for financial year 2012-13 and onwards.

Your Directors have appointed M/s Sanjay Gupta & Associates, Cost Accountants, to conduct the audit of Cost Records of the Company for the financial year 2012-13 in respect of all Businesses of the Company

LISTING OF SECURITIES

Your Company's securities are currently listed with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the listing fees to BSE and NSE for the financial year 2012-13.

CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The prescribed details as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure 'A' forming part of this report. Your Company was a net foreign exchange earner during the year under review.

PARTICULARS OF THE EMPLOYEES

The particulars of the employees drawing the salary as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report.

As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all shareholders of the Company excluding the statement of particulars of the employees. Any shareholder interested in obtaining a copy may write to the Company Secretary of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge the cooperation and assistance received from various departments of Central & State Government and banks.

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, staff and executives of the Company at all levels ensuring successful management of the Company. Your Directors also thank the shareholders for their continued support.

On behalf of the Board

Date : 1st August, 2012 Arvind Kumar Singhania

Place : New Delhi Chairman

 
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