Ester Industries Ltd. — Investor Presentation 2021

Nov 15, 2021

Date: 15th November, 2021

BSE Limited	National Stock Exchange of India Limited
Department of Corporate services	Exchange Plaza,
Phirojee Jeejeebhoy Towers	Plot no. C/1, G Block,
Dalal Street, Mumbai -400023	Bandra-Kurla Complex,
	Bandra (E), Mumbai - 400051
Scrip Code: 500136	Symbol: ESTER

Dear Sir

Subject: Investor presentation on financial results for the quarter and period ended on 30th September, 2021

We wish to submit the Investor presentation on financial results for the quarter and period ended on 30th September, 2021.

Please acknowledge the receipt of the same.

Thanking You

Yours Faithfully For Ester Industries Limited

Encls: As Above

Ester Industries Limited

Corporate Ofiice: Block-A, Plot No. 11, lnfocity-1, Sector-34, Gurgaon - 122001 Haryana, India Phone: +91-124-2656100, 4572100 Fax: +91-124-4572199, 2656199 E-Mail: info@ester.in Website: www.esterindustries.com

November, 2021

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.

About Us

Ester 2.0

Investment Thesis

Business Overview

Q2 FY22 Performance

Diversified business portfolio

Comprehensive product suite

State-of-the-art manufacturing facilities

Global footprint

Experienced management team

Strong Financial profile

Polyester Films 67%

Sales Mix (Q2 FY22)

Specialty Polymers 12%

Engineering Plastics 21%

Year of Incorporation

Corporate Headquarters

GURGAON, INDIA

Business Segments*

43 COUNTRIES 556

Global Footprint

People Credit Rating (Long Term)

CRISIL A-

(positive outlook)

1985 # 3

We serve more than 40 Countries

7

Technology

• Commoditized product portfolio
• Limited bargaining power
• Low and unpredictable margins
• High gearing ratio
• Irregular dividend policy

Ester 2.0

• Specialty Polymer SBU
• o Largely patent protected – high entry barriers
• o High sustainable margins
• o High growth potential
• Film SBU
• o Improved product mix high share of specialty products
• o Improved efficiencies
• Engineering Plastics SBU
• o Unprecedented performance in recent quarters
• Incorporated formal dividend policy

Established base of Film business delivering steady cashflows, Specialty Polymer reaping the benefits of an intense R&D and innovation focus

Revenues (Rs.cr)

EBITDA (Rs.cr)

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

PAT (Rs.cr)

EBITDA Margins (%)

-14 -5 8 4 7 -11 5 31 100 142

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

*Source: Bloomberg

Problem Solution

High cost towards carpet stain

Stain marks on (nylon) carpets given

Present technology – 'Sulphonated

Nylon' (Costly & inflexible) and 'Topical coating' (wash fastness & longevity issue) for addressing the problem are

spillover / spillage of liquid shortens

removal

its life

Impairs aesthetic appeal

not economically feasible

Flexible low cost solution

• Ester has developed a PET based master batch, which imparts permanent stain resistance in nylon carpets
• Provides total flexibility to producers of "nylon yarns for carpets" to adjust the content of the active ingredient for stain resistance to their specific need
• Granted patent in USA; India & Europe; filed in Korea

Business Opportunity

USA, largest producer of Carpets & Rugs boasts of an industry with annual revenues of ~USD 15 Billion

Regularly manufacturing & supplying Innovative Polybutylene Terephthalate (PBT) polymers to a global chemical leader

Ester Industries is among the only company globally equipped with the expertise and infrastructure to manufacture the product

Innovative PBT being manufactured from recycled material is more eco-friendly than PBT which is manufactured using virgin raw materials

Innovative PBT finds application across multiple industries – Consumer electronics, textile, fibre & automotive

Signed 'Manufacture and Supply Agreement' with a global chemical leader in April 2019 effective 1st April 2019 for 2 years for 400 MT per annum

Achieved sales of 465 MT in the first year of Agreement against committed volume of 400 MT

Achieved sales of 1042 MT during FY 2020-21 against committed volume of 400 MT

Basis performance of FY20 & 21 confident of substantially scaling up volumes in FY22 and beyond

EPS and Margin accretive

MB07

• o MB07 is added to make polyester dye-able with deeper and darker color
• o Achieved customer approval after 3 years of relentless hard work
• o Started commercial sales with good volumes
• o Steady state business going forward
• o As committed in earlier calls, commercial sales started that are there to stay

LMC 03

• o Techno commercial qualification achieved
• o Customers are introducing their final product in the market
• o Volumes to grow significantly over the next 2-3 years
• o Will make the final product recyclable
• o Commercial sales commenced

MB16

• o Close to achieving techno commercial qualification
• o Product in final stages of trial with customers
• o Commercial sales commenced
• o Potential for sizable sales volume 21

Strong product pipeline

Attractive array of products at varied stages of development

Polyethylene Terephthalate (PET)
PolybutyleneTerephthalate (PBT)	snotia
Polyethylene Naphthalate(PEN)	cplipA
Master Batches

Consumer electronics

Textile –Flame Retardant,Deep dyeablemaster batches, Cationic dyeablemasterbatch
Carpets –Stain Resistant Master Batches
Carpets –Deep DyeableMaster Batch
Heat Sealable

Engineered Plastics / Injection Moulding

Low Melt Polymers for Textiles

Products

• Demand growth of 5% 6%
• BOPET film used in flexible packaging applications will continue to be the key end use sector, accounting for nearly 60% of global consumption, and drive demand over the next five years
• Gaining wider application across both industrial & consumer staples and discretionary sector
• Design versatility; low carbon footprint and better cost economics driving demand
• Approx.1.1 Million Tons of Capacity likely to be added by 2023 – 2024 globally
• China and India account for ~60% of global output

Global Scenario: Domestic Scenario:

• Strong double digit growth rate of 10%-12% pa over past 5 years
• Low per capita consumption of BOPET; new innovative products and rising disposable income – key growth drivers
• Capacity expansion in Converting space, export opportunities in laminates promising brighter future
• Availability of recycled content films, helping sustainability initiatives

exports orders

Balanced mix of domestic and

Value Added (%)

EBIT Margins (%) – as per

Product mix – despite reduction in recent past, aiming towards increasing the share of value added products to ~25% - 30% by FY23

Pass through business model – provides protection against volatility in raw material prices (petrochemical based)

stcudorP	White Opaque	High Clear
	High Barrier	Embossable
	Heat Saleable	Twist Wrap
	Shrink film	Anti -Static
	Metalized HighBarrier	Matte

	Flexible Packaging
sno	Barrier Packaging
tiac	Embossing
plipA	Lidding
	Label & Graphics

Figs. in cr

Particulars Q2FY22 Q2FY21 % Q1 FY22 % H1 FY22 H1 FY21 % Sales (Vol's MT) 14,591 15,000 (3.0) 15,283 (4.5) 29,874 27,630 8.01 Revenue* 213 190 12.1 225 (5.3) 438 351 24.8 EBIT+ 28 70 (60.0) 36 (22.2) 64 124 (48.4) Margins (%) 13.1 36.8 (2,370 bps) 16.0 (290 bps) 14.6 35.3 (2,070 bps)

*including Chips sale worth Rs. 18 crore (Q2FY22); ~Rs.0 crore (Q2FY21) & ~Rs. 26 crore (Q1FY22) +adjusted for chip sales EBIT margins for Q2 FY22 would have been 14.1% as against 18% in Q1FY22

• Eliminating the impact of increase in feedstock prices from raw material consumption and revenue from operations, the EBIT margin during Q2FY22 would have been about 17%
• Margin compression during the quarter owing to:
  • o Lower margins owing to excess supply following commissioning of new capacities
  • o Higher shipping freight costs impacted export volume and margins
• Margin / profitability scenario likely to remain subdued over short to medium term: mitigation strategy focusing on enhancing volume of value added and off-line coated products being pursued relentlessly

• Setting up state of the art 48,000 MTPA BOPET Film plant and 8,333 MTPA Metallized BOPET Film plant in Telangana through Wholly Owned Subsidiary
• Achieved financial closure
  • Debt structure: Rs. 239 crore Euro denominated term loan at less than 2% all in cost along with Rs. 171 crore rupee term loan at interest rate of ~ 8% - 8.5%. Weighted average cost of debt ~5.5% to 6%
• Commercial operations / production to commence in October 2022

Diverse product portfolio

Backward integrated player

Increasing share of high margin products

"Unit relocation" to result in margin expansion

Strong sector tailwinds

Polybutylene Terephthalate (PBT)

Polyethylene Terephthalate (PET)

Polyamide 6 (Nylon 6)

Polyamide 66 (Nylon 66)

Polycarbonate (PC)

Products

Acrylonitrile Butadiene Styrene (ABS)

Polyoxymethylene (POM)

Alloys & Blends

	Switchgear Industry
	MCB, MCCB, RCCB, etc. Case, Cover & other Parts
	Lighting Industry
	Switches, Sockets, LED/CFL Holders, etc.
	Appliances Industry
sn	Knobs, Rotary Switches, Couplers, Body Parts, etc.
oti	Textile Industry
a	Bobbins, Apron Gauge, SuctionTubes, etc.
cpli	Automotive Industry -Passenger Vehicles
p	External -Door Handles, Bezels, Wheel Cover, Mirror parts, etc.
A	Internal -Center Fascia, HVAC Parts, Clips, Engine Parts like
	Connectors
	Automotive Industry -2 Wheelers
	Handle Bar parts, Grab Handles, Covers, Bezels, Ignition Coils, etc.
	Safety Devices
	Helmet Parts, Toe-guards, etc.

Figs. in cr

Particulars	Q2 FY22	Q2 FY21	%	Q1 FY22	%	H1 FY22	H1 FY21	%
Sales(Vol's MT)	2,973	3,562	(16.5)	2,400	23.9	5,373	4,824	11.4
Revenue	74	49	51.0	59	25.4	133	65	104.6
EBIT	18	8	125.0	22	(18.2)	40	7	471.4
Margins (%)	24.3	16.3	+800 bps	37.3	(1,300 bps)	30.1	10.8	+1,930 bps

• Revenue growth remained strong on the back of higher volumes and better realizations; higher realizations driven by higher input prices
• EBIT and margins for Q2FY22 declined in comparison to Q1FY22 as the benefit of low-cost inventory in hand / pipeline subsided
• Eliminating the impact of increase in feedstock prices from raw material consumption and sales value, the EBIT margin during Q2FY22 would have been about 34%.
• Relocation of unit should help in further improvement in operations and profitability of the business

Figs. in cr

Particulars(Rs.cr)	Q2 FY22	Q2 FY21	%	Q1 FY22	%	H1FY22	H1FY21	%
Revenues	333	251	32.9	319	4.4	652	439	48.5
EBITDA*	59	73	(20.1)	64	(7.8)	123	126	(2.4)
Margins (%)	17.7	29.1	(1,140 bps)	20.1	(240 bps)	18.8	28.7	(990 bps)
PAT	33	46	(28.1)	38	(13.2)	71	75	(5.3)
Margins (%)	9.9	18.3	(840 bps)	11.9	(200 bps)	10.9	17	(610 bps)

*including other non operating income

• Strong revenue growth across businesses, especially Specialty Polymer and Engineering Plastics SBU; performance of Film business would have been better but for lower production owing to plant shutdown for maintenance
• Eliminating the impact of increase in feedstock prices from raw material consumption and sales value, the EBITDA margin during Q2FY22 would have been about 23%
• Margin compression during the quarter owing to lower profitability in Film business resulting in lower PAT generation for the quarter
• Moderation in profitability of Film business partially made good by strong performance of Specialty Polymers & EP SBUs

Commenting on the results, Mr. Arvind Singhania, Chairman, Ester Industries said "We have had a good first half with revenues expanding ~50% over the previous year. All our businesses continue to perform well, helping us sustain the growth momentum.

Specialty Polymer business delivered yet another quarter of solid performance on the back of good demand and off-take for our products. Demand for MB-03, one of our marquee products continues to remain strong, as reflected by the strong volume growth during the quarter. Innovative PBT as well maintained its momentum with a volume growth of 27% over the previous year. In addition to the existing products, demand for some of our newly introduced products like MB 07 & LMC 03 as well remain encouraging. As mentioned earlier, we expect the sales of the new products to pick up pace over the following quarters. Furthermore, we are also close to achieving techno commercial qualification for some of our other products as well, which once approved and commissioned should help us drive the revenues in the years to come.

Performance of Film business would have been better but for lower production owing to plant shutdown for maintenance. Margins moderated largely owing to new capacities getting commissioned. Furthermore, higher shipping costs caused by global supply chain disruption impacted both margins and volume of export sales. Benign margin environment coupled with lower production owing to plant shutdown for maintenance resulted in lower profitability during the quarter. Though the margin / profitability scenario is likely to remain subdued over short to medium term, we are working relentlessly to mitigate the same by higher volume of value added and offline coated products. Lastly, commissioning of our new BOPET plant as well should help scale up our business in the coming years.

Engineering plastics business performed well with significant improvement in profitability. Demand from end-user customers remained buoyant which coupled with favourable pricing environment resulted in revenue growth of 51% for the quarter. We expect the business to perform well going forward as well.

Eliminating the impact of increase in feedstock prices from raw material consumption and revenues from operations, the EBITDA margin for the Company would have been 24%

We believe we are well placed to deliver growth and create value for our stakeholders."

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

Ester Industries Ltd. CDR India Tel: +91 124 2656 100 Tel: +91 22 6645 1237 / 1219 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