Ester Industries announces Q3 & 9M FY17 results

9M FY17 Total Income : Rs. 507 crore; EBITDA: Rs. 32 crore

Patent filed under PCT for Master Batch to produce Speciality polyester yarn
Setting up a world class R & D and Innovation complex at Gurgaon

New Delhi, 7th February, 2017: Ester Industries Limited, India’s leading manufacturer of
Polyester Films, Engineering Plastics and Specialty Polymers, announced its financial results for the
quarter and nine month ended December 31, 2016.

Q3FY17 performance overview compared with Q3FY16
 Total Income stood to Rs. 177 crore v/s Rs. 174 crore, up 2%
o Subdued performance of the dominant film business resulting in moderate revenue
growth / contraction in revenue for the period.
 EBITDA stood at Rs. 11 crore compared to Rs. 12 crore
o Lower proportion of high margin Specialty Polymer business resulting in reduction of
operational profitability and margins. Working towards improving the overall product
mix by increasing the share of value added products.
 Loss after tax was Rs. 4 crore

Commenting on the performance, Mr. Arvind Singhania, Chairman, Ester Industries said:

“We have moved a step forward towards transforming the existing business profile of the Company.
Our efforts towards strengthening the innovation and executional capabilities of Specialty Polymer
business should help us quicken the transitioning phase.
Specialty Polymer business, our key focus area is shaping up well and continues to be extremely
promising. The filing of patent for Master Batch to produce Specialty Polyester yarn, and
Result Release

collaboration with leading global players should help us further improve our proficiencies. The
setting up of innovation and R&D complex will enable us to undertake downstream analytics and
pilot scale manufacturing internally in-turn resulting in lowering the lead time.
We are also working towards improving the performance of our legacy businesses namely polyester
film and engineering plastics through a two pronged approach of value enhancement and optimizing
cost efficiencies. This is reflected in an improving trend for both these businesses
Going ahead, we are confident of delivering strong and consistent returns post completion of our
transition process.”
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Key Highlights

 Patent filed under PCT for Master Batch to produce Speciality polyester yarn
o Filed a patent for Master Batch to produce specialized polyester yarn - The Master batch
is for a Cationic Dyeable Yarn which offers value advantages both from a quality and cost
perspective
o Product already approved by some Indian Entities
o Overall patent filing under Specialty Polymer business – 9

 Setting up a world class R & D and Innovation complex at Gurgaon –
o Plans to set up R&D and Innovation complex at an approx. cost of Rs. 50 crore. This is
expected to further enhance the Specialty Polyester business and stimulate the existing
collaboration with companies like DuPont for development of certain other Specialty
Polyester polymers
o To bring downstream analytics and pilot scale manufacturing functions in-house, in a bid
to lower the lead time
o Proposes to house 40 scientists/ engineers responsible for researching and developing
breakthrough innovations
 Promoter hikes stake in Company– reflection of confidence in the business
o Purchased 4.92% recently, resulting in increasing overall stake in the Company to
59.14% from earlier 54.22%. Heightened stake, indicative of promoter’s belief and
confidence in long term performance of the business
 Shift towards being more cost effective by focusing on Cost optimisation –
o The Company has aligned its operational efficiencies towards meeting the future goals by
optimizing operational cost
o Emphasis on value addition, value added offerings presently comprise ~15% of portfolio

About Ester Industries:

Ester Industries Limited is a public limited company incorporated in 1985 promoted by the Singhania
family. The company is one of India’s leading producers of Polyester Films, Engineering Plastics and
Speciality Polymers having a track record of continually developing new and innovative products for
Result Release

customers across the globe. Ester Industries has state of the art manufacturing facilities in khatima in
Uttarakhand with the capacity of 67,000 TPA of Polyester Resin, 57,000 TPA of Polyester Film, 30,000
TPA of Specialty Polymers and 16,500 TPA of Engineering Plastics. The company currently exports more
than 30% of its production of Polyester Films with sales and distribution network in more than 56
countries across the world resulting in strong customer relationship. Specialty Polymers are manufactured
primarily for the European and US markets.

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For more information contact:
Pradeep Kumar Rustagi (CFO) Gavin Desa / Suraj Digawalekar / Snighter Albuquerque
Ester Industries Ltd. CDR India

Tel: +91 124 2656 100 Tel: +91 22 6645 1237 / 1235 / 1250
Fax: +91 124 2656 199 Fax: +91 22 6645 1213
E-mail: pradeep.rustagi@ester.in E-mail: gavin@cdr-india.com
suraj@cdr-india.com
snighter@cdr-india.com

CIN: L24111UR1985PLC015063
Regd. Office : Sohan Nagar, P.O. Charubeta, Khatima– 262308 Distt. Udham Singh Nagar, Uttarakhand
Phone: EPABX No. (05943) 250153-57; Fax No.: (05943) 250158;
Email: info@ester.in; Website: www.esterindustries.com
Result Release

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Q3 & 9M FY17 Results Presentation
February 7, 2017
Disclaimer

Certain statements in this document may be forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties like government actions, local political or
economic developments, technological risks, and many other factors that could cause actual results to
differ materially from those contemplated by the relevant forward looking statements. Ester Industries
Limited will not be in any way responsible for any action taken based on such statements and
undertakes no obligation to publicly update these forward-looking statements to reflect subsequent
events or circumstances.

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Index

Q3 & 9M FY17 Performance 04
Business – wise Performance 10
Strategic Shift – The New Ester 19
About Us 22

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Q3 & 9M FY17
Performance
Key Highlights

Patent filing under PCT for Master Batch to Setting up a world class R & D and
produce Speciality polyester yarn Innovation complex at Gurgaon –

• Filed a patent for Master Batch to produce • Plans to set up R&D and Innovation complex at
specialized polyester yarn - The Master batch is an approx. cost of Rs. 50 crore. This is expected
for a Cationic Dyeable Yarn which offers value to further enhance the Specialty Polyester
advantages both from a quality and cost business and stimulate the existing collaboration
perspective with companies like DuPont for development of
certain other Specialty Polyester polymers
• Product already approved by some Indian Entities
• To bring downstream analytics and pilot scale
• Overall patent filing under Specialty Polymer manufacturing functions in-house, in a bid to
business - 9 lower the lead time

• Proposes to house 40 scientists/ engineers
responsible for researching and developing
breakthrough innovations

Promoter hikes stake in Company– Shift towards being more cost effective by
reflection of confidence in the business ` focusing on Cost optimisation –

• Purchased 4.92% recently, resulting in • The Company has aligned its operational
increasing overall stake in the Company to efficiencies towards meeting the future goals by
59.14% from earlier 54.22%. Heightened stake, optimizing operational cost
indicative of promoter‟s belief and confidence in
long term performance of the business • Emphasis on value addition, value added
offerings presently comprise ~15% of portfolio

5
PCT - Patent Cooperation Treaty
Performance Update

Subdued performance of Lower proportion of
the dominant film high margin
business resulting in Specialty Polymer
moderate revenue business resulting in
growth for the period. reduction of
Revenue EBITDA operational
profitability and
177 588 margins. Working
12 60
11 towards improving
174
the overall product
mix by increasing
8
the share of value
32 added products.
163 507

Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17 Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17

PAT
5

-3

-4

-5
-10
Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17

6
Business Wise - Revenue Contribution

Q3 FY17 Q3 FY16

5% 6%
20%

20%

75% 74%

9MFY17 9MFY16

7% 8%

20%
19%

73% 73%

7
PF – Polyester Films; EP – Engineering Plastics; SP – Specialty Polymers
Business Performance…….. (Rs. cr)

Revenue & EBIT
improvement after a
Revenue EBIT
48
challenging H1 FY17
Specialty 35 8 5
1
Polymers
10 8 -2 0
4

Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17 Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17

Focus on cost
efficiencies & value Revenue EBIT
enhancement
translating to margin 426
369
Polyester Films improvement
52
& Chips 129 132 33
127
11 10 14

Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17 Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17

Steady Growth Revenue EBIT
8
Engineering 7
113 102
Plastics 3 3 3
35 33 36

Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17 Q3 FY16 Q2 FY17 Q3 FY17 9MFY16 9M FY17

8
PF – Polyester Films; EP – Engineering Plastics; SP – Specialty Polymers
Chairman’s Comments

Commenting on the results, Mr. Arvind Singhania, Chairman, Ester Industries said

”We have moved a step forward in transforming the existing business profile of the Company. Our efforts
towards strengthening the innovation and executional capabilities of Specialty Polymer business should help us
quicken the transitioning phase.

Specialty Polymer business, our key focus area is shaping up well and continues to be extremely promising.
The filing of patent for Master Batch to produce Specialty Polyester yarn, and collaboration with leading global
players should help us further improve our proficiencies. The setting up of innovation and R&D complex will
enable us to undertake downstream analytics and pilot scale manufacturing internally in-turn resulting in
lowering the lead time.

We are also working towards improving the performance of our legacy businesses namely polyester film and
engineering plastics through a two pronged approach of value enhancement and optimizing cost efficiencies.
This is reflected in an improving trend for both these businesses

Going ahead, we are confident of delivering strong and consistent returns post completion of our transition
process.”

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Specialty Polymers
Specialty Polymers

 Product portfolio - 18 products at various stages of
Particulars Q3 Q3 9M 9M
% %
development of which patents have been filed in (Rs cr) FY17 FY16 FY17 FY16

respect of 9
Revenues 8.4 10 -15.9 34.8 47.5 -26.7

 High entry barriers protected by Intellectual EBIT -0.5 1.4 - 4.8 8.5 -43.1
-400
Property rights Margins (%) -5.7 14.3 - 13.8 17.8
bps

 Setting up of R&D and Innovation Centre – In
 Growth Drivers –
house downstream analytics and pilot scale
manufacturing to lower lead time  Strengthening R&D capabilities

 Develop customized polyester resins based on
 Existing Product Portfolio –
customer's requirement
• Product Stain resistant Master Batch – Positive
response from the customers; ramping up sales  Focus on developing products which will help
transform latent demand into real demand
• PET resin for Draught beer Kegs - Working with a
leading global beer maker for developing a PET beer  Develop high quality specialty polyesters to
keg ensure competitive advantage for customers

• Master batch for a Cationic Dyeable Yarn --
Patent filed under PCT for a Master Batch to produce
specialised polyester yarn. Gaining strong potential in
China and Taiwan
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Specialty Polymers – Products & Applications

Polyethylene Terephthalate (PET)

Products
Polybutylene Terephthalate (PBT)

Polyethylene Naphthalate (PEN)

Master Batches

Rigid Packaging – Hot-fill / Beer Kegs

Textile – Flame Retardant

Applications
Carpets – Stain Resistant Master Batches

Heat Sealable

Engineered Plastics / Injection Moulding

Low Melt Polymers for Textiles

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Polyester Films
Polyester Films

 Manufactures and markets polyester films under the brand
Particulars Q3 Q3 9M 9M
% %
“UmaPET” (Rs cr) FY17 FY16 FY17 FY16

 Manufacturing capacity - 57,000 MTPA for polyester films
Revenues 132.5 129.3 2.4 369.5 426.1 -13.3
& 13,200 MTPA for metalized polyester films
EBIT 13.9 10.6 31.3 33.1 51.8 -35.9
 Integrated player – Polyethylene Terephthalate (Polyester) +230 -330
Margins (%) 10.5 8.2 8.9 12.2
bps bps
chips manufacturing capacity 70,000 MTPA

 Global Footprint: Formidable reach across more than 85
countries  Heightened competitive intensity and weak realisations
resulted in muted performance for the business.
 Value Added & Specialty products include transparent
 Cost reduction exercise translating to improving
barrier film, shrink film etc
profitability, hopeful of improving operational
o Transparent high barrier film is being keenly explored
efficiencies even further
by global buyers to replace PVdC coated PET
 Focus on improving profitability by sprucing up product
(environmentally hazardous material) and EVOH
mix; more focus on developing value added products
coextruded films (due to their higher mass).
 Value added / specialty products constitutes
 Aiming towards increasing proportion of value added & about 20% of the overall revenue at present
specialty products in overall mix by focusing on innovation,  Company has aligned its operational efficiencies towards
development and partnership with customers both in India meeting the future goals by optimizing operational cost
and overseas which will reduce the effect of inherent  Focused on offering customers unique value proposition
cyclicality by aligning innovation, development and partnership

14
Polyester Films – Products & Applications

White Opaque High Clear

Products
High Barrier Embossable

Heat Saleable Twist Wrap

Shrink film Anti - Static

Metalized High Barrier Matte

Flexible Packaging

Applications
Barrier Packaging

Embossing

Lidding

Label & Graphics

15
Engineering Plastics
Engineering Plastics – Products & Applications

 A well regarded manufacturer of Engineering plastics
Particulars Q3 Q3 9M 9M
% %
(Rs cr) FY17 FY16 FY17 FY16
 Diverse Product Portfolio – 350+ grades products
marketed under the brand “ESTOPLAST” Revenues 36.4 34.8 4.6 102.5 113.8 -9.9

 Manufacturing capacity - 16,500 MTPA EBIT 3.3 3.1 6.4 7.7 6.6 15.6
170
Margins (%) 8.9 8.8 10 bps 7.5 5.8
 Growing at better than industry run rate since the last 3 bps

years
 Being an integrated player, Ester is able to offer one of the
 Awarded the prestigious Plasticon Gold Award for the
most diversified Engineering Plastics product portfolio
“Fastest Growing Enterprise – Processing (Engineering
covering most of the polymers in this category
Polymers)” at the Plastindia Exhibition in February 2015
 Working towards scaling up its presence in the business

CFL Holders, Adopters & Sockets
Thermoplastic Polyester Compounds
MCB Case, Cover & other Parts
Applications

Handles Polybutylene Terephthalate (PBT)
Products

Knobs, Panels
Polyethylene Terephthalate (PET)
Switches

Optical Fibre Sheathing Polyamide 6 Compounds
Textile Machinery Parts
Polyamide 6.6 Compounds
Connectors

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Vision - 2022

Revenue: Rs. 1,700 – Rs 2,000 crore

• Achieve revenues upwards of 5x
• EBITDA Margins ~ 25%+

• Increase share of value added
products to 30-35%*
• EBITDA margins ~ 13%-14%
• Increasing focus on optimizing
operational cost

Revenue: 2x • Increase share of high margin
products
• EBITDA margins ~ 11%-12%

* Over 2 years
18
Strategic shift – The new
Ester
Knowledge

New
Innovation
ESTER Customization

Technology
Business Transformation – “Commodity” to “Technology”

New Product
Value Addition Technology Innovation Customisation
Development

Past Present Future

 One amongst many in the  Transforming from a  Aiming to be a Technology
Polyester Film and “commodity” to “technology” driven enterprise
Engineering plastic space player  Insulate performance from
 Redefining product portfolio effects of volatility & cyclicality
with innovative and customer  Emphasis on sustainable &
centric products profitable growth

The Specialty Polymers business will be a key driver of this transition
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Investor Contacts

About Us: (CIN :- L24111UR1985PLC015063)

Incorporated in 1985, Ester Industries Limited (EIL) is an ISO 9001:2008,ISO 22000:2005,TS16949:2002 certified Company
engaged in the manufacture of polyester films, specialty polymers, engineering plastics and polyester chips with manufacturing
facilities located in Khatima (Uttarakhand). A globally recognized player Ester manufactures and markets its polyester films under
the brand „UmaPET‟ and engineering plastics as „Estoplast‟. The Specialty Polymers business is driven by technology and
innovation and the Company presently has many patent applications pending for this business. With state-of-the-art
manufacturing plant, skillfully managed operations and a committed work force Ester continuously strives to meet commitments
towards total customer satisfaction.

For more information contact:

Pradeep Kumar Rustagi (Chief Financial Officer) Gavin Desa / Suraj Digawalekar / Snighter Albuquerque
Ester Industries Ltd. CDR India
Tel: +91 124 2656 100 Tel: +91 22 6645 1237 / 1235 / 1250
Fax: +91 124 2656 199 Fax: +91 22 6645 1213
E-mail: pradeep.rustagi@ester.in E-mail: gavin@cdr-india.com
suraj@cdr-india.com
snighter@cdr-india.com

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