ESTERNSE11 February 2025

Ester Industries Limited

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Management on call

Vaibhav Jha

the Deputy CEO; and Mr. Pradeep Kumar Rustagi – the Executive

Key numbers — 40 extracted

rs,

th on a Y-o-Y basis. Let me now move on to individual businesses. Starting with Specialty Polymers, as I just mentioned, the business registered a strong Y-o-Y growth. The growth was primarily owing

785 MT

MB03 and Innovative PBT. For the quarter, our overall volume of sales, excluding R – PET, stood at 785 MT, almost 40% higher compared to Q3FY24 volume of 558 MT. On a nine months basis,

40%

tive PBT. For the quarter, our overall volume of sales, excluding R – PET, stood at 785 MT, almost 40% higher compared to Q3FY24 volume of 558 MT. On a nine months basis, volume, exc

558 MT

luding R – PET, stood at 785 MT, almost 40% higher compared to Q3FY24 volume of 558 MT. On a nine months basis, volume, excluding R-PET, stood at 2,610 MT compared to 1683 MT achieved i

2,610 MT

Y24 volume of 558 MT. On a nine months basis, volume, excluding R-PET, stood at 2,610 MT compared to 1683 MT achieved in 9M FY24, higher by 55% on a YOY basis. In terms of our key product

1683 MT

volume of 558 MT. On a nine months basis, volume, excluding R-PET, stood at 2,610 MT compared to 1683 MT achieved in 9M FY24, higher by 55% on a YOY basis. In terms of our key products, MB03 volume stood

55%

sis, volume, excluding R-PET, stood at 2,610 MT compared to 1683 MT achieved in 9M FY24, higher by 55% on a YOY basis. In terms of our key products, MB03 volume stood at 202 MT during Q3FY25 as against

202 MT

ieved in 9M FY24, higher by 55% on a YOY basis. In terms of our key products, MB03 volume stood at 202 MT during Q3FY25 as against 153 MT during Q3FY24. Volume of sales of Innovative PBT for Q3FY25 stood

153 MT

n a YOY basis. In terms of our key products, MB03 volume stood at 202 MT during Q3FY25 as against 153 MT during Q3FY24. Volume of sales of Innovative PBT for Q3FY25 stood at 333 MT as against 314 MT of Q

333 MT

ring Q3FY25 as against 153 MT during Q3FY24. Volume of sales of Innovative PBT for Q3FY25 stood at 333 MT as against 314 MT of Q3FY24. Specialty Polymers, as previously mentioned, are primarily produced f

314 MT

nst 153 MT during Q3FY24. Volume of sales of Innovative PBT for Q3FY25 stood at 333 MT as against 314 MT of Q3FY24. Specialty Polymers, as previously mentioned, are primarily produced for sale to oversea

ability for the business. To quantify, on consolidated basis, exports registered volume growth of 5% during Q3FY25. Furthermore, on consolidated basis, the share of value-added products as well stood

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Guidance — 20 items

Vaibhav Jha

opening

“Looking ahead, we anticipate that the business will maintain its growth momentum in the coming years, supported by a promising product pipeline & human capital to pursue aggressive & focused marketing strategy for achievement of growth in the segment.”

Vaibhav Jha

opening

“We expect the entity to deliver revenues of approximately Rs.”

Vaibhav Jha

opening

“360 crores in current fiscal and Rs.450– Rs.500 crore upon achieving optimal utilization at reasonable prices / margins during next fiscal.”

Vaibhav Jha

opening

“Further in addition to improving demand supply environment and better product mix, Plastic Waste Management Rules (PWMR) mandating utilization of 10% recycled content in flexible packaging laminate, coming into force from next year is expected to further increase demand for Polyester Film with conversion taking place from other substrates to polyester.”

Vaibhav Jha

opening

“Collaborative teams comprising members from both Ester and Loop have been established to execute the plan and oversee essential functions such as detailed engineering, project setup, raw material procurement planning, and financing.”

Vaibhav Jha

opening

“8.50 crores each contributed as Equity by Ester and Loop In conclusion, we expect a markedly improved operational and financial performance in the current fiscal year compared to the previous one.”

Pradeep Rustagi

opening

“We expect the unit to generate revenue worth Rs.”

Pradeep Rustagi

opening

“450 to Rs.500 crore at reasonable prices & margins upon achieving optimal utilization by FY26.”

Vaibhav Jha

“So, this is making the market more balanced with respect to supply-demand, and therefore, we expect that this recovery should continue and the margins should stabilize, given that the supply and demand are now coming closer to each other.”

Vaibhav Jha

“So, we expect a pull coming in from the market, which would lead to an increment in the demand, much more than what we have seen over last 2 or 3 years.”

Risks & concerns — 6 flagged

The new capacities introduced over the last two years have created a substantial oversupply, which has exerted downward pressure on pricing and profit margins within the BOPET films market.

— Vaibhav Jha

And sir, certainly, on the Specialty Polymer business, you said it's difficult to do Rs.

— Aditya Vora

Now the challenge is that while this market is very attractive, it takes time to establish new products and new customers, because of the long approval cycle for any new chemical that we develop.

— Vaibhav Jha

There was a quarter-on-quarter decline in terms of the Specialty Polymer revenues and also the margins, I think 33% has come to 30%.

— Vaibhav Jha

I think Singhania sir is not here, but I think Pradeep ji, you would be able to give or convey to him that next time when he is there, he give us some much more understanding because this is going to be a bigger risk, if I may use the word quote- unquote, in terms of the size of the business that we are trying to inculcate the profile into the company.

— Saket Kapoor

And also sir, when we look at the volume for the 9 months for Ester, there was a 3% volume decline.

— Saket Kapoor

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Q&A — 7 exchanges

Good evening, sir, and thank you for the opportunity. Sir, first of all, congrats on a good set of numbers. So, sir, first question, just wanted to understand on the market demand-supply scenario, because in your opening comments, you alluded that a couple of new capacities were set up in the last 2 years, which had weighed on the pricing. And so just wanted to understand the current demand-supply dynamics in terms of the mismatch, what is it right now and how are we seeing it 1 year or 2 years down the line? So, thank you for the question. So, basically, what has happened was that their capac

Jatin Damania

So, sir, in terms of the quantification, if you can probably help me. Because if I am not wrong, in last call or probably a call before that, we had mentioned that the demand-supply mismatch was around 15,000 per month. So, has it come down to almost a single digit or it's still continuing to remain in the range of 10,000, 12,000? So, it is in that range, about 12,000 to 15,000 tons a month is the overcapacity. So, there is a domestic demand and there is a certain amount of exports happening from India. So, we are left with a surplus of about 12,000 tons a month. So, secondly, now when you loo

Thank you for the opportunity. Sir, I have a couple of questions. First one, do you still believe on the Specialty Polymers, we are on track to do Rs. 200 crore of revenue for this year?

Vaibhav Jha

See on Specialty Polymers, indeed the target was to do Rs. 200 crore top line as we had shared earlier. But right now, given the way 3 quarters have shaped up, we believe that it's going to be quite tough for us to hit that Rs.200 crore top line. And we are looking to come close to it, but I believe that in the end we might end up being 10% to 15% short in the top line target of Rs. 200 crore. So, that is what we feel as of now. But we are pushing very hard to make sure that we reach as close to Rs.200 crore as possible. Okay. Thank you, sir. The second, my question was on what is your demand

The first point was, sir, I think so we are also in the process of installing a metallic extruder in our Khatima plant. So, is that also related to this value-addition proposition going up? I think so some Rs. 70 crore, Rs. 80 crore of capital work-in- progress was there as a closing balance.

Pradeep Rustagi

So, we are going to install an extruder in Ester Filmtech in Hyderabad for taking advantage of the increased demand emerging from the implementation of Plastic Waste Management Rules. There is no major CAPEX planned in Ester Khatima. Ester Filmtech, there is an extruder to be commissioned, which is likely to be installed by June or July '25. Okay. And how will we benefit out of it, sir? What would be the benefit? So, that machine will convert the PET bottle flakes to granules, which can then be fed as a raw material in the manufacturing process of polyester film to meet the requirement of PCR

Yes. So, sir, just wanted to understand our margin profile in the standalone entity. So, can you help us, how does the margin differ in our film business and our chip business?

Pradeep Rustagi

So, you are talking of chips business for film which is captively consumed and very small quantity, or you are talking of film and specialty polymers? Sir, films and the Polyester chips which we can captively consume because we sell Rs. 30-odd crore of this… The major quantity is captively consumed. It has hardly any contribution margin. The contribution margin is not more than Rs. 2, Rs. 3 per Kg. So, it's an intermediate product, primarily produced for captive consumption or consumption in Ester Filmtech. A very small quantity if left with us that is sold to the customers outside of Ester an

Yes, thank you, sir, for the opportunity again. Rustagi Ji, when we look at the consolidated numbers for specialty polymers, we find our revenue as well as the profitability is lower. What explains this number, sir? When we look at standalone, the number is Rs. 126 crore for the 9 months and profitability, PBT number is Rs.44.53. And when we go into consolidation, then this figure is becoming little lower. It becomes Rs.123 crore. So, what exactly?

Pradeep Rustagi

See, in specialty polymer, there is a very small portion of specialty polymer which is sold from Ester Industries to Ester Filmtech. That amount is very, very small. As you rightly said, Rs.126 crore is getting reduced to Rs. 123 crore or Rs. 124 crore. So, that's the elimination when we look at the consolidated accounts. Okay. And also sir, when we look at the volume for the 9 months for Ester, there was a 3% volume decline. So, what explains? Although we are running at 91%, but when we look at 9 months FY'24, the volume was 38,170 and this time 9 months it is 36,998. So, there was what happe

Yes, thank you for the opportunity again, sir. Sir, just the last question. How much of the tonnage did we do rPET in second quarter?

Pradeep Rustagi

rPET in December ’24 quarter was 370 tons. In September ‘24, it was 128 tons. And out of the ones, as you gave a guidance of 5,000 tons for the full year, which makes it around 1,650 tons for the next year for specialty polymers, how much will we do rPET for the fourth quarter? In the fourth quarter, we are expecting rPET sales to be in the range of about 800 to 1,000 tons. Okay, sir. That's great. That's it from my side. Thank you so much.

Thank you, everyone, for attending the call. We look forward to talk to you all in the month of May when we have the next earning call. Thank you.

Management

Speaking time

Pradeep Rustagi

Saket Kapoor

Jatin Damania

Vaibhav Jha

Moderator

Aditya Vora

Krushna Parekh

Gavin Desa

Operator

Sourabh Agarwal

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Opening remarks

Gavin Desa

Thank you, Angel. Good day, everyone, and a warm welcome to Ester Industries Q3 and 9 Month FY '25 Analyst and Investor Conference Call. We have with us today Mr. Vaibhav Jha – the Deputy CEO; and Mr. Pradeep Kumar Rustagi – the Executive Director- Corporate Affairs. We will begin this call with “Opening Remarks” from the Management, following which we will have the floor open for an interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussions may be forward looking in nature and a note to this effect was sent to you in the invite earlier. We trust you have had a chance to go through the Communications and Financial Performance. I would now like to invite Mr. Vaibhav Jha to make his Opening Remarks. Over to you, Vaibhav.

Vaibhav Jha

Thank you Gavin and thank you everyone for joining us today. I will briefly talk about the key Business developments, post which Mr. Pradeep will walk you through our Financial Performance. I am pleased to report that we have not only sustained the business momentum of the previous quarter but have in fact further accelerated it as can be seen from our margins and profitability. While both businesses performed well, Film business in particular registered a solid performance especially with regards to margins and profitability on the back of better product & market mix. Specialty Polymer business as well registered healthy growth on a Y-o-Y basis. Let me now move on to individual businesses. Starting with Specialty Polymers, as I just mentioned, the business registered a strong Y-o-Y growth. The growth was primarily owing to strong demand for our marquee products MB03 and Innovative PBT. For the quarter, our overall volume of sales, excluding R – PET, stood at 785 MT, almost 40% higher

Pradeep Rustagi

Thank you and good day, everyone. Thank you for joining us on our Q3 FY25 Earnings Call. Let me quickly walk you through our financial performance post which we can commence the Q&A session. I would like to start with financial performance of Ester Industries Ltd. Total income on standalone basis stood at Rs. 277 crore as against Rs. 211 crore in the corresponding quarter last year, higher by 31%. The primary reason for the growth is the strong performance of both our businesses. EBITDA during the quarter under review including non-operating income stood at Rs. 44 crores as compared to loss of Rs. 1.2 crores during Q3FY24. EBITDA during 9MFY25 stood at Rs. 98 crores as compared to Rs. 14 crores during the corresponding period last year. Coming to the financial performance of Wholly Owned Subsidiary, Ester Filmtech, the revenues stood at Rs. 90 crores as against Rs. 99 crores in Q2FY25. Reported EBITDA during the quarter under review including non-operating income stood at Rs. 22 crores

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