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Company Information

Home » Market » Company Information

Ester Industries Ltd.

Aug 17
51.60 -0.80 ( -1.53 %)
 
VOLUME : 12922
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53.00
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31.00
 
 
 
78.00
Aug 17
51.45 -1.15 ( -2.19 %)
 
VOLUME : 127875
Prev. Close 52.60
Open Price 52.60
TODAY'S LOW / HIGH
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53.00
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77.90
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Market Cap. ( ₹ ) 481.66 Cr. P/BV 1.71 Book Value ( ₹ ) 30.18
52 Week High/Low ( ₹ ) 78/31 FV/ML 5/1 P/E(X) 91.06
Bookclosure 04/09/2017 TTM EPS ( ₹ ) 1.37 Div Yield (%) 0.00
DIRECTOR'S REPORT
You can view full text of the latest Director's Report for the company.
Year End :2016-03 

To The Members

The directors are pleased to present the Thirtieth Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2016 .

FINANCIAL RESULTS (Rsin lacs)

For the year ended 31.03.2016

For the year ended 31.03.2015

Sales and Other Income

84541.74

98608.68

Profit before Financial Expenses, Depreciation and Tax

7520.95

7407.77

Less: Interest & Other Financial Expenses

3601.43

3709.55

Profit / (Loss) before Depreciation, Extra Ordinary Items and Tax

3919.52

3698.22

Depreciation

3236.25

3210 .58

Profit / (Loss) before Tax

683.27

487.64

Deferred Tax

227.21

103.73

Profit / (Loss) after Tax

456.06

383.91

Balance brought forward from previous year

12701.31

12317.40

Appropriation: Dividend & Tax on Dividend

--

--

Balance Carried to Balance Sheet

13157.37

12701.31

Basic Earnings Per Share (Rupees)

0.57

0 .61

Diluted Earnings Per Share (Rupees)

0.57

0.57

DIVIDEND AND RESERVES

Your directors have not recommended payment of dividend as the Net Profit after Tax earned during the year under review is marginal Your Company has not transferred any amount of Profit & Loss account to any reserve .

OPERATIONS REVIEW

During the year under review, your Company earned a Net Profit after Tax of Rs. 456.06 lacs as compared to Rs . 383.91 lacs earned during the FY 2014-15 . Revenue from Operations during the year under review stood at Rs . 84541.74 lacs as compared to Rs . 98608.68 lacs during FY 2014-15, a reduction of 14 . 3%

Main reason for reduced revenue from operations was significant reduction in the quantities of sales of Polyester Chips from 19133 MT during 2014-15 to 2940 MT during 2015-16 with corresponding reduction in revenue from operations by Rs . 14526.36 lacs . Reduced sales of Polyester Chips did not have major adverse impact on the profits of the Company as Polyester Chips is an intermediate product that fetches marginal contribution.

Despite depressed market conditions, your Company was successful in improving sales of Polyester Films and Engineering Plastics Compounds - in quantitative terms - by 12. 3% and 5.7% respectively. In value terms, sales of Polyester Films reduced by 4 . 4% while that of Engineering Plastics Compounds improved marginally by 1. 5% . Drop in value terms despite increase in quantity of sales was due to fall in feedstock prices consequent to decline in crude oil price Sales of Engineering Plastics for OFC application, both in quantitative & value terms, reduced by 35% and 26% respectively due to slowdown in implementation of the BharatNet (earlier NOFN) project

Benefit arising from fall in the price of feedstock caused by fall in the price of Crude Oil could not be realized as sluggish market conditions, coupled with an oversupply situation, resulted in sustained pressure on the Company's product prices and inventory valuation losses

Sales of Specialty Polymers improved significantly by 186 . 3%, albeit on a smaller base in quantitative terms while in value terms net sales improved by 231.9% from Rs . 1983.10 lacs during FY 2014-15 to Rs . 6581.65 lacs during FY 2015-16 due to better product mix

To some extent adverse effect of sluggish market conditions and an oversupply scenario was mitigated with significantly improved performance of Specialty Polymers. Company continues to focus towards increasing the proportion of Value Added & Specialty products across all SBUs in its portfolio aligned with its strategic objective

Various initiatives taken over the last seven years - supported by capacity expansions - have resulted in Net Sales of the Company growing at a CAGR of 10 . 78% pa, from Rs . 37240.99 lacs in FY2008-09 to Rs . 76239.06 lacs in FY2015-16 .This CAGR has been achieved despite significant reduction in the prices of products of the Company due to huge fall in the prices of feedstock that are petrochemical products consequent to fall in the prices of crude oil

During the year under review, capacity utilization in Polyester Films was about 87%, with production higher at 49430 MT as compared to 43788 MT during the year 2014-15 .

Details on operations, a view on the outlook for the current year and various strategies (internal and external) adopted by the Management are provided in the 'Management Discussion & Analysis Report' which forms an integral part of this Annual Report.

AWARDS & RECOGNITION

Your directors are pleased to report that the Company was felicitated at the 6th National Awards for Technology Innovation in Petrochemicals under the category of Innovation in Polymeric Materials. We were selected as Joint Winner in the category of Innovation in Polymeric Materials for Modified Polyester for Hot fill Application by Injection Stretch Blow Molding (ISBM) Process. We were also selected as Joint Runner Up in the category of Innovation in Polymeric Materials for Polyester Masterbatch to Impart Stain Resistance in Nylon for Carpet Application.

PROJECTS UNDER IMPEMENTATION & NEW PRODUCT DEVELOPMENT

Aligned with the strategic objective of increasing the proportion of Value Added & Specialty products, the Company is in the process of modifying its Film Line # 1 by installing a Twin Screw Extruder to enable it to produce various Specialty Films with reduced conversion cost and wastage . This modification - likely to be completed by August 2016 - was originally scheduled to be completed by August 2015 . The delay in implementation is on account of a review in design specifications

Your company has invested towards enhancing its Solid State Polymerization (SSP) capacity by 1800 TPA during FY 2015-16. This would enable us to enhance sales of Specialty Polymers besides exploiting opportunities in Optical Fiber Cable segment upon implementation of Digital India program of Government of India.

Company has entered into agreements with some internationally reputed / renowned companies for collaborative work in the development of innovative products for its Specialty Polymers SBU at its plant in Khatima.

Your Company continues to make investments towards modernization, technical upgradation and debottlenecking initiatives in all the business segments

CORPORATE GOVERNANCE

The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the SEBI (LODR) Regulations, 2015 . We consider it our inherent responsibility to disclose timely and accurate information regarding our financials and performance, as well as the leadership and governance of the Company.

Pursuant to SEBI (LODR) Regulations, 2015, the Corporate Governance Report and the Auditors' Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report

MANAGEMENT DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis Report on performance, state of affairs of the company, risk management system, industry trends and other material changes and commitments, if any, affecting the financial position of the company forms an integral part of the Annual Report

PUBLIC DEPOSIT

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on public deposits was outstanding at the end of financial year 2015-16.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Sandeep Dinodia, Chartered Accountant was appointed as the Additional Director of the Company w. e . f. 25th May, 2015 in the capacity of Independent Director. He has also been appointed as the Chairman of Audit Committee . A resolution proposing his appointment as Independent Director to hold office for a period up to 31st March, 2020, was approved by the Shareholders in the last AGM held on 28th September, 2015 .

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mrs . Archana Singhania will retire by rotation at the forthcoming AGM of Company and being eligible, offers herself for re-election

Mr. Arvind Singhania, Chairman & Managing Director (designated as Chairman & CEO), Mr. Pradeep Kumar Rustagi, Executive Director & CFO and Mr. Diwaker Dinesh, Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) read with 203 of the Companies Act, 2013 and rules made thereunder.

DECLARATION OF INDEPENDENCE

The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and other applicable provisions, if any, of Companies Act, 2013 read with the Schedules and Rules issued there under as well as SEBI (LODR) Regulations, 2015 .

COMPOSITION AND MEETING OF THE BOARD AND AUDIT COMMITTEE

The details of the composition of Board of Directors and Audit Committee and number of Board and Audit Committee meetings held during the year are given in the Corporate Governance Report which forms part of this Report .

AUDITORS AND AUDIT REPORT

Statutory Audit

M/s S. R. Batliboi & Company LLP, Chartered Accountants, was appointed as Statutory Auditors by the Shareholders in their Annual General Meeting (AGM) held on 22nd September, 2014, to hold office from 28th AGM till 31st AGM As required by the provisions of the Companies Act, 2013, their appointment should be ratified by members each year at the AGM . Accordingly, requisite resolution forms part of the notice convening the AGM .

The Auditors' Report read together with Annexure do not contain any qualification of significant nature and do not call for any explanation/clarification

Cost Audit

In accordance with the Section 148 and other applicable provisions, if any, of the Companies Act, 2013 and rules made there under, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. In this connection the Board of Directors of your Company has on the recommendation of the Audit Committee, approved the appointment of M/s . R. J . Goel & Co., Cost Accountants as the Cost Auditor for the financial year 2015-16 at a remuneration of Rs. 3 Lacs plus applicable taxes and out of pocket expenses . The Cost Auditor has submitted the report for FY2015-16 to the Audit Committee and the Board There are no qualifications, reservation or adverse remark made by the auditor in the report .

The Board has re-appointed M/s R J Goel & Co , Cost Accountants, as the Cost Auditor for the Financial year 2016-17 . In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company Accordingly, the Board seeks ratification of the remuneration payable to the Cost Auditors for the financial year 2016-17 . A resolution seeking your ratification of the remuneration of M/s . R . J . Goel & Co. is provided in the Notice of AGM.

Secretarial Audit

Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board's report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form

The Board, during the year, appointed M/s Sanjay Grover & Associates, Company Secretaries, to conduct secretarial audit of the Company for the financial year ended 31st March, 2016 .The Report of M/s Sanjay Grover & Associates is provided in the “Annexure-A" forming part of this Report.

There are no qualifications, reservation or adverse remark made by the auditor in the report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 with respect (including any statutory modification(s) or re-enactment(s) for the time being in force), the Directors of your company, on the basis of information placed before them by the Management and Auditors, confirm that:-

1. in the preparation of the annual accounts for the Financial Year ended 31st March 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departure, if any.

2 they have selected appropriate accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent, so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the Profit and Loss of the Company for the year under review;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4 they have prepared the accounts of the Company for the financial year ended 31st March 2016 on a going concern basis .

5. proper internal financial controls laid down by them were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

6 . they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL CONTROLS

Your company's internal control procedures are adequate to ensure compliance with various policies, practices and statutes Your Company maintains a system of internal controls designed to provide reasonable assurance regarding the following:

- Effectiveness and efficiency of operations

- Adequacy of safeguards for assets

- Prevention and detection of frauds and errors

- Accuracy and completeness of the accounting records

- Timely preparation of reliable financial information

Key controls have been tested during the year and necessary corrective and preventive actions taken to address identified improvement areas. Your Company has put in place adequate internal financial controls with reference to the financial statements

Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 .These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

Your company operates in SAP, an ERP system, and has many of its accounting records stored in electronic form with periodic back up . The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of accounts.

Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary actions, wherever necessary

The Company's Internal Auditors have conducted periodic audits to evaluate the adequacy & effectiveness of financial and operating internal controls, to report significant findings to the Audit Committee of the Board and to provide reasonable assurance that the Company's established systems, policies and procedures have been followed The Audit Committee constituted by the Board reviews the internal controls and financial reporting issues with Internal Auditors on a regular basis

Compliance with laws and regulations is also monitored through a well laid down framework which requires individual functions to confirm and report statutory compliances on all laws and regulations concerning their respective functions This gets integrated with the overall compliance reporting on all laws and regulations for the purpose of review and monitoring by the Board .

CODE OF CONDUCT

The Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company. They have affirmed compliance with the Code of Conduct A declaration to this effect duly signed by Mr Arvind Singhania, Chairman & CEO is enclosed as a part of the Corporate Governance Report which forms part of this report A copy of the Code of Conduct is available on the Company's website viz

www.esterindustries.com

The Code of Conduct is based on the fundamental principles of good corporate governance and corporate citizenship The Code covers the Company's commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, vigil mechanism, transparency, audit ability and legal compliance

CHANGES IN CAPITAL

During the financial year 2015-16, the Company has allotted 2,07,50,000 Equity Shares of Rs 5/- at a premium of Rs. 5 .10/-, pursuant to conversion of 2,07,50,000 Zero Coupon convertible Warrants at Rs. 10 .10/- each issued to Vettel International Limited in the Board Meeting held on 25th May, 2015 .The Equity Shares were got listed on BSE and NSE.

LISTING OF SECURITIES

Your Company's Equity Shares are currently listed with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) .The Company has paid the listing fees to BSE and NSE for the financial year 2016-17

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure - B".

PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES

The particulars of the loan, if any (along with the purpose of utilization by recipient of loan) and investments covered under Section 186 of the Companies Act, 2013 are provided in Notes 12, 13 to financial statements . The Company has not issued any guarantee or provided any security as covered under Section 186 of the Companies Act, 2013 .

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 and rule made there under, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The details of the Composition of the Committee is set out in Corporate Governance Report which forms part of this report. The Committee has adopted a Corporate Social Responsibility Policy. Brief outline of the CSR Policy of the Company along with total amount spent on CSR and reason for unspent amounts are set out in "Annexure -C" of this report as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Policy is uploaded on Company's website and the same can be accessed at the following link -

http://esterindustries.com/sites/default/files/Corporate_Social_

Responsibility_Policy.pdf

PERFORMANCE EVALUATION

The Company has devised a Policy for performance evaluation of all the Directors, Board as a whole and Committees of the Board .

An annual evaluation was carried out of the performance of the Board, Board committees, all the directors and Chairperson pursuant to the provisions of the Companies Act, 2013 as well as SEBI (LODR) Regulations, 2015.

During the year the following evaluation process was adopted -

1. Independent Directors at their separate meeting without the presence of Non-Independent Director, had reviewed the performance of the Chairperson, Non-Independent Directors and the Board While evaluating the performance of the Chairman, the views of executive directors and non-executive

directors were also taken into account

2 Nomination and Remuneration Committee carried out the evaluation of every Director's performance The Committee, while doing so, considered the outcome of meeting of Independent Directors;

3 The Board had evaluated its own performance, performance of its Committees and each Director While conducting the evaluation, the Board considered and discussed the outcome of the separate meeting of Independent Directors and the meeting of Nomination & Remuneration Committee

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The process of evaluation was based on the criteria prescribed in the Policy on Performance Evaluation . The Policy is uploaded on Company's website and the same can be accessed at the following link - http://esterindustries.com/sites/default/files/Performance_

Evaluation_Policy.pdf

POLICY AND DISCOSURE RELATING TO THE NOMINATION AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNELS AND OTHER EMPLOYEES

The Nomination and Remuneration Committee has framed a Nomination and Remuneration policy for determining criteria selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel including determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Companies Act, 2013. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report.

The Policy is uploaded on Company's website and the same can be accessed at the following link -http://esterindustries.com/sites/default/files/Nomination_and_

Remuneration_Policy.pdf

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in "Annexure - D" of this report The same is open for inspection at the Registered Office of your Company at all working days except Saturday, till the date of AGM .

RISK MANAGEMENT SYSTEM

The Board of the Company has formed a risk management committee of directors to frame, implement and monitor the risk management plan for the Company. The details of the Composition of the Committee is set out in Corporate Governance Report which forms part of this report The Committee monitors the risk managing plan and ensures that the appropriate systems are in place The Committee reviews the progress of risk mitigation plan The Company has framed a Risk Management Policy covering risk management process, governance and execution of the same . Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis .

RELATED PARTY TRANSACTIONS

All contracts or arrangements with related parties, entered into or modified during the financial year, were on an arm's length basis and in the ordinary course of business .

All such contracts or arrangements, wherever required, have been approved by the Audit Committee and the Board. However no material contract or arrangement with related parties was entered into during the year under review. The company has not entered any transaction with the Related parties, which are not at arm’s length Accordingly, no transactions are being reported in Form No AOC-2 provided in "Annexure - E" pursuant to Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.

The details of the related party transactions as required under Accounting Standard - 18 are set out in Note 34 to the standalone financial statements forming part of this Annual Report.

The Policy on Related Party Transactions, can be accessed on the Company website at

http://esterindustries.com/sites/default/files/Related_Party_

Transactions_Policy.pdf

SUBSIDIARY COMPANIES

In accordance with Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and its subsidiary, form part of the Annual Report Further, a statement containing salient features of financial statements of the subsidiary company in Form AOC-1 is attached as 'Annexure-F' of this Report .

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and financial statement of the subsidiary will be available on our website www. esterindustries.com

Further the financial statement of the Subsidiary Company shall be made available to the members of the Company on their request These documents will also be available for inspection during business hours at the Corporate Office and registered office of the Company on all working days except Saturday till the date of AGM .

In accordance with Regulation 16(1)(c) of SEBI (LODR) Regulations, 2015, the Company has framed Policy on Material Subsidiaries to set out the criteria to determine "Material Subsidiaries". The policy can be accessed on Company website at the following link - http://esterindustries.com/sites/default/files/Policy_on_material_

subsidiary.pdf

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as prescribed under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules 2014 is set out in the "Annexure - G" forming part of this report.

VIGIL MECHANISM

The Company has formulated Vigil Mechanism/Whistle Blower Policy with a view to provide a mechanism for employees of the Company to raise concerns of suspected frauds, any violations of legal/regulatory requirements or code of conduct/policy of the Company, incorrect or misrepresentation of any financial statements and reports, etc. The purpose of this Policy is to encourage employees and directors who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. The policy aims to provide an avenue for employees and directors to raise concerns and reassure them that they will be protected from reprisals or victimization for whistle blowing in good faith

The practice of the Whistle Blower Policy is overseen by the Audit Committee of the Board and no employee has been denied access to the Committee. The Policy can be accessed on the Company website at following link -http://esterindustries.com/sites/default/files/Whistle_blower_policy.pdf

INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

In terms of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made there under, it is mandatory to review status of sexual harassment related complaints in the Annual Report There was no incident of sexual harassment reported in the Company during FY2015-16 . For protection against sexual harassment, Company has formed an internal complaints committee to which employees can write in their complaints. The Company has a Prevention of Sexual Harassment Policy which has laid down a process for dealing with such issues.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future

ACKNOWLEDGEMENT

Your Directors acknowledge the cooperation and assistance received from various departments of the Central & State Government, banks and Non-banking finance companies. Directors also express their gratitude and thanks to Customers, Suppliers and other Business Associates for their continued co-operation and patronage .

Your Directors wish to place on record their appreciation of the sincere services rendered by the workmen, staff and executives of the Company at all levels ensuring successful management of the Company. Your Directors also thank the shareholders for their continued support

For and on behalf of the Board

Sd/-

New Delhi Arvind Singhania

10th August, 2016 Chairman & CEO