Ester Industries Ltd. — Investor Presentation 2021

Feb 2, 2021

Date: 2nd February, 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 31st December, 2020

We wish to submit the Investor presentation on financial results for the quarter and period ended on 31st December, 2020.

Please acknowledge the receipt of the same.

Thanking You

Yours Faithfully For Ester Industries Limited

Diwaker Dinesh Head‐Legal & Company Secretary

Encls: As Above

Q3 FY21 RESULTS PRESENTATION

February 2nd, 2021

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 differmaterially from those contemplated by the relevant forward looking statements. Ester Industries Limitedwill not be in any way responsible for any action taken based on such statements and undertakes noobligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

Q3 & 9M FY21 Performance Overview

Strong performance of Film and Engineering Plastics business resulted in 4% revenue growth (surpassed FY20 quarterly run-rate for the first time in FY21) for the quarter. External factors impact Specialty Polymer though revival expected soon

Improved performance of Film & Engineering Plastics SBUs more than made good the impact of adverse performance of Specialty Polymers

This resulted in EBITDA margin of 23% and EBITDA margin expansion of 434 bps

Strong operational performance combined with reduced interest cost and lower tax ratetranslated to PAT expansion of ~70% for the quarter

Focused on improving Debt/EBITDA (x) by paying off debt / reduced utilization of WC limits

• • Diligently working towards strengthening balance sheet by repaying debt / reducing utilization of WC limits and improving leverage ratios
• • Total interest bearing debt (net of free cash) as on 31st Dec 2020 stood at Rs. 157.02 crore comprising of interest bearing Working Capital of Rs. 51.78 crore and Term Debt (net of free cash) amounting to Rs. 105.27 crore
• • Total Outside Liabilities (net of free cash) (TOL) : Tangible Net Worth (TNW) ratio stood at 0.58 as at 31st Dec 2020 as compared to 0.49 as at 30th Sep 2020
• • Out of the total scheduled repayment of term debt of Rs. 26.8 crore during FY 2020-21, the Company has already repaid Rs. 22.37 crore till 31st Dec 2020 including pre-payment of Rs. 3.14 crore
• Have invested Rs. 86.6 crore as equity in the WOS till 31st December 2020 and Rs. 87.4 crore as on date
• • Higher level of current assets due to increase in raw material rates, and investment as equity in WOS caused interest bearing debt as multiple of EBITDA to increase to 0.64

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Chairman's Comments

Specialty Polymers business was impacted by external factors, but is expected to rebound by next year. Commercial sales of two new products namely MB 07 (Easy Dyeable & Cationic Masterbatch) and LMC 03 (Low Melt Copolyetherester) having immense potential has started during the quarter. Performance of our Specialty Polymer business was largely impacted by lack of demand from our key customer markets (mainly USA) on account of Covid – 19. The underlying strength of this business, however, gives us confidence that this business will regain its momentum as the environment normalises. Additionally, commencement of commercial sales of our newly launched products (MB 07 & LMC 03) acts as a strong growth trigger for the business.

Moving on to Engineering Plastics, the business delivered a stellar performance, with revenue and margins registering a sizeable jump. Volumes for the quarter were exceptionally strong on the back of strong demand from end-user industries. We expect the business to perform well going forward and believe that our decision to relocate our unit would help us to improve bottom line of the SBU besides serving our clients in a better and more efficient way.

To conclude, we believe that all our businesses are well positioned to deliver steady and consistent performance over the medium to long term and create significant value for our shareholders."

High entry barriers - Patent protected business (Product & 8 (+1)

Patentsfiled

22 (+3)

Product portfolio

30,000MTPA 35%+

Production Capacity EBIT margins on achieving of adequate scale of operations

• Product portfolio - 22 products. Out of which patents have been filed in respect of 8
• High entry barriers protected by Intellectual Property rights
• Existing Product Portfolio:
  • • Stain resistant Master Batch: ~ 200% growth in sales volume in FY20 as compared to FY19. Confident to achieve targeted volumes in FY22
  • •Innovative PBT: Already achieved sales of 786 MT during 9M vs sales of 465 MT during FY20
• New Products:
  • • Encouraging progress made in the development of another new product for carpet industry in USA. Commercial sales have already started on a small scale. We foresee immense potential for the product going forward.
  • • Cationic Dyeable Master Batch (MB – 16) and Deep Dyeable Master Batch (MB – 07) - Customer approval already received and commercial sales have commenced. Expect substantial volumes from these products going forward

10

• 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
• While agreement is for nominal quantity, there is possibility of substantial upside. Achieved sales of 465 MT in the first year of Agreement.
• Achieved sales of 786 MT during 9MFY21itself. Basis orders in hand, confident of achieving sales of about 1000 MT during FY21
• Volume of sales expected to grow continuously post FY21 as well
• Innovative PBT find application mainly in consumer electronics application currently and is now being propagated for other applications such as automotive, textiles, cosmetics etc.

Cationic Dyeable Master Batch (MB-06)

• Commercial sales have commenced
• Deep Dyeable Master Batch (MB-07)
  • Commercial sales have commenced

Both these products are expected to contribute significant volumes. Commercial sales started

Product Code Product Description Status of Patent Product approval from customer Application ESTER HR-03 Hot Fill PET by normal ISBM Granted in USA and India, filed in Europe Approved Packaging ESPET MB-03 Masterbatch Sulfonated PET Granted in US, India and Europe Filed in KoreaApproved Stain Resistance in Nylon Carpet ESPBN Clear PBN Granted in USA, Europe and IndiaUnder Trials Monolayer and Multilayer ContainersESPET HR-01 B3 Beer Keg PET Granted in USA and filed in India & EUUnder Trials Monolayer containers/Kegs ESPET MW-01 Microwaveble PET Filed in India Under Trials Extrusion and thermoforming ESPET FR-10 Flame Retardent PET Filed in India Approved Flame retardant master batch for PET Polyester in textile (PFY/PSF) & Film application ESPET MB-06 R4 & ESPET MB-07 R8Easy Dyeable & Cationic Masterbatch Filed in India, USA, European Union, China, Korea & Thailand MB-06 R3 - Under Trial MB-07 R7 - Approved Deep and Dark dyeablity in TextileLMC grades Low Melt Copolyetherester Filed in India Approved Adhesive in Textile/Carpet Industry

Polyethylene Terephthalate (PET)

Polybutylene Terephthalate (PBT)

Polyethylene Naphthalate (PEN)

Master Batches

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Applications

De-commoditizing the business by changing product mix

Mfg. Capacity -57,000MTPA Polyester Films & 13,200 MTPA Metalized polyester films New Capacity of 48,000 MTPA `

Strong sector fundamentals – Stable pricing environment;

No. of countries (exports)

Share of value added product by FY22 from ~16% (FY20)

Cost rationalization initiatives and improving production & process efficiencies contributed to bottom line

Improved productivity & efficiency drives growth in production

• • Q-o-Q: Maintenance shutdown undertaken during the quarter., resulted in lower volume and revenue generation
• • Y-o-Y: Favorable demand – supply scenario, higher operating leverage resulting in better profitability & margin
• Steady improvement in product mix share of Value added products stands at 20% as of Q3 FY21

FY20 – Film includes revenue of Rs. 69.98 crore & EBIT of Rs. 2.61 crore from Polyester Chips. *Q3FY20 – Film includes revenue of Rs. 15.85 crore & EBIT of Rs. 0.63 crore from Polyester Chips ^Q3 FY21 – Film includes Rs. 8.03 crores revenues from sale of PTA

• Manufactures and markets polyester films under the brand "UmaPET"

• Manufacturing capacity - 57,000 MTPA for polyester films & 13,200 MTPA for metalized polyester films

• Integrated player – Polyethylene Terephthalate (Polyester) chips manufacturing capacity 67,000 MTPA

• Global Footprint : Formidable reach across more than 60+ countries

• Value Added & Specialty products include transparent barrier film, shrink film & silky matte etc.

• Thrust on increasing proportion of value added & specialty products in overall mix by focusing on innovation, development and partnership with customers both in India and overseas.

• As regards expansion of Film capacity through a wholly owned subsidiary, we have already started implementation of the project and invested Rs. 87.40 crores till date

• Demand from the Consumer Staples sector for flexible packaging is expected to remain strong

• Increased focus on health & hygiene products to widen opportunity

• Raw material started to rise from November. Have started to stabilise now.

• Due to changes in the macro-economic scenario on account of Covid – 19 outbreak, there is a likelihood that some of the planned commissioning of new capacities in near term may be delayed

Industry Dynamics

• Market size of Domestic BOPET films ~540000 tpa
• Domestic demand growing at 11%-13%
• Incremental supply of about 65,000 TPA on account of commissioning of 2 new production lines in August & November 2019 already absorbed by the market with minimal disruption

Company specific initiatives

• Setting up an advanced polyester film manufacturing facility in the state of Telangana
• Capex of Rs. 587 crore; Targeted Completion date – October 2022
• Working towards increasing the share of value added products – ~30% by FY22
• Off Line Coater that has been commissioned in May 2020 will enable us to enhance the volume of Value Added & Specialty Films significantly. Commercial sales have started from the month of June 2020
• BOPET Film made from 100% PCR has been certified by two reputed institutions

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NESCAFÉ

19

Engineering Plastics – "Structurally positive; near term challenging"

Product Portfolio

13,500MTPA

Mfg. capacity

"Estoplast"

Products marketed under the brand

"Fastest Growing Enterprise Processing (Engineering Polymers)" at the Plastindia Exhibition in February 2015

Improving product / customer mix, expanding exports & controlling costs to improve margin profile & return ratio

• A well regarded manufacturer of Engineering plastics
• Diverse Product Portfolio – 250+ grades / products marketed under the brand "ESTOPLAST"
• Manufacturing capacity - 13,500 MTPA
• Evaluating capacity expansion in view of improved performance
• Management Decided
• Relocation of unit to a Western State would help to improve bottom line besides serving clients in a better and more efficient way.

Business highlights

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Polyethylene Terephthalate (PET)

Polyamide 6 (Nylon 6)

Polyamide 66 (Nylon 66)

Polycarbonate (PC)

Acrylonitrile Butadiene Styrene (ABS)

Polyoxymethylene (POM)

Alloys & Blends

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Investor Contacts

For more information contact:

Pradeep Kumar Rustagi (Chief Financial Officer) Ester Industries Ltd.Tel: +91 124 2656 100Fax: +91 124 2656 199E-mail: pradeep.rustagi@ester.in

Gavin Desa / Suraj Digawalekar CDR India Tel: +91 22 6645 1237 / 1219 Fax: +91 22 6645 1213E-mail: gavin@cdr-india.com suraj@cdr-india.com

About Us: (CIN :- L24111UR1985PLC015063)

Incorporated in 1985, Ester Industries Limited (EIL) is an ISO 50001:2018, ISO 9001:2015, ISO 14001:2015, IATF 16949:2016, ISO 45001:2018 and Food Safety System Certification 22000 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 stateof-the-art manufacturing plant, skillfully managed operations and a committed work force Ester continuously strives to meet commitments towards total customer satisfaction.