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Notes to Accounts of Ester Industries Ltd.

Mar 31, 2016

Term Loans from banks are further secured by second charge by way of hypothecation of stocks of raw material, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future).

II. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the Loans .Vehicle loans bears interest rates ranging from 8 . 25% to 13 . 50% pa. These loans are repayable in monthly installments till January 2020.

III. Buyers'' credit for capital goods

a) Buyers'' Credit amounting to Rs .979.83 lacs (previous year Rs . 534.22 lacs) are against LOUs / LOCs issued by Bank of India. LOUs / LOCs facility from BOI is secured by first exclusive charge by way of hypothecation of Engineering Plastics Extruder, Twin Screw Extruder and UPS and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company) and Personal Guarantee of Mr. Arvind Singhania.

Company has availed LOUs / LOCs facilities from the banks to avail the Buyers'' Credit of Rs . 979.83 lacs (previous year - Rs. 534.22 Lacs). These LOU / LOC facilities are sanctioned to the company as a sub limit of term loans upto a period of 3 years till March 2018 .

LOCs / LOUs facilities are sanctioned to the company as a sub limit of term loan, bears interest rate ranging from 0.45% to 1. 53%. Liability towards Buyers'' Credit under LOCs / LOUs will be liquidated out of the proceeds of term loans that are repayable in 12 quarterly installments .

Working capital loan, bills discounting and acceptances: These loans are secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of Wilemina Finance Corp. (Holding company) and Personal Guarantee of Mr. Arvind Singhania. Working Capital and Bill discounting facilities are further secured by way of second charge in respect of immovable properties and movable fixed assets

The working capital loans from banks bear floating interest rate at Base Rate plus ranging from 2 50% to 3 00% pa The bill discounting from banks bear floating interest rate ranging from 10 15% to 11 75% pa

Buyers'' credit for raw material are against LOUs / LOCs issued by consortium of banks . The LOUs / LOCs facilities is sanctioned to the Company as a sub limit of Non Fund (LCs) based facility The facility is secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of Wilemina Finance Corp. (Holding company). Buyers'' credit for raw material taken in USD and Euro bears interest rate ranging from 0 . 93% to 1. 53% pa.

1. Directors'' Remuneration

The shareholders of the Company had approved the remuneration of Mr. Arvind Singhania, Managing Director of the Company, vide Special Resolution passed through Postal Ballot on 20th May, 2015 . However due to changed market condition, the profits of the Company during FY 2015-16 were inadequate for payment of remuneration to Mr. Arvind Singhania and the remuneration paid to Mr Arvind Singhania is in excess of the limit prescribed under Section 197, 198 read with Schedule V of the Companies Act, 2013. Such inadequacy of the profit was not determinable at the time of appointment Therefore, the Company has made an application to the Central Government seeking its approval for the payment of remuneration in case of inadequacy of profit. The application is still under consideration with the Central Government In case the Central Government does not provide the approval for the payment of remuneration/waiver of excess remuneration, Mr. Arvind Singhania will refund the excess remuneration to the Company.

The remuneration of Mr. Pradeep Kumar Rustagi was approved by the Shareholders vide Special Resolution passed through Postal ballot on 20th May, 2015 .The remuneration paid to Mr Rustagi during FY 2015-16 is within the limits prescribed under Part II of Schedule V of the Companies Act, 2013 .

2. Gratuity and other post employment benefits plan Gratuity

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation.The benefit vests on the employees after completion of 5 years of service .The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The following tables summaries the components of net benefit expense recognized in the Statement of profit and loss and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Provident Fund

Provident fund for certain eligible employees is managed by the company through trust "Ester Industries Limited Employee''s Provident Trust" in line with the Provident Fund and Miscellaneous Provision Act, 1952.The plan guarantees interest at the rate as notified by the Provident Fund authority. The contribution by the employer and employee together with the interest thereon are payable to the employee at the time of separation from the company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee .

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary have provided a valuation of provident fund liability and based on assumptions provided below there is no shortfall as at March 31, 2016 and March 31, 2015 .

As per the guidance note on implementing AS-15, employee benefits (revised 2005) issued by the accounting standard board (ASB), provident fund trust set up by employers, which required interest shortfall to be met by employer, needs to be treated as defined benefit plan

3. In the Board Meeting held on 25th May, 2015, the Company has allotted 2,07,50,000 Equity Shares of Rs . 5/- each (face value) fully paid at a price of Rs . 10 .10 each including premium of Rs . 5 .10/- each (the Equity Shares) to Vettel International Limited, a Non-Promoter entity, pursuant to conversion of 2,07,50,000 Zero Coupon Warrants of Rs . 10 .10 each (the Warrants) in compliance with the Companies Act, 1956 and SEBI Regulations .The company had already obtained approvals from Shareholders, Stock Exchanges and FIPB. During the month of May, 2015, the Company had received an amount of Rs . 1587.02 Lacs towards 75% of the total amount of the Warrants required for the conversion of the Warrants into Equity Shares. The Company had already received 25% of the total amount of the Warrants during FY 2014-15 .

The Company has obtained listing approvals of the Equity Shares from both the Stock Exchanges viz Bombay Stock Exchange and National Stock Exchange in the month of June, 2015 .

4. Pursuant to Section 135 of the Companies Act,2013 and rules made there under, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The Committee has adopted a Corporate Social Responsibility Policy. As per Section 135(5) of the Act, the Company needs to ensure that at least 2% of the average net profit of preceding 3 (three) financial years is spent on CSR activities as mentioned in CSR Policy. The prescribed amount to be spent on CSR during FY 2015-16 was Rs . 7 . 47 Lacs being 2% of the average net profit of preceding three financial years (2012-13, 2013-14 and 2014-15) .

As against obligation to spend Rs . 7 . 47 lacs on CSR during FY 2015-16, the Company has spent only Rs . 2 . 90 lacs and carried forward unspent amount of Rs . 4 .57 Lacs for spending on CSR activities during FY 2016-17.The Company observed that obligated amount of Rs . 7.47 lacs was not large enough to make any worthwhile impact on the society. The Company feels that brought forward amount of Rs . 4 .57 lacs together with obligation of Rs . 17 .29 lacs, would be large enough to make positive impact on the society and accordingly has decided to spend Rs . 21. 86 lacs during the FY 2016-17 on CSR activities .


Mar 31, 2015

1. Directors Remuneration

Mr Pradeep Kumar Rustagi was re-appointed as Whole-time Director w e f April 1, 2014 for 3 years Mr Arvind Singhania was appointed w e f May 21, 2014 as Whole-time Director of the Company The shareholders approved their appointment in Annual General Meeting held on September 22, 2014

The remuneration paid to Mr Arvind Singhania and Mr Pradeep Rustagi during financial year 2014-15 was within the limits prescribed in Schedule V of the Companies Act, 2013 In accordance with the requirements of Section 203 read with schedule V of the Companies Act, 2013, approval of Shareholders by way of Special Resolution through Postal Ballot was granted for payment of remuneration in case of inadequacy of Profits to Mr Pradeep Kumar Rustagi and Mr Arvind Singhania

2. Gratuity and other post employment benefits plan Gratuity

The Company has a defined benefit gratuity plan Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation The benefit vests on the employees after completion of 5 years of service The Gratuity liability has not been externally funded Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method

The following tables summaries the components of net benefit expense recognized in the Statement of Profit and loss and the unfunded status and amounts recognized in the balance sheet for the Gratuity

Provident Fund

Provident fund for certain eligible employees is managed by the company through trust "Ester Industries Limited Employee's Provident Trust" in line with the Provident Fund and Miscellaneous Provision Act, 1952 The plan guarantees interest at the rate as notified by the Provident Fund authority The contribution by the employer and employee together with the interest thereon are payable to the employee at the time of separation from the company or retirement, whichever is earlier The benefits vests immediately on rendering of the services by the employee

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary have provided a valuation of provident fund liability and based on assumptions provided below there is no shortfall as at March 31, 2015 and March 31, 2014

As per the guidance note on implementing AS-15, employee benefits (revised 2005) issued by the accounting standard board (ASB), provident fund trust set up by employers, which required interest shortfall to be met by employer, needs to be treated as defined benefit plan

3. Leases:

The Company has taken various residential, Office and warehouse premises under operating lease agreements These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms There are no restrictions imposed under the lease agreement and there are no subleases The company have paid Rs 69 97 lacs (previous year Rs 47 51 lacs) towards operating lease rentals

4. Capitalization of expenditure:

During the year, the company has capitalized the following expenses to the cost of fixed asset/ capital work-in-progress (CWIP) Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company

5. Segment Reporting

The Company operates in two segments manufacturing and sale of polyester film and engineering plastics The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organization and management structure A brief description of the reportable segment is as follows:

Polyester Film: Polyester Films that are used in primarily flexible packaging and other industrial application Polyester Film is known for high tensile strength, chemical and dimensional stability, transparency, reflective, gas and aroma barrier properties and electrical insulation PET Chips is the main raw material used to manufacture the film

Engineering Plastics: Engineering Plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics Engineering Plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc

6. Scheme of amalgamation

The shareholders of the Company had approved a scheme of amalgamation between the Company (transferee Company) and fellow subsidiary Sriyam Impex Private Limited (transferor Company) with an appointed date of April 1, 2012 This scheme of amalgamation was approved by the High Court of Uttrakhand on March 25, 2014 and was subsequently submitted with Registrar of Companies (RoC), Uttrakhand on May 7, 2014 Accordingly, from April 1, 2012, the operation of the Transferor Company stood transferred to and vested in the company on a going concern basis

Equity shares of transferee Company held by the transferor Company were cancelled and new equity shares were issued to equity shareholders of transferor Company in the exchange ratio as specified in the Scheme The effect of cancellation and issuance of equity shares has been disclosed under head "Share Capital Control Account" in previous year's Balance Sheet The excess of book value of the investment held by the transferor Company in the transferee Company over the face value of equity shares was adjusted in the Capital Reserve of the transferee Company

In previous year, the credit balance of security premium account and capital reserve account of the transferor company was transferred to the transferee company

The reduction in the share capital and security premium account of the transferee Company was effected as an integral part of the Scheme in accordance with the provisions of Sections 100 to 103 of the Companies Act, 1956 and the order of the High Court sanctioning the Scheme was deemed to be the order under Section 102 of the Companies Act, 1956 for the purpose of confirming the reduction

Since the impact of amalgamation was considered in previous year's financial statements, the loss after tax of Rs 3 76 lacs of transferor Company from April 1, 2012 to March 31, 2013, was accounted for in the previous year's statement of Profit & loss as a separate line item However, debit balance of Profit and loss and Goodwill as on March 31, 2012 was adjusted from Securities Premium account Further, net cash fows for the period April 1, 2012 to March 31, 2013 pertaining to the transferor Company on account of operating, investing and financing activities aggregating Rs 25 11 lacs, Rs nil and Rs nil respectively were included in the previous year's statement of cash flows as a separate line item under the respective heads

7. In the Board Meeting held on October 3, 2013, the Board of Directors approved the proposal for preferential allotment of 20,750,000 Zero Coupon Warrants of Rs 10 10 each and convertible into 20,750,000 equity shares of Rs 5 each fully paid up at a price of Rs 10 10 each including premium of Rs 5 10 each to a Non-Promoter entity in compliance with the Companies Act, 1956 and SEBI regulations and subject to the shareholders and other necessary approvals required

After obtaining approval from Shareholders, Stock Exchanges and FIPB, the Company allotted Warrants in its Board Meeting held on April 11, 2014 As on March 31, 2015 the company has received an amount of Rs 524 23 lacs which is 25% of the total amount of warrants including premium

8. 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 Committee has adopted a Corporate Social Responsibility Policy As per Section 135(5) of the Act, the Company needs to ensure that at least 2% of the 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, the average result of preceding three financial years (2011-12, 2012-13 and 2013-14) is loss Consequently the Company is not required to spend any amount on CSR during the current year

9. Previous year figure have been regrouped / reclassified whenever considered necessary, so as to confirm with the current year's classification


Mar 31, 2014

1. Nature of operations

Ester Industries Limited (hereinafter referred to as ''the Company'') is a manufacturer of polyester film and engineering plastics.

2. Contingent liabilities

(Rs. In lacs)

As at As at March 31, 2014 March 31, 2013

(a) Excise Duty and Customs Duty pending hearing of appeals/writ petitions:

(i) Cenvat credit disallowed on inputs (for the period March 1990 to Mar 8.06 8.06 1991) not covered under rule 57A, mainly Santotherm, Diethyl Glycol, Delion etc. Disallowance was due to use of inputs for manufacture of exempted goods.

(ii) Removal of PET chips (exempted goods) from bonded warehouse 3.00 3.00 without payment of duty.

(iii) Goods sold from depot at higher value than one declared at factory gate 25.46 25.46 price for the period Jun 1988 to Mar 1992.

(iv) Cenvat credit disallowed on inputs like DMT, additives etc. for the 164.20 164.20 manufacturing of polyester chips. Disallowance was due to use of inputs for manufacturing of exempted goods.

(v) Reversal of Cenvat credit availed on HSD. Department disallowed credit 206.92 206.92 alleging that cenvat credit has been wrongly availed on HSD.

(vi) Cenvat credit availed on raw material. Disallowance on account of credit 11.72 11.72 availed fully on raw material and not on pro-rata basis for clearance of dutiable goods i.e. polyester films.

(vii) Availment of credit on import of Dimethyl Terephalate. Disallowance was 57.71 57.71 due to use of inputs for manufacturing of exempted goods.

(viii) Other Miscellaneous Cases 33.82 33.82

(ix) Cenvat credit of Rs. 0.59 lacs not admissible on shape & section as capital 3.09 3.09 goods and Rs. 2.5 lacs recoverable against shortage of cenvatable inputs.

(x) Demand raised on account of excess / shortfall in stocks alleged by 12.95 12.95 preventative staf .

(xi) Demand raised for differential amount of Custom Duty on import of PBT chips. 188.36 188.36

Total (a) 715.29 715.29

(b) Show cause notices related to Service Tax & Excise rebate on export 13.54 13.54

(c) Income Tax:

(i) Disallowance of advertisement expenditure pursuant to rule 6B of IT 1.68 1.68 rules, 1962 in the revised return of income which is based on the auditor''s report in respect of A.Y. 1990-91, 1993-94 to 1997-98 by ITAT.

(ii) Disallowance of club expenditure on the contention that they are not 1.80 1.80 wholly and exclusively for the business needs of the company in respect of A.Y. 1990-91, 1993-94 to 1994-95 & A.Y. 2005-06 by ITAT.

(iii) Disallowance of 50% of entertainment expenses on the contention 5.10 5.10 that there has been no participation of the employee for incurring such expenditure in respect of A.Y. 1993-94 to 1997-98 by ITAT.

(iv) Disallowance of expenses relating to previous years in respect of A.Y. 14.68 14.68 1993-94 to 1997-98 by ITAT.

(v) Demand of MAT (including interest) A.Y. 2004-05* 5.78 5.78

* Disallowances of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the act by AO in respect of A.Y. 2004-05.

* Disallowances of provision for doubtful debts and advances for computing book Profits under section 115JB of the Act as they are in the nature of reserves as per assessing officer.

* Disallowances of claim of Profit under section 80HHC for computing book Profits under section 115JB of the act on the contention that company should have adjusted unabsorbed business loss and depreciation with the Profits of the business first before arriving at the deduction under section 80HHC of the Act. Since, the two exceed the current years Profits, there can be no deduction under section 80HHC of the Act.

(vi) Demand of MAT (including interest) A.Y. 2005-06@ 11.16 11.16

@ Disallowance of carry forward of loss on sale of investment on which dividend income is earned which is exempt from tax by invoking section 94(7) of the Act.

@ Disallowance of other expenses under MAT including foreign technician fees, unexplained investment.

(vii) Liability in respect of disallowances of excess depreciation claimed by 11.66 11.66 company, bonus provision, disallowance of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the Act in respect of A.Y. 2006-07 to A.Y. 2009-10.

(viii) Disallowances out of travelling exp and U/S 14A in respect of AY 2011-12 6.27 -

Total (c) 58.13 51.86

(d) Labour Cases:

Workers suspended, pending in High Court, Delhi - 1.67

Total (D) = (a) (b) (c) (d) 786.96 782.36

(e) Other claims not acknowledged as debts 83.14 49.20

(f) Bonds amounting to Rs 510 lacs executed in favour of Central Excise & 324.55 366.84 Customs Authorities, out of which, amount to be re-credited on receiving the proof of export is yet to be submitted.

(g) Amount of duty saved on import under advance license - corresponding 7.77 8.33 export obligation pending is Rs. 953.15 lacs (previous year Rs. 972.66 lacs)

Based on favorable decisions in similar cases, legal opinion taken by the company, discussions with the solicitors etc., the company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) to (e) above and hence no provision is considered necessary against the same.

3. Directors'' Remuneration

The Company appointed Mr. Ashok Kumar Agarwal and Mr. Pradeep Kumar Rustagi as Whole Time Directors of the Company with effect from February 14, 2011 with the approval of the shareholders. During the FY 2010-11, the Company had adequate Profits and both the directors were paid remuneration within the limits as prescribed in Schedule XIII to the Companies Act, 1956.

During the financial year 2011-12, due to changed market condition caused by over-supply, the Company had suf ered losses which were not determinable at the time of appointment. The remuneration paid/accrued to both the whole time directors was in excess of the limit prescribed under schedule XIII of the Companies Act, 1956 by Rs. 25.19 lacs. Therefore the Company, with the approval of shareholders in the Extra ordinary general meeting held on April 7, 2012, had made an application to the Central Government seeking its approval for the payment of remuneration in case of losses. The said application has been approved by the Central Government on July 17, 2012.

The remuneration paid to Mr. Ashok Kumar Agarwal and Mr. Pradeep Kumar Rustagi during the current financial year has been accrued / paid in accordance with the approval given by the Central Government.

Further in respect of managerial remuneration of Rs. 15.50 lacs paid during earlier years and not sanctioned by the department of company af airs, an interim stay has been granted by the Hon''ble High Court of Delhi on the writ petition filed by the Company.

4. Gratuity and other post employment benefits plan

Gratuity

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The following tables summaries the components of net benefit expense recognized in the Statement of Profit and loss and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Statement of Profit and loss

Net employee benefit expense recognised in employee cost

Since the entire amount of plan obligation is unfunded therefore changes in the fair value of plan assets, categories of plan assets as a percentage of the fair value of total plan assets and Company''s expected contribution to the plan assets in the next year is not given. The principal assumptions used in determining gratuity benefit obligations for the Company''s plans are shown below:

Provident Fund

Provident fund for certain eligible employees is managed by the company through trust "Ester Industries Limited Employee''s Provident Trust" in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate as notif ed by the Provident Fund authority. The contribution by the employer and employee together with the interest thereon are payable to the employee at the time of separation from the company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary have provided a valuation of provident fund liability and based on assumptions provided below there is no shortfall as at March 31, 2014 and March 31, 2013.

As per the guidance note on implementing AS-15, employee benefits (revised 2005) issued by the accounting standard board (ASB), provident fund trust set up by employers, which required interest shortfall to be met by employer, needs to be treated as defined benefit plan.

5. Leases:

The Company has taken various residential, office and warehouse premises under operating lease agreements. These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed under the lease agreement and there are no subleases. The company have paid Rs. 47.51 lacs (previous year Rs. 123.01 lacs) towards operating lease rentals.

6. Segment Reporting

The Company operates in two segments manufacturing and sale of polyester film and engineering plastics. The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organization and management structure. A brief description of the reportable segment is as follows:

Polyester Film: Polyester Films that are used in primarily flexible packaging and other industrial application. Polyester Film is known for high tensile strength, chemical and dimensional stability, transparency, reflective, gas and aroma barrier properties and electrical insulation. PET Chips is the main raw material used to manufacture the film.

Engineering Plastics: Engineering Plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering Plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc.

7. Scheme of amalgamation

i) The shareholders of the Company had approved a scheme of amalgamation between the Company (transferee Company) and fellow subsidiary Sriyam Impex Private Limited (transferor Company) with an appointed date of April 1, 2012. Sriyam Impex private limited was engaged in trading of BOPP film, chemicals and other items. This scheme of amalgamation has been approved by the High Court of Uttrakhand on March 25, 2014 and was subsequently submitted with Registrar of Companies (RoC), Uttrakhand on May 7, 2014. Accordingly, from April 1, 2012, the operation of the transferor Company stood transferred to and vested in the company on a going concern basis.

ii) The Transferee Company shall, without further application, issue and allot to the Equity Shareholder(s) of the Transferor Company, 100 (One Hundred only) Equity Shares of the nominal value of Rs. 5/- each, credited as fully paid up, for every 197 (One hundred and ninety seven only) Equity Shares of the nominal value of Rs. 10 each fully paid up held by them in the Transferor Company. For the purpose of allotment referred to in this clause, fractional entitlements shall be rounded-of to the next higher whole number.

iii) Pursuant to the scheme, equity shares of transferee Company held by the transferor Company''s shareholders shall stand cancelled and new equity shares will be issued to equity shareholders of transferor Company in the exchange ratio as specified above. The effect of cancellation and issuance of equity shares has been disclosed under head "Share Capital Control Account"

iv) The excess of book value of the investment held by the transferor Company in the transferee Company over the face value of equity shares has been adjusted in the Capital Reserve of the transferee Company.

v) Debit balance of statement of Profit and loss and the goodwill transferred from transferor Company has been adjusted from security premium account.

vi) The reduction in the share capital and security premium account of the transferee Company shall be effected as an integral part of the Scheme in accordance with the provisions of Sections 100 to 103 of the Act and the order of the High Court sanctioning the Scheme shall be deemed to be also the order under Section 102 of the Act for the purpose of confirming the reduction. The reduction would not involve either a diminution of liability in respect of unpaid share capital or payment of paid-up share capital, and the provisions of Section 101 of the Act will not be applicable.

vii) Pursuant to the scheme, the authorized share capital of the transferee Company on the effective date shall automatically stand increased by merging the authorized share capital of transferor Company with transferee Company without any further act or deed on the part of the transferee Company, including payment of stamp duty and Registrar of Companies fees, for the authorized share capital of transferor Company. Further, if required, the transferee Company shall take necessary steps to further increase and alter its authorized share capital suitably to enable it to issue and allot the equity shares required to be issued and allotted by it in terms of this scheme.

viii) Upon the Scheme becoming effective, the rransferor Company shall stand dissolved without winding up.

ix) The transfer of assets and liabilities has been effected from the "Appointed date" of April 1, 2012, as defined in the scheme and approved by the High Court of Uttrakhand.

x) Credit balance of security premium account and capital reserve account of the transforer company have been transferred to the tranferee company.

# This excludes the amount of Rs. 162.92 lacs pertaining to the amortization of goodwill debited in the statement of Profit and Loss account of the transferor Company for the year ended March 31, 2013. However, as per the approved scheme of amalgamation, goodwill as on April 1, 2012 in the books of transferor Company should be adjusted from the securities premium account of the transferee Company. Accordingly, the amortization of goodwill amounting to Rs. 162.92 lacs has not been considered while giving effect of the operations of the transferee Company for the year April 1, 2012 to March 31, 2013 and it has been adjusted from the securities premium account as part of goodwill brought in the books of transferee Company.

Further, net cash flows for the period April 1, 2012 to March 31, 2013 pertaining to the transferor Company on account of operating, investing and financing activities aggregating Rs. 25.11 lacs, Rs. nil and Rs. nil respectively have been included in the current year''s statement of cash flows as a separate line item under the respective heads.

8. In the Board Meeting held on October 3, 2013, the Board of Directors approved the proposal for preferential allotment of 20,750,000 Zero Coupon Warrants of Rs. 10.10 each and convertible into 20,750,000 equity shares of Rs. 5 each fully paid up at a price of Rs. 10.10 each including premium of Rs. 5.10 each to a Non-Promoter entity in compliance with the Companies Act, 1956 and SEBI regulations and subject to the shareholders and other necessary approvals required.

After obtaining approval from Shareholders, Stock Exchanges and FIPB, the Company allotted Warrants in its Board Meeting held on April 11, 2014.

9. Previous year figure have been regrouped / reclassified whenever considered necessary, so as to confirm with the current year''s classif -ication.


Mar 31, 2013

1. Nature of operations

Ester Industries Limited (hereinafter referred to as ''the Company'') is a manufacturer of polyester flm and engineering plastics.

2. Directors'' Remuneration

The Company appointed Mr. Ashok Kumar Agarwal and Mr. Pradeep Kumar Rustagi as Whole Time Directors of the Company with efect from February 14, 2011 with the approval of the shareholders. During the FY 2010-11, the Company had adequate profts and both the directors were paid remuneration within the limits as prescribed in Schedule XIII to the Companies Act, 1956.

During the fnancial year 2011-12, due to changed market condition caused by over-supply, the Company had sufered losses which were not determinable at the time of appointment. The remuneration paid/accrued to both the whole time directors was in excess of the limit prescribed under schedule XIII of the Companies Act, 1956 by Rs. 25.19 lacs. Therefore the Company, with the approval of shareholders in the Extra ordinary general meeting held on April 7, 2012, had made an application to the Central Government seeking its approval for the payment of remuneration in case of losses. The said application has been approved by the Central Government on July 17, 2012.

The remuneration paid to Mr. Ashok Kumar Agarwal and Mr. Pradeep Kumar Rustagi during the current fnancial year has been accrued / paid in accordance with the approval given by the Central Government.

Further in respect of managerial remuneration of Rs. 15.50 lacs paid during earlier years and not sanctioned by the department of company afairs, an interim stay has been granted by the Hon''ble High Court of Delhi on the writ petition fled by the Company.

3. Gratuity and other post employment benefts plan

Gratuity

The Company has a defned beneft gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The beneft vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The following tables summaries the components of net beneft expense recognized in the Statement of proft and loss and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

4. Leases:

The Company has taken various residential, ofce and warehouse premises under operating lease agreements. These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed under the lease agreement and there are no subleases. The company have paid Rs. 123.01 lacs (previous year Rs. 123.85 lacs) towards operating lease rentals.

5. Segment Reporting

The Company operates in two segments manufacturing and sale of polyester flm and engineering plastics. The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organization and management structure. A brief description of the reportable segment is as follows:

Polyester Film : Polyester Films that are used in primarily fexible packaging and other industrial application. Polyester Film is known for high tensile strength, chemical and dimensional stability, transparency, refective, gas and aroma barrier properties and electrical insulation. PET Chips is the main raw material used to manufacture the flm.

Engineering Plastics : Engineering Plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering Plastics are equipped with certain electrical properties which enable it to be used in specifc industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc.

6. The Board of Directors in its meeting held on January 17, 2013 accorded the approval of Scheme of amalgamation of Sriyam Impex Private Limited ("the Promoter group company") with Ester Industries Limited ("the Company") subject to regulatory and other approvals. In this process the company have fled an application with stock exchange for obtaining "No Objection" and in principle approval.

7. Previous year fgure have been regrouped / reclassifed whenever considered necessary, so as to confrm with the current year''s classifcation.


Mar 31, 2012

1. Nature of operations

Ester Industries Limited (hereinafter referred to as 'the Company') is a manufacturer of polyester film and engineering plastics.

a) Terms / rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 5 per share. Each equity shareholder is entitled for one vote per share. The Company declares and pays dividend in Indian rupees.

During the year ended March 31, 2012, the amount of dividend recognized as distribution to equity shareholders was Rs. nil per share (previous year : Rs. 4 including interim dividend of Rs. 2).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. This distribution will be in proportion to the number of equity shares held by the shareholder.

* Shares held by Super Leasing Limited has been included in Sriyam Impex Private Limited pursuant to it's merger with Sriyam Impex Private Limited w.e.f. February 18, 2011.

** Shares held by Saraswati Trading Company Ltd and Sri Lakshmi Investments Ltd has been included in Wilemina Finance Corp. pursuant to it's merger w.e.f. April 20, 2011.

As per records of the company, including its register of shareholders/members and other declarations received from share- holders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

* Shares held by Super Leasing Limited has been included in Sriyam Impex Private Limited pursuant to it's merger with Sriyam Impex Private Limited w.e.f. February 18, 2011.

** Shares held by Saraswati Trading Company Ltd and Sri Lakshmi Investments Ltd has been included in Wilemina Finance Corp. pursuant to it's merger w.e.f. April 20, 2011.

I. Term loans

a) From Bank of Baroda of Rs. 514.38 lacs (Previous year Rs. 721.00 lacs) for Corporate Office project is secured by mortgage created by way of deposit of title deeds in respect of the immoveable property (land and building under construction thereon) at Gurgaon. The term loan bears floating interest at the rate base rate plus 4.25% pa. The term loans are repayable in 59 monthly installments starting from April 2013.

b) From State bank of Bikaner and Jaipur of Rs. 162.50 lacs (Previous year Rs. Nil) is secured by first exclusive charge by way of hypothecation of Oil Fired Heater, Reclaim Co-extruder and In-Line coater and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company). The term loan bears floating interest at the rate base Rate plus 3.25% pa. The Term Loans are repayable in 14 quarterly installments starting from April 2013.

c) From consortium member banks of Rs. 2,373.57 lacs (Previous Year Rs. 3,707.07 lacs) are secured by first mortgage created by way of deposit of title deeds in respect of the immovable properties at Khatima, both present & future and first charge by way of hypothecation of Company's all movable assets (save and except inventories, book debts, vehicles acquired through vehicles loans and machinery acquired through term loan taken from banks / body corporate on exclusive charge basis), ranking pari passu inter-se and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company). The term loans bear floating interest rate ranging from Base Rate plus 2.75% - 4.25% pa. These term loans are repayable in 24 quarterly installments starting from April 2013.

Term Loans from banks are further secured by second charge by way of hypothecation of stocks of raw material, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future).

d) From Body Corporate (Tata Capital Limited) is secured by first exclusive charge by way of hypothecation of Engineering Plastics Extruder No: 3 & Off Line Coater and further secured by irrevocable guarantee of Mr. Arvind Kumar Singhania (Chairman of the Company) and Wilemina Finance Corp. (Holding company). The term loan from body corporate bears floating interest at the rate 16.50% pa. Term Loans are repayable in 9 monthly installments starting from April 2013.

II. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the Loans.

III. Buyers' Credit for capital goods

a) Buyers' credit amounting to Rs. 11,585.76 lacs (Previous Year Rs. 10,516.80 lacs) are against Letters of Undertaking (LOUs) / Letter of Comfort (LOCs) issued by consortium of banks. LOUs / LOCs facility is secured by first mortgage created by way of deposit of title deeds in respect of the immovable properties situated at Khatima, both present & future and first charge by way of hypothecation of all movable assets (save and except inventories, book debts, vehicles acquired through vehicles loans and machinery acquired through term loans taken from body corporate on exclusive charge basis), ranking pari passu inter-se and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company).

b) Buyers' Credit amounting to Rs. 1,012.91 lacs (Previous Year Rs. 884.16 lacs) are against LOUs / LOCs issued by Union Bank of India (UBI). LOUs / LOCs facility from UBI is secured by first exclusive charge by way of hypothecation of Metallizer (Topmet 2850) and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company).

c) Buyers' Credit amounting to Rs. 989.80 lacs (Previous Year Rs. nil) are against LOUs / LOCs issued by State bank of Bikaner & Jaipur (SBBJ). LOUs / LOCs facility from SBBJ is secured by first exclusive charge by way of hypothecation of Reclaim co- extruder and In-Line coater, and further secured by irrevocable guarantee of Wilemina Finance Corp. (Holding company).

Company has availed LOUs / LOCs facilities from the banks to avail the Buyers' Credit of Rs. 13,588.47 lacs (Previous Year - Rs. 11,400.96 Lacs). LOU / LOC facilities to the extent of Rs.12,575.56 Lacs (previous year- Rs 10,516.80 lacs) is sanctioned to the company as a sub limit of term loans upto a period of 3 years from May 2010 to Aug 2013.

LOCs / LOUs facilities are sanctioned to the company as a sub limit of term loan. Liability towards Buyers' Credit under LOCs / LOUs will be liquidated out of the proceeds of term loans that are repayable over a period of seven years.

IV. Working capital loan and bills discounting: These loans are secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of Wilemina Finance Corp. (Holding company). Working Capital and Bill discounting facilities are further secured by way of second charge in respect of immovable properties and movable fixed assets. The working capital loans from banks bear floating interest rate ranging from Base Rate plus 2.50% to 2.75% pa.

V. Buyers' Credit for raw material are against LOUs / LOCs issued by consortium of banks. The LOUs / LOCs facilities is sanc- tioned to the Company as a sub limit of Non Fund (LCs) based facility. The facility is secured by first charge by way of hypotheca- tion of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of Wilemina Finance Corp. (Holding company).

(i) Conveyance deed in respect of part of the land valued at Rs. Nil (previous year Rs 4.75 lacs) is pending for execution.

(ii) (a) Amount of borrowing cost aggregating Rs. 5.34 lacs (Previous year Rs.428.64 lacs) is capitalised during the year.

(b) Current year's deletions from plant & machinery include Rs. 6.00 lacs (Previous year Rs.687.10 lacs) on account of discarding of the old machinery and equipments

(iii) (a) Gross block of fixed assets includes Rs. 7299.53 lacs (previous Year Rs.7,299.53 lacs) being the amount added on revaluation of fixed assets on 31-10-1992

Revaluation was carried out by an external valuer as per "Existing Use Value" method using prevailing market prices of the assets and where such prices were not available, RBI indices were used.

Details of additions due to revaluation during 1992 are as follows:

Land - Rs. 39.93 Lacs (previous year Rs. 39.93 lacs)

Building - Rs. 526.23 Lacs (previous year Rs. 526.23 lacs)

Plant and machinery - Rs. 6733.37 Lacs (previous year Rs. 6733.37 lacs)

(iv) Plant & machinery Rs. 448.05 lacs (previous year nil) have been adjusted for remission of liability towards technician fee & other expenses.

Excise duty on sales amounting to Rs. 4,249.06 lacs (previous year Rs. 4,572.75 lacs) has been reduced from sales in statement of profit & loss and excise duty on increase/decrease of stock Rs. 202.66 lacs (previous year Rs. 132.62 lacs) has been considered as (income) / expenses in note 22 of the financial statements.

1. Contingent liabilities not provided for

(Rs. In lacs)

As at As at March 31, 2012 March 31, 2011

(a) Excise Duty and Customs Duty pending hearing of appeals/writ petitions:

(i) Cenvat credit disallowed on inputs (for the period March 1990 to Mar 1991) not covered under rule 57A, mainly Santotherm, Diethyl Glycol, Delion etc. Disallowance was due to use of inputs for manufacture of exempted goods. 8.06 8.06

(ii) Removal of PET chips (exempted goods) from bonded warehouse without payment of duty. 3.00 3.00

(iii) Goods sold from depot at higher value than one declared at factory gate price for the period Jun 1988 to Mar 1992. 25.46 25.46

(iv) Cenvat credit disallowed on inputs like DMT, additives etc. for the manufacturing of polyester chips. Disallowance was due to use of inputs for manufacturing of exempted goods. 164.20 164.20

(v) Reversal of Cenvat credit availed on HSD. Department disallowed credit alleging that cenvat credit has been wrongly availed on HSD. 206.92 206.92

(vi) Cenvat credit availed on raw material. Disallowance on account of credit availed fully on raw material and not on pro-rata basis for clearance of dutiable goods i.e. polyester films. 11.72 11.72

(vii) Availment of credit on import of Dimethyl Terephalate. Disallowance was due to use of inputs for manufacturing of exempted goods. 57.71 57.71

(viii) Other Miscellaneous Cases 33.82 33.82

(ix) Cenvat credit of Rs. 0.59 lacs not admissible on shape & section as capital goods and Rs. 2.5 lacs recoverable against shortage of cenvatable inputs. 3.09 3.09

(x) Demand raised on account of excess / shortfall in stocks alleged by preventative staff. 12.95 12.95

Total (a) 526.93 526.93

(b) Show cause notices related to Service Tax & Excise rebate on export 13.75 2.59

(c) Income Tax:

(i) Demand raised during assessment (A.Y. 1989-90) 1.84 1.84

(ii) Disallowance of advertisement expenditure pursuant to rule 6B of IT rules, 1962 in the revised return of income which is based on the auditor's report in respect of A.Y. 1990- 91, 1993-94 to 1997-98 by ITAT. 1.68 1.68

(iii) Disallowance of club expenditure on the contention that they are not wholly and exclusively for the business needs of the company in respect of A.Y. 1990-91, 1993-94 to 1994-95 & A.Y. 2005-06 by ITAT. 1.80 1.80

(iv) Disallowance of 50% of entertainment expenses on the contention that there has been no participation of the employee for incurring such expenditure in respect of A.Y. 1993-94 to 1997-98 by ITAT. 5.10 5.10

(v) Disallowance of expenses relating to previous years in respect of A.Y. 1993-94 to 1997-98 by ITAT. 14.68 14.68

(vi) Demand of MAT (including interest) A.Y. 2004-05* 5.78 46.63

* Disallowances of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the act by AO in respect of A.Y. 2004-05.

* Disallowances of provision for doubtful debts and advances for computing book profits under section 115JB of the Act as they are in the nature of reserves as per assessing officer.

* Disallowances of claim of profit under section 80HHC for computing book profits under section 115JB of the act on the contention that company should have adjusted unabsorbed business loss and depreciation with the profits of the business first before arriving at the deduction under section 80HHC of the Act. Since, the two exceed the current years profits, there can be no deduction under section 80HHC of the Act.

(vii) Demand of MAT (including interest) A.Y. 2005-06@ 11.16 17.05

@ Disallowance of carry forward of loss on sale of investment on which dividend income is earned which is exempt from tax by invoking section 94(7) of the Act.

@ Disallowance of other expenses under MAT including foreign technician fees, unexplained investment.

(viii) Liability in respect of disallowances of excess depreciation claimed by company, bonus provision, disallowance of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the Act in respect of A.Y. 2006-07 to A.Y. 2009-10. 37.27 14.43

Total (c) 79.31 103.21

(d) Labour Cases:

Workers suspended, pending in High Court, Delhi 1.67 1.67

Total (D) = (a) (b) (c) (d) 621.66 634.40

(e) Other claims not acknowledged as debts 48.50 47.50

(f) Bonds amounting to Rs 510 lacs executed in favour of Central Excise & Customs Authorities, out of which, amount to be re-credited on receiving the proof of export is yet to be submitted. 163.75 426.48

Based on favorable decisions in similar cases, legal opinion taken by the company, discussions with the solicitors etc., the company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) to (e) above and hence no provision is considered necessary against the same.

2. Directors' Remuneration

The Company appointed Mr. Ashok Kumar Agarwal and Mr. Pradeep Kumar Rustagi as Whole Time Directors of the Company with effect from February 14, 2011 with the approval of the shareholders. During the FY 2010-11, the Company had adequate profits and both the directors were paid remuneration within the limits as prescribed in Schedule XIII to the Companies Act, 1956.

During the current year, due to changed market condition caused by over-supply, the Company has suffered losses which were not determinable at the time of appointment. The remuneration paid to both the whole time directors is in excess of the limit prescribed under schedule XIII of the Companies Act, 1956 by Rs. 25.19 lacs. Therefore the Company, with the approval of shareholders in the Extra ordinary general meeting held on April 7, 2012, has made an application to the Central Government seeking its approval for the payment of remuneration in case of losses. The application is still under consideration with the Central Government.

Further in respect of managerial remuneration of Rs. 15.50 lacs paid during earlier years and not sanctioned by the department of company affairs, an interim stay has been granted by the Hon'ble High Court of Delhi on the writ petition filed by the Company.

3. Gratuity and other post employment benefits plan Gratuity

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The following tables summaries the components of net benefit expense recognized in the Statement of profit and loss and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Since the entire amount of plan obligation is unfunded therefore changes in the fair value of plan assets, categories of plan assets as a percentage of the fair value of total plan assets and Company's expected contribution to the plan assets in the next year is not given.

Provident Fund

The company has set up provident fund trust which is managed by the company, and as per the guidance note on implementing AS-15, employee benefits (revised 2005) issued by the accounting standard board (ASB), provident fund trust set up by employers, which required interest shortfall to be met by employer, needs to be treated as defined benefit plan.

The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities during the quarter ended December 31, 2011 the actuary has accordingly provided a valuation for the year ended on March 31, 2012 (previous year ended on March 31, 2011 valuation is not available) and based on the below provided assumptions there is a shortfall of Rs. 1.50 lacs as at March 31, 2012. This shortfall in Provident Fund has been made good by way of creating sufficient provision.

4. Leases:

The Company has taken various residential, office and warehouse premises under operating lease agreements. These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed under the lease agreement and there are no subleases. The company have paid Rs. 123.85 lacs (previous year Rs. 109.79 lacs) towards lease rentals.

5. Segment Reporting

The Company operates in two segments manufacturing and sale of polyester film and engineering plastics. The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organization and management structure. A brief description of the reportable segment is as follows:

Polyester Film: Polyester Films that are used in primarily flexible packaging and other industrial application. Polyester Film is known for high tensile strength, chemical and dimensional stability, transparency, reflective, gas and aroma barrier properties and electrical insulation. PET Chips is the main raw material used to manufacture the film.

Engineering Plastics: Engineering Plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering Plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc.

6. Previous year figure have been regrouped / reclassified whenever considered necessary, so as to confirm with the current year's classification.


Mar 31, 2011

1. Nature of Operations

Ester Industries Limited (hereinafter referred to as the Company) is a manufacturer of Polyester Film and Engineering Plastics.

2. Contingent Liabilities not provided for (Rs. in lacs) March 31, 2011 March 31, 2010

a) Excise Duty and Customs Duty pending hearing of appeals/writ petitions: i) Cenvat Credit Disallowed on inputs (for the period March 1990 to May 1991) not covered Under Rule 57A, mainly Santotherm, Diethyl Glycol, Delion MS etc. Disallowance was due to use of inputs for manufacturing of exempted goods. 8.06 8.06

ii) Removal of PET Chips (exempted goods) from bonded warehouse without payment of duty 3.00 6.95

iii) Goods sold from depot at higher value than one declared at factory gate price for the period Jun 1988 to Mar1992. 25.46 26.96

iv) Cenvat Credit disallowed on Inputs like DMT, additives etc. for the manufacturing of Polyester Chips.

Disallowance was due to use of inputs for manufacturing of exempted goods. 164.20 164.20

v) Reversal of Cenvat credit availed on HSD.

Department disallowed credit alleging that Cenvat credit has been wrongly availed on HSD 206.92 206.92

vi) Cenvat credit availed on raw material.

Disallowance on account of credit availed fully on raw materials and not on pro-rata basis for clearance of dutiable goods i.e. Polyester Films. 11.72 11.72

vii) Availment of credit on import of Dimethyl Terephalate

Disallowance was due to use of inputs for manufacturing of exempted goods. 57.71 57.71

viii) Other Miscellaneous Cases 33.82 39.85

ix) CENVAT credit Rs .58 lacs not admissible on shape & section as capital goods and Rs 2.5 lacs recoverable against shortage of cenvatable inputs 3.09 0.00

x) Demand raised on account of Excess / Shortfall in stocks alleged by Preventive Staff 12.95 12.95

Total (A) 526.93 535.32

b) Show cause notices related to denial of Service Tax credit & Excise rebate on export 2.59 2.59

c) Income Tax:

Demand raised during assessment (A.Y. 1989-90) 1.84 1.84

Disallowed of advertisement expenditure pursuant to Rule 6B of IT Rules, 1962 in the revised return of income which is based on the auditors report in respect of A.Y. 1990-91, 1993-94 to 1997-98 by ITAT 1.68 1.68

Disallowances of club expenditure on the contention that they are not wholly and exclusively for the business needs of the Company in respect of A.Y. 1990-91, 1993-94 to 1994-95 & A.Y.2005-06 by ITAT 1.80 1.80

Disallowances of 50% of entertainment expenses on the Contention that there has been no participation of the employee for incurring such expenditure in respect of A.Y. 1993-94 to 1997-98 by ITAT 5.10 5.10

Disallowances of expenses relating to previous year in respect of A.Y. 1993-94 to 1997-98 by ITAT 14.68 14.68

Demand of MAT (including interest) A.Y.04-05* 46.63 46.63

* Disallowances of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the Act by AO in respect of A.Y.2004-05

* Disallowances of provision for doubtful debts and advances for computing book profits under section 115JB of the Act as they are in the nature of reserves as per Assessing officer.

* Disallowance of claim of profits under section 80HHC under for computing book profits under section 115JB of the Act on the contention that Company should have adjusted unabsorbed business loss and depreciation with the profits of the business first before arriving at the deduction under section 80HHC of the Act. Since, the two exceed the current years profits, there can be no deduction under section 80HHC of the Act.

Demand of MAT (including interest) A.Y.05-06@ 17.05 17.05

@ Disallowances of carry forward of loss on sale of investments on which dividend income is earned which is exempt from tax by invoking section 94(7) of the Act.

@ Disallowances of other expenses under MAT including Foreign technician fees, unexplained investments.

Liability in respect of disallowances of excess depreciation claimed by company, bonus provision, disallowances of expenses incurred on earning exempt income like dividend and interest by invoking section 14A of the Act in respect of A.Y. 2006-07 to A.Y. 2008-09 14.43 14.43

d) Labour Cases: Workers suspended, pending in High Court, Delhi 1.67 1.67

Total (D) = (A)+(b)+(c)+(d) 634.36 642.79

e) Other claims not acknowledged as debts 47.50 46.70

f) Contingent liability in respect of partly paid up shares - 5.15

g) Bonds amounting to Rs 510 lacs executed in favour of Central Excise & Customs Authorities, out of which, amount to be re-credited on receiving the proof of export is yet to be submitted. 426.48 264.06

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) to (e) above and hence no provision is considered necessary against the same.

3. a) Directors Remuneration

As the liability for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, the amounts pertaining to the whole time director is not included above.

Note:

In respect of the Managerial Remuneration of Rs.15.50 lacs paid during earlier years and not sanctioned by the Department of Company Affairs, an interim stay has been granted by the Honble High Court of Delhi on the writ petition filed by the Company.

4. Excise duty on sales amounting to Rs. 4,572.75 lacs (previous year Rs. 2,628.75 lacs) has been reduced from sales in profit & loss account and excise duty on increase of stock Rs. 132.62 lacs (Previous year Rs. 32.29 lacs) has been considered as expense in Schedule 15 of financial statements.

5. Gratuity and other post-employment benefit plans: a) Gratuity

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the Projected unit credit method.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the unfunded status and amounts recognised in the balance sheet for the Gratuity.

b) Provident Fund

The Company has set up Provident Fund Trust which is managed by the Company, and as per the Guidance note on implementing AS-15, Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB), Provident Fund set up by the employers, which required interest shortfall to be met by the employer, needs to be treated as defined benefit plan. Pending the issuance of the guidance note from the Acturial Society of India, the Companys Actuary has expressed his inability to reliably measure the Provident Fund liability. However, the Company has ascertained that at the year end there is no shortfall in the Provident Fund Trust.

6. Segment Reporting

The Company operates in two segments manufacturing and sale of polyester film and engineering plastics. The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organisation and management structure. A brief description of the reportable segment is as follows:

Polyester Film : Polyester Films that are used in primarily flexible packaging and other industrial application. Polyester Film is known for high tensile strength, chemical and dimensional stability, transparency, reflective, gas and aroma barrier properties and electrical insulation. PET Chips is the main raw material used to manufacture the film

Engineering Plastics : Engineering Plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering Plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc.

B. Information About Secondary Segments

c) The Company has common fixed assets for producing goods for Domestic Market and Overseas Market. Hence, separate figures for fixed assets / additions to fixed assets cannot be furnished.

7.a) Names of Related parties

Nature of Relationship Name of Related Party

Names of related parties where control exists

- Holding Company - Goldring Investments Corp.

- Subsidiary Company - Ester International (USA) Limited (EIUL)

Names of Associates/ Joint Ventures :

- Associates - Saraswati Trading Company Limited

Key Management Personnel. - Mr. A K Singhania (Chairman & Managing Director)

- Mr. Ashok Kumar Agrawal (Executive Director with effect from 14th February 2011)

- Mr. Pradeep Rustagi (Executive Director with effect from 14th February 2011)

Relatives of Key Management Personnel. - Mr. Sitaram Singhania (Father of Mr. A K Singhania)

- Uma Devi Singhania (Mother of Mr. A.K.Singhania)

- Jai Vardhan Singhania (Son of Mr. A K Singhania)

- Ayush Vardhan Singhania (Son of Mr. A K Singhania)

Individuals, which directly or indirectly - Uma Devi Singhania (upto 3rd May 2010) through subsidiaries, control or exercise - Jai Vardhan Singhania (with effect from 3rd May 2010) significant influence over the company.

Enterprises owned or significantly - Super Leasing Limited * influenced by Key management personnel - Sriyam Impex Private Limited or their relatives - Saraswati Trading Company Limited

- Sri Lakshmi Investments Limited

- Wilemina Finance Corporation

- Polyplex Corporation Limited

* Now merged with Sriyam Impex Private Limited (with effect from 18th February 2011)

8. During the current financial year, the Company has received the approval of the appropriate authority for the closure of Ester Europe Gmbh, accordingly we have eliminated the investments from the standalone financial statements.

9. Previous year figures have been regrouped / reclassified wherever considered necessary, so as to confirm with the current years classification.


Mar 31, 2010

1. Contingent Liabilities not provided for March 31, 2010 March 31, 2009 (Rs. In Lacs) (Rs. In Lacs) (a) Excise Duty and Custom Duty pending hearing of appeals/writ petitions: (i) Cenvat credit disallowed on certain items 8.06 8.06 (ii) Removal of PET chips without payment of duty 6.95 6.95 (iii) Goods sold from depot at higher value than one declared at factory gate price 26.96 26.96 (iv) Cenvat credit disallowed on inputs 164.20 164.20 (v) Reversal of Cenvat credit availed on HSD 206.92 206.92 (vi) Cenvat credit availed on raw material utilized on prorata basis. 11.72 11.72 (vii) Availment of credit on import of Dimethyl Terephalate 57.71 57.71 (viii) Other Miscellaneous Cases 39.85 40.21 (ix) Show cause notice issued by Commissioner, based on CAG audit, alleging short reversal of Modvat Credit while disposing Yarn Plant. - 63.83 Total (a) 522.37 586.56 (b) Show cause notices related to denial of Service Tax credit & Excise rebate on export 2.59 2.59 (c) Income Tax: Demand raised during assessment (A.Y. 89-90) 1.84 1.84 Demand of MAT (including interest) A.Y.04-05 46.63 46.63 Demand of MAT (including interest) A.Y.05-06 17.05 17.05 (d) Labour Cases: Workers suspended, pending in High Court, Delhi 1.67 1.67 Total (a to d) 592.15 656.34 (e) Other claims not acknowledged as debts 46.70 46.00 (f) Contingent liability in respect of partly paid up shares 5.15 5.15 (g) Bonds amounting to Rs 510 lacs executed in favour of Central Excise & Customs Authorities, out of which, amount to be re-credited on receiving the proof of export is yet to be submitted. 264.06 88.69

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) to (e) above and hence no provision is considered necessary against the same.

2. Company had taken an unsecured interest free loan in 1999-2000 from an overseas corporate body (Spring Falls Limited - Related Party) in the form of External Commercial Borrowing (ECB). Loan was due for repayment in one installment on March 31, 2005 but it was rescheduled with the consent of lender and was repayable by March 31, 2006. Company was not able to repay the loan on that date and the same was not renewed in the previous year as per the guidelines of Reserve Bank of India. The Company has repaid the said Loan during the year.

3. In the opinion of the Board of Directors of the Company, Loans and Advances have a realisable value at least at the amounts at which they are stated.

As the liabilities for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, the amounts pertaining to the whole time director is not included above.

Note:

In respect of the Managerial Remuneration of Rs.15.50 lacs paid during earlier years and not sanctioned by the Department of Company Affairs, an interim stay has been granted by the Hon’ble High Court of Delhi on the writ petition filed by the Company.

4. Excise duty on sales amounting to Rs. 2,628.75 lacs (previous year Rs. 3,180.65 lacs) has been reduced from sales in profit & loss account and excise duty on increase of stock Rs. 32.29 lacs in the current year is considered as expense and excise duty on decreased in stock of Rs. 51.92 Lacs is considered as income in previous year in Schedule 17.

5. Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the Projected unit credit method.

The following tables summarise the components of net benefit expense recognized in the profit and loss account and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Since the entire amount of plan obligation is unfunded therefore changes in the fair value of plan assets, categories of plan assets as a percentage of the fair value of total plan assets and Company’s expected contribution to the plan assets in the next year is not given.

6. Pursuant to the resolution passed by the Shareholders of the Company at the Extra Ordinary General Meeting (EGM) held on 21st October 2009, the Company has by way of preferential issue allotted 21,73,914 Shares Warrants of face value of Rs. 5/- each to Promoters, 26,08,696 Zero Coupon Unsecured Fully and Compulsorily Convertible Debentures (FCCD) of face value of Rs. 5/-each to an independent Overseas Investor and 26,08,696 Zero Coupon unsecured Fully and Compulsorily Convertible Debentures (FCCD) of Face Value of Rs. 5/- each to Person Acting in Concert with Promoters for cash at a premium of Rs. 18/- as part financing of the Polyester Film Expansion project. Board of Directors in their meeting dated 24th December 2009 has converted these Share Warrants and FCDs into 73,91,306 equity shares at a price of Rs. 23/- including a premium of Rs. 18/- per equity share.

7. Loss on foreign exchange fluctuation during the year includes Mark – to – Market losses of Rs. 402.13 lacs (previous year nil) towards forward contracts booked to hedge the foreign currency liabilities related to Polyester Film Expansion Project.

8. Previous year figures have been regrouped / reclassified wherever considered necessary, so as to confirm with the current year’s classification.