Fulfilling Commitments

Delivering Value

24th ANNUAL REPORT 2009-10

2

Conten ts

Chairman’s Message 5

Corporate Information 12

Notice of Annual General Meeting 13

Directors’ Report 17

Annexure to Directors’ Report 21

Management Discussion & Analysis 24

Report on Corporate Governance 33

Auditors’ Report 43

Balance Sheet 46

Profi t and Loss Account 47

Cash Flow Statement 48

Schedules to Balance Sheet & Profi t and Loss Account 49

Balance Sheet Abstract and Company’s General Business Profi le 80

Auditors’ Report on Consolidated Financial Statement 81

Consolidated Balance Sheet 82

Consolidated Profi t and Loss Account 83

Consolidated Cash Flow Statement 84

Schedules to Consolidated Balance Sheet & Profi t and Loss Account 85

Statement pursuant to Section 212 of the Companies Act, 1956, relating to Company’s interest in Subsidiary Companies 113

Ester International (USA) Ltd. 114

Ester Europe GmbH 120

3

5

Dear Shareholders,

It gives me immense pleasure to present the Annual Report for the

year 2009-10 and share with you the highlights of the year and our

plans going forward.

The world was still recovering from the fi nancial meltdown of 2008 during

the year under review. Commodity and currency markets remained

volatile and economic recovery was slow in the developed world. Despite

the diffi cult economic environment we have been able to weather the

storm and stay the course by delivering a good performance. Our Net

Sales Turnover increased by 6.2% with a healthy PAT of Rs. 2,786.56

Lacs.

The Polyester Film Business delivered the highest production historically

at 30122 MT. Our strategy of increasing productivity, reducing costs and

increasing the share of value added products has yielded desired results

and helped maintain margins despite tough market conditions. Polyester

Film fi nds the biggest application in Food Packaging. India’s demographic

dynamics coupled with rising population of its aspiring middle class has

ensured a healthy growth in demand of approximately 17-18% annually.

International demand for Polyester Films is also growing at a satisfactory

rate of 6-8% annually. I am confi dent that our global presence, with

exports to over 50 countries, allows us to optimally position ourselves to

take advantage of the recovery that is likely to follow.

Encouraged by the performance and growth in Polyester Film business

your company has initiated an expansion program which will see

production double from 27,000 MTPA to 54,000 MTPA. This new

expansion is expected to go on stream by December 2010. In line with

our philosophy of adopting state-of-the-art technology we are adopting

CHAIRMAN’S Message

6

‘Continuous Polymerization and Direct Casting’ technology which will not

only reduce costs but also ensure better quality. The Metallised Film

capacity is also being increased to 13,200 MTPA.

Our approach to manufacturing is to drive an inclusive, disciplined,

metrics-based approach in evaluating operating performance which

engages talent throughout the organization with razor sharp focus on

quality. Throughout our operations, we apply the metrics and mechanisms

of world class manufacturing to reduce raw material usage and work-

in-process inventory, increase productivity, and improve scheduling

effi ciency. These techniques have successfully reduced costs to improve

competitiveness and increased capacity in growing product lines.

We will continue to look for opportunities to further strengthen our

position in this unit by looking at diversifi cation into related products,

downstream integration and further growth in capacity of Polyester Film

both in India and overseas.

The Engineering Plastics Business has also demonstrated phenomenal

growth both in terms of sales and profi tability. The sales increased to

5832 MT representing a growth of 112.5%. The Earning before Interest

and Tax (EBIT) of this unit increased almost three fold to Rs.1223.96

Lacs. We successfully commissioned new capacity of 9,600 MT during

the year taking total capacity to 14,400 MTPA. Engineering Plastics

fi nds its major applications in the automotive, electrical and electronics

segment. These segments are demonstrating very high growth rates of

approximately 30% annually.

Engineering Plastics is a knowledge intensive business with a very high

dependance on R&D. We have recognised this need and ensured

continuous strengthening of our technological capabilities. This has paid

rich dividends that are demonstrated in the rapid growth in sales and

profi ts. Engineering Plastics will remain a high focus area for us and we

will continuously look at investments to further strengthen our position

in this industry.

7

Over the years we have consciously worked towards a healthier balance

sheet. The Net Debt of the company as at 31st March 2010 was only Rs.

3620.82 lacs representing a multiple of 0.59 EBIDTA. While profi table

growth will be the mantra of the company going forward, we will continue

to ensure that the gearing of the company is within prudent limits.

As a company we are conscious of our responsibilities towards the society

and environment (CSR). In pursuance of this we have made concerted

efforts to reduce our dependence on conventional fuels as a source of

energy. The usage of conventional fuels has reduced over the years from

a high of 13520 MTPA to 2267 MT during 2009-10. The reduction in

consumption of conventional fuels was made possible by switching to a

renewable and cleaner biomass fuel as feed stock.

We have also made a modest beginning towards fulfi lling our

responsibilities towards the under privileged section of society by helping

young, terminally ill children fulfi ll their dreams. We will continue to

enhance our efforts, specifi cally in the areas of education and healthcare

for the economically disadvantaged sections of society.

We are at an exciting time in the history of Ester as we enter the next

decade of opportunities. We have the tools and the ingenuity to bring

unique solutions to meet our customers’ needs. Our business model

offers us more fl exibility to manage and deliver on our operating model

and provide solutions to our global customers and attractive return to

our shareholders.

We are confi dent of delivering long-term profi table growth and greatly

appreciate the support and confi dence of each of our customers,

suppliers, employees and shareholders.

Arvind Kumar Singhania

Chairman & Managing Director

Applicationsof Polyester Film

Applications of Engineering Plastic

12

BOARD OF DIRECTORS MR. A. K. SINGHANIA CHAIRMAN & MANAGING DIRECTOR MR. M. R. HOSANGADY DIRECTOR MR. V. B. HARIBHAKTI DIRECTOR MR. A. P. SARWAN DIRECTOR MR. A. K. NEWATIA DIRECTOR MR. M. S. RAMACHANDRAN DIRECTOR MR. DINESH KOTHARI DIRECTOR

COMPANY SECRETARY MS. SHWETA YADAV (TILL 31ST MAY 2010) MR. GIRISH NARANG (FROM 07TH JUNE 2010)

STATUTORY AUDITORS M/S S. R. BATLIBOI & COMPANY, GURGAON

BANKERS BANK OF INDIA BANK OF BARODA UNION BANK OF INDIA CANARA BANK STATE BANK OF BIKANER & JAIPUR

HEAD OFFICE DLF BUILDING NO. 8, TOWER A 2ND FLOOR, DLF CYBER CITY, DLF PHASE II, SECTOR - 25, GURGAON HARYANA – 122 002, INDIA

REGISTERED OFFICE & SOHAN NAGARWORKS P.O. CHARUBETA KHATIMA – 262 308 DISTRICT UDHAM SINGH NAGAR UTTARAKHAND

REGISTRAR & SHARE MCS LIMITEDTRANSFER AGENTS F-65, OKHLA INDUSTRIAL AREA, PHASE-I NEW DELHI – 110 020

LISTING OF SECURITIES BOMBAY STOCK EXCHANGE LIMITED PHIROZE JEEJEEBHOY TOWERS, DALAL STREET MUMBAI 400 001

CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED 7, LYONS RANGE KOLKATA 700 001 (APPLIED FOR DELISTING)

CORPORATE Information

13

NOTICE is hereby given that the 24th ANNUAL GENERAL MEETING of ESTER INDUSTRIES LIMITED will be held on Tuesday, 27th July, 2010, at 10:30 a.m. at the Registered Offi ce of the Company at Sohan Nagar, P.O. Charubeta, Khatima-262308, District Udham Singh Nagar, Uttarakhand, to transact the following business:

ORDINARY BUSINESS1. To receive, consider and adopt the Audited

Balance Sheet as on 31st March 2010 and the Profi t and Loss account for the year ended on that date together with the reports of Directors and Auditors thereon.

2. To declare dividend of Rs.1 per Equity Share on 6,28,93,706 Equity Shares i.e. 20% on equity shares of face value of Rs.5 each, for the fi nancial year 2009-10.

3. To appoint a Director in place of Mr. Dinesh Kothari who retires by rotation and being eligible, offers himself for re-appointment;

4. To appoint a Director in place of Mr. A.P. Sarwan who retires by rotation and being eligible, offers himself for re-appointment;

5. To appoint M/s S. R. Batliboi & Co., Chartered Accountants, (Registration No. 301003E), the retiring auditors, to hold offi ce as auditors from the conclusion of this meeting until the conclusion of the next Annual General Meeting, and to authorise Board of Directors to fi x their remuneration.

SPECIAL BUSINESS6. To consider and if thought fi t, to pass with

or without modifi cation(s), the following resolution as a SPECIAL RESOLUTION:

“RESOLVED THAT subject to the approval of the Central Government pursuant to Section 314(1B) and other applicable provisions, if

any, of the Companies Act, 1956, Directors’ Relatives (Offi ce or Place of Profi t) Rules 2003, or any amendment or substitution thereof, approval of the Company be and is hereby accorded to the appointment of Mr. Ayush Vardhan Singhania (son of Mr. Arvind Kumar Singhania, Chairman and Managing Director) to hold offi ce as ‘Group Leader - Business Development, with effect from 1st day of August, 2010 for a period of 3 (three) years on the following remuneration and terms and conditions:

1. Rs.1,00,000/- p.m (including Special Allowance, House Rent Allowance and other Benefi ts like Provident Fund, Superannuation Fund) with normal increments as per the general policy of the Company.

2. Such other allowances, incentives, perquisites, benefi ts and amenities as may be provided by the Company to other employees in that grade from time to time.

3. Leaves in accordance with the leave rules of the Company from time to time.

RESOLVED FURTHER THAT, the Board of Directors be and is hereby authorised to sign and execute such documents/writings or other papers as may be necessary and to do all such acts, deeds, matters and things as it may, in its sole discretion, deem necessary, proper, desirable, expedient or incidental for the purpose and to settle any question, diffi culty or doubt that may arise in giving effect to this resolution.”

By Order of the Board of DirectorsFor Ester Industries Limited

Shweta YadavGurgaon Company Secretary18th May, 2010

Notice of Annual General meeting

14

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THIS ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE (ON A POLL ONLY) ON HIS / HER BEHALF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED AT THE REGISTERED OFFICE OF THE COMPANY AT SOHAN NAGAR, P.O. CHARUBETA, KHATIMA-262308, DISTRICT UDHAM SINGH NAGAR, UTTARAKHAND NOT LESS THAN 48 HOURS BEFORE THE MEETING.

2. An Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Business to be transacted at the Meeting is annexed hereto.

3. Pursuant to Section 154 of the Companies Act, 1956, the Register of Member and the Share Transfer Books of the Company will remain closed from Saturday, 17th July 2010 to Tuesday, 20th July 2010 (both days inclusive).

4. The relevant details of Item Nos. 3 & 4 pursuant to Clause 49 of the Listing Agreement are annexed hereto.

5. The dividend as recommended by the Board of Directors, upon declaration by the members at the 24th Annual General Meeting, in respect of shares held in physical form, shall be paid to those members, whose names appear on the Register of Members of the Company as on the closing hours of business on Tuesday, 20th July, 2010.

In respect of shares held in electronic form, the dividend will be payable to the benefi cial owners of the shares as on the closing hours of business on Friday, 16th

July, 2010 as per the details furnished by the Depositories for this purpose.

6. ECS facility has to be used by Listed Company for distribution of dividend to the members. The Company has already initiated the process and a form for availing the ECS facility is also attached to the Notice. The Members are encouraged to use the ECS facility. Members holding the shares in dematerialised mode can send the ECS form to their Depository Participant while the Members holding shares in physical form can send it to the Registrar and Share Transfer Agent of the Company viz. MCS Limited, F-65, Okhla Industrial Area Phase I, New Delhi-110 020 quoting their folio number.

7. The members who hold shares in physical form and do not wish to avail the ECS facility, are requested to furnish their Bank Account Number (current/savings) together with the name of the Bank and Branch where they would like to deposit their Dividend Warrant/Demand Draft for encashment. These particulars will be printed on the cheque portion of the Dividend Warrant/Demand Draft. This should be furnished by the Sole Holder or the First Named Shareholder to the Registrar and Share Transfer Agent of the Company at the address mentioned above.

In case of shares held in dematerialised form and not availing ECS facility, the Company is obliged to print such bank details on the dividend warrants as furnished by National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), “the Depositories” to the Company and the Company can not entertain any request for deletion/change of bank details already printed on the dividend warrant(s) based on the information received from the concerned Depositories, without confi rmation from them. In this regard, members are advised to contact their DP (Depository Participant) and furnish them the particulars of any change desired.

15

8. Members are requested to notify immediately:

I In case shares are held in physical form: any change in address, if any, to the Company at 2nd Floor, Tower A, DLF Building No. 8, DLF Cyber City, Phase-II, Sector 25, Gurgaon, Haryana – 122 002, India or to the Registrar and Share Transfer Agent of the Company viz. MCS Limited, F-65, Okhla Industrial Area Phase I, New Delhi-110 020 quoting their folio number.

II In case shares are held in dematerialised form: any change in address, if any, to their depository participants.

9. The members are requested to bring their copy of Annual report at the Annual General Meeting.

10. Members/proxies should bring the attendance slip duly fi lled in for attending the Meeting. Members who hold shares in dematerialised form are requested to write their Client ID and DP ID and those who hold shares in physical form are requested to write their Folio Number in the attendance slip for attending the Meeting.

11. Members desiring any information on the accounts are required to write to the Company at 2nd Floor, Tower A, DLF Building No. 8, DLF Cyber City, Phase-II, Sector 25, Gurgaon, Haryana – 122 002, India at least 7 days before the Meeting so as to enable the management to keep the information ready. Replies will be provided only at the Meeting.

12. All the documents referred to in the accompanying Notice are open for inspection at the Registered Offi ce of the Company between 11.00 a.m. to 1.00 p.m. on all the working days except Saturday up-to the date of the Annual General meeting.

NOTES ON DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT AS REQUIRED UNDER CLAUSE 49 IV (G) (i) OF THE LISTING AGREEMENT ENTERED INTO WITH THE STOCK EXCHANGES

The particulars of Mr. Dinesh Kothari and Mr. A. P. Sarwan are given below:

A. Mr. Dinesh Kothari, aged about 60 years, is a Chartered Accountant. In 1972, he joined ICICI Limited and in October 1974, he joined Bukhatir Group of Companies in Sharjah, UAE and in his capacity as Executive Director, he was responsible for the Corporate Planning for Expansion, diversifi cation, monitoring joint venture companies, negotiating new joint venture collaborations, fi nancial restructuring etc. In 1986, he set up Interstar Financial Services Limited to provide consulting and advisory services to Non-resident Indians, resident Indians and large Indian Corporates on fi nancial matters. In 1999, he set up a Consultancy Firm in the name of New Delhi Corporate Consultancy Services Private Limited to provide Legal & Consultancy Services to the Corporate Sector within the country and abroad. He has also contributed in the education sector by setting up three schools in collaboration with Delhi Public School Society in Jodhpur, Sharjah, UAE and Dubai, UAE.

Directorships of Mr. Dinesh Kothari in other Companies as on 31st March, 2010 :-

Name of Companies1. Aro Granite Industries Ltd.2. Asian Hotels (North) Ltd3. Penam Laboratories Ltd.4. Interstar Financial Services Ltd. 5. International Print-O-Pac Ltd. 6. Ambuja Cement India Private Ltd.7. Holcim (India) Private Limited8. New Delhi Corporate Consultancy Pvt Ltd.9. Sarla Holdings Pvt Ltd.

16

10. Delhi Private School LLC, Sharjah, UAE11. Interstar Marbles Industries LLC, Sharjah,

UAE

Mr. Dinesh Kothari is a Chairman of General Committee of the Board of Aro Granite Industries Limited and member of Audit Committee and Shareholders’/Investor Grievance Committee of Aro Granite Industries Limited.

He (either own or held by/ for other persons on a benefi cial basis) does not have any shareholding in the Company.

B. Mr. A.P. Sarwan aged about 75 years is a professional and independent director and is associated with the Company since 1991. Mr. Sarwan, IAS, retired as Chief Secretary of Government of Assam. He is also member of Audit Sub Committee and Remuneration Committee of the Company.

Directorships of Mr. A.P. Sarwan in other Companies as on 31st March, 2010 :-

Name of Companies1. Nirma Ltd.

He (either own or held by/for other person on a benefi cial basis) does not have any shareholding in the Company.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

ITEM NO. 6

Mr. Ayush Vardhan Singhania is a graduate from Bentley University, Waltham, Massachusetts, USA. He has majored in Management and International Studies. The Board of Directors, in its meeting held on May 18, 2010, approved his appointment as ‘Group Leader - Business Development’ subject to the approval of the

Shareholders and the Central Government. The proposed remuneration to Mr. Ayush Vardhan Singhania is commensurate with his qualifi cation and is in line with the industry standards.

Since Mr. Ayush Vardhan Singhania, who is son of Mr. Arvind Kumar Singhania, Chairman and Managing Director, proposes to hold the offi ce or place of profi t carrying a total monthly remuneration in excess of Rs. 50,000/-, consent of the members by a Special Resolution and approval of the Central Government is required in terms of Section 314(1B) of the Companies Act, 1956.

None of the Directors except Mr. Arvind Kumar Singhania, Chairman & Managing Director, is concerned or interested in this resolution. Your Directors recommend the Resolution for your approval as a Special Resolution

By Order of the Board of Directors

For Ester Industries Limited

Shweta Yadav Company SecretaryGurgaon18th May, 2010

17

To The MembersYour directors are pleased to present the Twenty Fourth Annual Report together with Audited Statement of Accounts of your Company for the year ended 31st March 2010.

FINANCIAL RESULTS

DIVIDENDIn respect of fi nancial year 2009-10, your directors are pleased to recommend, subject to the approval of the shareholders, a dividend of 20% i.e. Rs. 1.00 per equity share on the paid-up equity share capital as compared to 10% for the fi nancial year 2008-09.

OPERATIONSYour directors are pleased to inform that during the year under review, Company has earned Net Profi t after Tax of Rs. 2786.56 lacs as compared to Rs. 3343.39 lacs in the year 2008-09. Thesales including excise duty and other income

during the year under review are Rs. 42271.69 lacs as compared to Rs. 40514.06 lacs in the previous year, an increase of 4.3%. This increase is mainly due to increase in sale of Engineering Plastics both in quantitative & value terms. The production of Polyester Film was higher at 30122 MT as compared to 29534 MT during 2008-09

DIRECTORS’ REPORT

For the year ended 31.03.2010

(Rs. In Lacs)

For the year ended 31.03.2009

(Rs. In Lacs)

Sales and Other Income 42271.69 40514.06

Profi t before Financial Expenses, Depreciation and Tax 6177.79 7113.76

Less - Interest & Other Financial Expenses 628.22 963.45

Profi t / (Loss) before Depreciation, Extra Ordinary Items and Tax 5549.57 6150.31

Less - Depreciation 1415.32 1341.68

Profi t / (Loss) before Tax 4134.25 4808.64

Less - Current Tax 1127.25 ---

Minimum Alternate Tax --- 540.86

MAT Credit Entitlement (8.85) (682.54)

Fringe Benefi t Tax --- 34.90

Deferred Tax 229.29 1572.03

Profi t / (Loss) after Tax 2786.56 3343.39

Balance brought forward from previous year 3198.27 459.62

Appropriation : Transfer to General Reserve

: Transfer to Capital Redemption Reserve

: Dividend & Tax on Dividend

208.99

----

733.40

---

279.76

324.98

Balance Carried to Balance Sheet 5042.44 3198.27

Basic Earnings Per Share (Rupees) 4.85 6.02

18

as a result of continuous process improvements. The capacity utilisation in Polyester Film remained higher than the operating capacity at 111.6%.

Sales of Compounded and Unfi lled Engineering Plastics increased from 2744 MT to 5833 MT, an increase of 112.6%. Sales (net of excise duty) in value terms increased from Rs. 3411.23 lacs to Rs. 6569.45 lacs, an increase of 92.6%. Sales of Polyester Chips has increased both in quantitative and value terms by 11%. Exports accounted for 20.3% of the turnover during the year.

Interest and other Financial Expenses reduced signifi cantly during the year due to repayment of term loans and lower utilisation of working capital facilities on account of retention of profi ts.

Net Profi t after Tax has reduced on account of following exceptional items viz: (a) Mark – To – Market (MTM) losses of Rs. 402.13 lacs towards forward contracts booked to hedge the foreign currency liabilities related to Capital Goods under Polyester Film Expansion Project, (b) increase of Rs. 160.00 lacs in managerial remuneration on account of payment of commission on profi ts earned to Whole Time Director and (c) increase of Rs. 42.00 lacs in Administrative and Other Expenses on account of payment of commission on profi ts earned to Non- Executive Directors..

Company continues to remain focused on development of new products and during the year under review, certain new value added niche products were developed and commercialised, both in Polyester Film and Engineering Plastics.

Environment friendly/Cost reduction initiatives like installation of Bio-mass (Rice Husk) based Thermic Fluid Heater and Glycol Ejectors implemented in later part of the year 2008-09 have given the envisaged results during the year under review.

Details on operations and a view on the outlook for the current year are provided in the ‘Management

Discussion & Analysis Report’ which forms an integral part of this Annual Report.

CAPITALPursuant to the resolution passed by the Shareholders of the Company at the Extra Ordinary General Meeting (EGM) held on 21st October 2009, the Company has by way of preferential issue allotted 21,73,914 Share Warrants of face value of Rs. 5.00 each to Promoters, 26,08,696 Zero Coupon Unsecured Fully and Compulsorily Convertible Debentures (FCD) of face value of Rs. 5.00 each to an Independent Overseas Investor and 26,08,696 Zero Coupon unsecured Fully and Compulsorily Convertible Debentures (FCD) of Face Value of Rs. 5.00 each to Person Acting in Concert with Promoters for cash at a premium of Rs. 18.00 as part fi nancing of the Polyester Film Expansion Project. Board of Directors in the meeting dated 24th December 2009 has converted these Share Warrants and FCDs into 73,91,306 equity shares at a price of Rs. 23.00 including premium of Rs. 18.00 per equity share.

ENGINEERING PLASTICS Your company commissioned new extruder for Compounded Engineering Plastics of 9,600 MTPA capacity in November 2009, thereby taking the total capacity to 14,400 MTPA. During the year under review, capacity utilisation, on pro rata basis, was 55.6%. Company is confi dent of improving capacity utilization during 2010 –11 and achieving near 100% capacity utilization in 2011–12.

After commissioning of extruder in November 2009, company has been able to develop Poly Carbonate and ABS compounds and expects to commercialise sales on a larger scale in the year 2010 – 11.

EXPANSION PROJECTSDuring the year under review, Company has undertaken expansion of Polyester Film capacity. Progress in the implementation of project is going on as per schedule. Financial closure for

19

the project is already achieved. Company is going for cost effective ‘Continuous Polymerization and Direct Casting’ technology. Project is likely to be commissioned by December 2010. Company has also undertaken expansion of Polyester Chips by putting up a Continuous Polymerization plant of 70,000 MTPA capacity.

Besides these expansions, company is installing a Metallizer with a capacity of 7,200 MTPA at a project cost of Rs. 2000.00 lacs, thereby taking the total capacity to 13,200 MTPA. Metallizer is likely to be commissioned by October 2010.

COST REDUCTION INITIATIVESYour directors are pleased to inform that continuous focus on Cost reduction has enabled the company to remain competitive. During the year 2010 -11, a further investment of Rs. 400 lacs has been planned in various projects which will have a Payback period of less than a year.

SUBSIDIARY COMPANIESIn pursuance to Section 212 of the Companies Act, 1956, the audited statement of accounts along with the report of the Board of Directors of Ester International (USA) Ltd. and Ester Europe GmbH are annexed.

FIXED DEPOSITThe Company has not accepted any deposit during the year.

DIRECTORSMr A P Sarwan and Mr. Dinesh Kothari, directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

CORPORATE GOVERNANCEThe Company has complied with the mandatory provisions of Corporate Governance as prescribed in the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance is included as a part of the Annual Report along with the practicing Company

Secretary’s Certifi cate on its compliance.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to the Directors’ Responsibility Statement, the Directors confi rm on the basis of information placed before them by the Management and Auditors: -

1. That in the preparation of the annual accounts for the Financial Year ended 31st March 2010 the applicable Accounting Standards have been followed;

2. That the Company has 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 state of the affairs of the Company at the end of the fi nancial year and of the Profi t and Loss of the Company for the year under review;

3. That the Company has taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. That the accounts of the Company for the fi nancial year ended 31st March 2010 has been prepared on a going concern basis.

CODE OF CONDUCTThe Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors and senior management of the Company. They have affi rmed compliance with the Code of Conduct. A declaration to this effect duly signed by Chairman and Managing Director is enclosed as a part of the Corporate Governance Report. A copy of the Code of Conduct is available on the Company’s website viz. www.esterindustries.com

20

Code is based on fundament al principles, viz. good corporate governance and corporate citizenship. The Code covers Company’s commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency and auditability and legal compliance.

CONSOLIDATED FINANCIAL STATEMENTIn accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, your directors provide the audited Consolidated Financial Statements in the Annual Report.

AUDITORS’ REPORTAuditors’ Report read together with Annexures referred to in Paragraph 3 of the Auditors’ Report do not contain any qualifi cation of signifi cant nature and do not call for any explanation/clarifi cation.

AUDITORSM/s. S.R. Batliboi & Company, Chartered Accountants retire at the forthcoming Annual General Meeting and are eligible for reappointment. M/s S. R. Batliboi & Company have confi rmed that their appointment, if made, shall be within the limits of Section 224(1B) of the Companies Act, 1956.

LISTING OF SECURITIESYour Company’s securities are currently listed with CSE (Kolkata) and BSE (Mumbai). The Company has paid the listing fees to Mumbai Stock Exchange for the fi nancial year 2009-2010. Application for listing of 73,91,306 equity shares allotted on preferential basis is under consideration of BSE, Mumbai.

The Company’s application for voluntary delisting, pursuant to the special resolution passed by the shareholders in the 17th Annual General Meeting in this behalf, of securities from The Calcutta Stock Exchange Association Limited is pending with the exchange since October 2003.

Therefore, the listing fee has not been paid to this exchange.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGOThe prescribed details as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure ‘A’ forming part of this report.

PARTICULARS OF THE EMPLOYEESThe particulars of the employees drawing the salary as prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report.

As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all shareholders of the Company excluding the statement of particulars of the employees. Any shareholder interested in obtaining a copy may write to the Company Secretary of the Company.

ACKNOWLEDGEMENTYour Directors acknowledge the cooperation and assistance received from various departments of Central & State Government and banks.

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.

On behalf of the Board

Arvind Kumar SinghaniaChairman and Managing Director

Gurgaon18th May 2010

21

STATEMENT CONTAINING PARTICULARS PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTORS’ REPORT

A. CONSERVATION OF ENERGY

Measures Taken• Saved 7,200 units per month by Replacing 60 HPMV lamps with 85Watts CFL lamps.• Installed 19 Inverters on various equipments of the plant and saved approximately 50,400

units per month.• Saved 19,500 units per month by replacing the Electrical Heating System of Jacket Water

and NTC Unit of 4 MW Gensets with Steam Heating System.• Saved 11,520 units per month in Air Conditioning System of Polyester Film Plant

Line -1 by isolating the TDO Section.• Saved 3.50 KL of HSD per month as result of modifi cation in the Power Supply System and

installation of separate feeder for Metalizer in case of power failure.• Saved 300MT of Steam per month in Polyester Chips Line - 2 and SSP by replacing Steam

Ejector with Glycol Ejector.

Total energy consumption and energy consumption per unit of production as per Form – A is given hereunder:

Power & Fuel Consumption 2009 – 10 2008 – 09

1. Electricity a. Purchased

Unit (Kwh) 34011207 37219200

Total Amount (Rs.) 122396085 123998182Rate per unit (Rs / Kwh) 3.60 3.33

b. Own Generation

i. Through Diesel Generatora. Through HSD Unit (Kwh) 1639772 948384

Units / Litre of diesel (HSD) 3.28 3.47b. Through LDO Unit (Kwh) - -

Unit / Litre of LDO - -c. Through FO Unit (Kwh) 6255824 2510819

Unit / Litre of FO 4.12 4.16Cost/ per unit (Rs/Kwh) 5.56 6.62

ii. Through Steam Turbine/Generator N.A. N.A.

2. Coal N.A. N.A.

ANNEXURE - A

22

3. Furnace Oil Quantity (MT) i. Primary Heating (FO/LDO/HSD) MT 193 3449

ii. Boiler (FO/LDO/HSD) MT 56 18Total MT 248 3467 Total Amount (Rs) 5778076 96982489Average Rate /MT (Rs) 23253 27977

4. HuskQuantity (MT)

For Steam 9156 13411For Primary Heating 18845 3797 Total Qty (MT) 28001 17208 Total Amount (Rs) 66467182 42010984Average Rate /MT (Rs) 2374 2441(Husk)

Consumption per unit of production

1. Electricity Product Unit Per Ton Per Ton Polyester Chips KWH 114 104 Polyester Film (Line –1) KWH 803 929 Polyester Film (Line –2) KWH 831 859

2. Furnace Oil Product Unit Per Ton Per Ton Polyester Chips KWH 0.0025 0.072 Polyester Film (Line –1) KWH 0.0031 0.059 Polyester Film (Line –2) KWH 0.0035 0.060

3. Husk Polyester Chips MT Per Ton 0.307 0.29 Polyester Film Line-1 MT Per Ton 0.221 0.18 Polyester Film Line-2 MT Per Ton 0.248 0.20

The % saving in consumption of various forms of energy per MT of Chips & Film during the year

under report as compared to previous year are given below :-

Chips Film –1 Film –21. Power - 13.5% 3.2%2. Steam - - - 3. Primary Heating (Oil)* 96.5% 94.8% 94.2%

Note: Furnace Oil consumption in Primary Heating has reduced signifi cantly consequent upon installation of Biomass (Rice Husk) based Thermic Fluid Heater

23

RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A. RESEARCH & DEVELOPMENT (R&D)

1 Specifi c areas in which R&D carried out by the Company and benefi ts derived as a result of the R&D activities.

2. Future plan of action

B. TECHNOLOGY ABSORPTION

1. Efforts in brief made towards technology absorption, adaptation and innovation.

2. Benefi ts derived as a result of the above efforts.

3. In case of Imported technology(imported during the last 5 years reckoned from the beginning of the fi nancial year)

(a) Technology imported:(b) Year of import:(c) Has technology been fully absorbed?(d) If not fully absorbed, areas where this has

not taken place, reasons there for and future plans of action.

a) Developed deformable Polyester Film for Toffee wrap application. Product has been accepted and commercialised.

b) Developed Antistatic Coated Film for Packaging, Electronic, Photographic and Radiographic high end application. Product has been accepted and commercialised.

c) Developed UV coating Film for Embossing Application. Product has been accepted and commercialised

d) Developed UV stabilised Polycarbonate FR & Non FR for switches, switch base plates (Electrical Segment). Product has been accepted and commercialised.

e) Developed Impact Modifi ed PC+ABS Blend for radio cover in car (automobile Segment).

f) Developed Impact modifi ed PC + PBT impact blend for bobbins in textile industry (Industrial Segment)

Company continues to remain focused on development of new products for applications in Plain Polyester Film, Metallized Polyester Film and Engineering Plastics.

Installed a Pilot Printing Machine to strengthen our R& D set up.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs. in Lacs)

2009-10 2008-09• Earnings – FOB Value of Exports 8357.35 10337.52• Outgo – CIF Value of Imports 12600.77 3784.36

24

BUSINESS PERFORMANCEThe company is engaged in the manufacture and sale of PET Film and Engineering Plastics. Majority of the PET Chips produced is consumed captively in the PET Film business.

Total Sales revenue (net of excise duty) for the Company has increased by 6.2%. Profi t before Tax and Profi t after Tax have decreased by 14% and 16.7% respectively.

MANAGEMENT Discussion & analysis

Quantity Produced (MT)(During 2009-10)

Quantity Produced (MT)(During 2008-09)

Growth

PET Film 30122 29534 2.0%

PET Film – Metallised 4936 5167 (4.5%)

PET Chips 36177 35873 0.8%

Engineering Plastics 5996 2683 123.5%

Quantity Sold (MT)(During 2009-10)

Quantity Sold (MT)(During 2008-09)

Growth

PET Film 24954 24224 3.0%

PET Film – Metallised 4888 5253 (6.9%)

PET Chips 6084 5483 10.9%

Engineering Plastics 5833 2744 112.6%

Sales Value (Net of Excise Duty)

(Rs. in Lacs)(During 2009-10)

Sales Value (Net of Excise Duty)

(Rs. in Lacs)(During 2008-09)

Growth

PET Film 23550.72 24577.67 (4.2%)

PET Film – Metallized 5626.61 5935.32 (5.5%)

PET Chips 3622.47 3303.42 9.7%

Engineering Plastics 6569.45 3411.23 92.6%

Others 167.85 13.32 1160.1%

TOTAL 39537.10 37240.96 6.2%

(Rs. in Lacs)(During 2009-10)

(Rs. in Lacs)(During 2008-09)

Growth

EBIDTA 6177.79 7113.76 (13.2%)

PBT 4134.25 4808.64 (14.0%)

PAT 2786.56 3343.39 (16.7%)

25

Engineering Plastics accounted for Rs. 6569.45 lacs of sales revenue, an increase of 92.6% over last year. During the year under review, sales & production of Engineering Plastics both in quantitative & value terms showed signifi cant improvement. Reduction in EBIDTA, PBT and PAT during 2009-10 was mainly on account of Mark – To – Market (MTM) losses of Rs. 402.13 lacs towards forward contracts booked to hedge the foreign currency liabilities related to Capital Goods under Polyester Film Expansion Project

POLYESTER FILM BUSINESSIn this world of fast changing life styles, consumers prefer packaging to be light weight, shatter-proof, cost effective, aesthetically appealing, easy to handle and with good protection. The answer to achieving all these properties simultaneously is to use the various options of Oriented Films to make Flexible Packaging Laminates. The Flexible packaging materials have been playing a major role in almost all the industries, especially the food packaging and personal care products, where demand has remained robust despite the global economic downturn. PET Film has traditionally been the largest constituent of the Oriented Film business in India and the second largest in the World.

• PET Film is known for its high tensile strength, chemical & dimensional stability, transparency, gas & aroma barrier, and electrical insulation.

• PET Film is an excellent material for high quality printing.

• PET Film has superior thermal resistance and its melting /softening range is much wider than other Films (like BOPP) thereby making PET one of the easiest Films to use in Form Fill and Seal (FFS) Machines / Pouching Machines etc.

• PET Film owing to its inherent strength and properties, in most packaging applications, is thinner than other Films by approximately 15 – 30%. PET Film is used as a layer in Laminates containing Plain and / or Metalized PET Film to protect food against oxidation and aroma loss so as to achieve long shelf life. This is one of the largest applications of PET Film for all forms of products including Coffee, Tea, Snack Foods, Mouth Freshener, Spices, and Industrial Products etc.

BUSINESS PROSPECTSPET Films can be broadly classifi ed into Thin and Thick Films. Thin Films constitutes nearly 70 % of the total PET Film demand. Demand for Thin PET Films is estimated to grow at 6 - 8% per annum globally and 17 – 18% in the domestic market. By far the largest end use for Thin PET Films is fl exible packaging which accounts for 65% of total Thin PET Film demand and this is Ester’s primary target market. Flexible packaging is associated with food products, personal & health care, household products, etc., which have remained insulated from recent global economic recessionary trends.

The growth in demand for PET Film in India is attributed to the following key drivers:• Continued economic growth in India even during a period of recession in developed countries.

• Growth in demand for convenience foods & personal care products, and pouches driven by demographic and lifestyle changes. Increased investments in supermarkets, hypermarkets and convenience retailers driving sales of packaged foods.

26

FY 09-10

FY 09-10

Defi ni� on : EBITDA Margin = EBITDA/Sales (%)

Defi ni� on : EBIT/Capital Employed

FY 09 10

D fi i� EBIT/C it l E l d

Defini�on EBITDA Margin EBITDA/Sales (%)

FY 09 10

27

• Government Regulation to improve quality & safety of packaged food products.• Greater demand for sophisticated and attractive packaging of products, proliferation of brand

development, and niche products demanding high quality printed packaging.

Demand for Thin PET Film in India will continue to grow at around 17-18% per annum in view of intrinsic factors like shift from loose packs to packaged unit packs/smaller packs, shift to laminates, increasing consumerism and the deeper penetration of modern retail and wholesale trade.

FUTURE PLANS & STRATEGY• During the year under review, Ester undertook a project to expand PET Film capacity at the existing

location in Khatima in the state of Uttarakhand with a view to leveraging economies of scale as well as ease of implementation and operations. With this expansion, likely to be commissioned by December 2010, company will be able to double its production of PET Film. For this Expansion Project, Ester is adopting cost effective ‘Continuous Polymerization and Direct Casting’ technology. To the best of our knowledge, when this plant is commissioned, it would be the third Direct Casting facility in the world.

• In addition to the PET Film Line, Metalising capacity is also being expanded by 7,200 MTPA. The new Metalizer is likely to be commissioned by October 2010. This would further enhance our competitiveness in providing Metalized PET Films for domestic & export markets.

• The company continues to have signifi cant presence in international markets as a part of its medium to long term strategy. Our strategy here is to promote and develop markets for value added niche products.

• Producers of PET Film in Western Europe, North America & Japan have been adversely impacted due to higher costs of production. They are looking at newer opportunities to shift their production to thicker fi lms for emerging niche applications like fl at panel displays, LCD panels, photovoltaic solar cell systems and other high end packaging applications. This has provided an opportunity to low cost & high productivity PET Film manufacturers in India. Ester is positioning itself to benefi t from this development by offering a range of products of PET Films in these markets produced at competitive costs as a result of economies of scale arising from our expansion.

• Trade barriers in form of Anti Dumping & Anti Subsidy duties on Indian PET Film manufacturers in Europe, US, Turkey & Brazil continues. However, this is gradually getting reduced in the revised scenario of lower cost of production in India vis-a-vis the high cost of production in developed economies. Ester has fi led for mid-term review of its Anti Dumping duties in Europe and is confi dent of minimising such duties by 3rd quarter of Financial Year 2010-11. Similar reviews are being initiated in US & Brazil.

• The companycontinuesinitsendeavortowardsdevelopingnewvalueaddedproducts.Signifi cant efforts have been made in our Research & Development programs with new testing equipments and pilot facilities have been added to facilitate speedy commercialisation of new products. This strategy would contribute towards better prospects and insulate the company from the adverse effects of cyclicality.

28

Defi ni� on : Financial Expenses/Sales %

Defi ni� on : Equity Shareholders Funds excluding Revalua� on Reserve/No. of Equity Shareholders

Defi ni� on : Sales/Average Net Fixed Assets excluding revalua� on reserves

Defi ni� on : Loan Funds / Shareholders Funds

D fi i� E it Sh h ld F d l di R l �

D fi i� L F d / Sh h ld F d

Defini�on : Sales/Average Net Fixed Assets excluding

29

• Ester continues its focus on marketing of value added PET Films which insulates Ester from typical cyclicality of commodity PET Film business.

Overall the long term prospects of PET Films business are encouraging. Ester will continue to explore various opportunities, in and outside of India, to maximize stakeholder’s returns.

ENGINEERING PLASTICS BUSINESSDuring fi nancial year 2009-10, our Engineering Plastics compounds and blends business grew on the back of strong demand growth registered in the electrical, electronics and automotive sector. In electrical segment, compact fl uorescent lamp (CFL) grew at 25% and the automotive sector also registered a growth above 20%. The growth rate in automotive and electrical segment is anticipated to be even higher for 2010 -11. With the Indian government actively promoting the use of CFL’s as part of its energy effi ciency policy, growth in CFL’s is expected to be more than 30%. The automotive sector is expected to grow around 25% during fi nancial year 2010 -11. Introduction of new models and design modifi cations in the current models will increase the consumption of plastics in cars.

Ester has successfully expanded its production capacity to 14,400 MT from 4,800 MT. Increasedcapacity has allowed us to offer a broader portfolio of compounding products. Ester introduced new products such as PC compounds, ABS compounds, PC+ABS Blends, PC+PBT blends along with our regular products like PBT compound, Nylon-6 compounds and Nylon-66 Compounds.

Throughout the year supply of basic raw material for compound has remained consistent. Prices also remained steady with some appreciation starting from the end of Q3. The raw material supply situation tightened during Q4 and we expect it to remain tight till Q2 2010-11. Despite price increase and tightening supplies we managed to do well through our operational excellence programs and initiating step changes in our effi ciency enhancement programs.

Key drivers for the Indian plastic-compounds market:• High growth rates for end-use applications, such as automotive, appliances, electrical &

electronics, wires and cables and the overall growth in the telecom industry are all expected drive demand for plastic compounds in India.

• Currently, per capita usage of plastics is 5.5 kg in India compared with the global average of 12 kg. However, with plastics increasingly replacing traditional materials such as metal and glass in many applications, the Indian plastic-compound business is expected to see signifi cant growth in the years ahead.

• India is emerging as a low-cost high-quality manufacturing hub. Many multinationals, especially in the automotive and appliances segments, are putting up manufacturing facilities in India. This is expected to drive demand for Engineering Plastics in the future.

30

BUSINESS PROSPECTSOur endeavor is to selectively target India’s growing automobile industry by becoming preferred supplier to automobile OEMs. The key challenge for us is to position ourselves in a quick and cost effective manner as the partner of choice of OEM. Ester is taking several steps to expedite this process with its customers, such as greater promotional activities and focused R & D initiatives.

More than 90% of all raw materials in the EP business are imported. There is therefore a lag between raw material prices and the prices of fi nished goods to the end customers. Ester is addressing the variability in prices through several mechanism, such as long term supply contracts, agreements with end customers on periodic price revisions etc.

Going forward, we see our focus on fl exible manufacturing processes together with our superior standards on operational excellence and consistent product quality as key differentiators’ vis-à-vis our industry peers.

KEY SUCCESS FACTORS Marketing Initiatives: We continue to witness positive results from our B2B marketing programs aimed at creating market awareness for our EP products. Our metrics driven ROI marketing programs through participation in exhibitions, industry forums, trade shows, R & D demonstrations for new product development programs demonstrates that our strategy is correct and is working in the market.

Productivity Improvement: Nearly 80 per cent of costs for engineering plastics compounds go towards raw materials. Hence, it is important for us to continuously improve productivity and reduce waste so as to safeguard margins amid increasing competition. We have initiated several ‘value-chain’ optimization programs to ensure that we keep our eyes on the ball on productivity improvement initiatives.

Economies of scale: With more than 75 per cent of the conversion cost (difference between the cost of fi nished goods and the raw material costs) being fi xed in nature, a larger scale of operations would yield economies of scale. Our recent expansion plan and future plans has factored this into our growth strategy which we will continue to exploit in an optimal manner.

31

FINANCIAL PERFORMANCEFollowing table presents the summary of the fi nancial performance of the Company during 2009 -10 and compares it with 2008 - 09.

Net Sales increased by 6.2% to Rs. 39537.06 lacs in 2009-10. Interest and Other Financial Expenses reduced substantially during the year as a result of retention of profi ts earned resulting in lower utilization of Working Capital facilities and repayment of term loans.

Due to profi ts earned and repayment of Term Loans made during the year, fi nancial leverage indicated by Total Debt : Tangible Net Worth ratio stands at healthy 0.72 as on 31st March 2010.

SEGMENT-WISE PERFORMANCEIn line with the requirements of the Accounting Standard on Segment Reporting (AS-17), the company’s reportable operating segments comprise:

Polyester Chips & Films Engineering Plastics

Business Segment Revenues (Rs in Lacs) PBIT (Rs in Lacs)

Polyester Chips & Film 32966.55 6721.33

Engineering Plastics 6570.51 1223.96

2009-10(Rs. in Lacs)

2008-09(Rs. in Lacs)

Net Sales 39537.06 37240.96

Other Income 105.88 92.45

Total Income 39642.93 37333.41

Material costs adjusted for change in stocks 24032.35 21147.87

Manufacturing and other expenses 9432.80 9071.77

Financial Expenses 628.22 963.45

Depreciation 1415.32 1341.68

Total expenditure 35508.69 32524.77

Profi t before Depreciation, Interest and Tax 6177.78 7113.76

Profi t / (Loss) before Tax 4134.25 4808.64

Current Tax (including FBT) 1127.25 575.76

Less: MAT Credit Entitlement (8.85) (682.54)

Deferred Tax credit 229.29 1572.03

Profi t / (Loss) after Tax 2786.56 3343.39

32

INTERNAL CONTROL SYSTEMSCompany has a structured Internal Control System in place, which assures the Board of Directors and the management that there is an effective system for:

• Planning and achievement of goals • Risks Evaluation • Reliable fi nancial & operating reporting and

legal & regulatory compliance• Adequate control against fraud and negligence• Review of performance

The integrated fi nancial accounting system, supported by in-built controls, ensures reliable and timely fi nancial & operational reporting. Controls and legal compliances are periodically reviewed by audit systems. The fi nancial accounting and audit systems ensure prevention and detection of frauds and negligence.

RISK MANAGEMENT Risk Management Framework adopted by the Company is focused on identifying potential events that may adversely affect the Company. Through an exercise involving senior management team, risks were divided into following categories namely strategic risks, operational risks, fi nancial risks and legal & compliance.

To evaluate probability of occurrence of a risk and assess its consequence/impact on the company, exercises were undertaken. For managing the critical risks, mitigation plans were developed and implemented during the year. Mitigation plans so developed and implemented have been effective and yielded desired results.Library of Risks will continue to be reviewed and risks would continue to be evaluated from time to time and mitigation plans would be modifi ed/developed with the changing Risk Scenario.

HUMAN RESOURCESIn the increasingly competitive scenario of Indian & global manufacturing, the contribution of our human capital is critical and well recognised. We recognise that it is of the utmost importance to

select, recruit, develop & retain top quality talent within the organisation. Our focus is on preparing the people to face the new and myriad challenges that the workplace of the 21st century is bringing with it. An engaged workforce is critical to Ester in realising its business objectives. Engagement is about creating an inclusive and high-energy working environment, where employees are aligned and energised to contribute to the company’s business success. An engaged workforce delivers a competitive advantage – because engaged employees are highly motivated to give their best every day. Accordingly, new impetus was provided to Human Resource function in the company during the year under review with the aim of implementing & strengthening best practices in the HR domain within the company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)As a Company, Ester has been conscious of its responsibility towards society and environment. Company has been making concerted efforts to reduce its dependence on conventional fuel as a source of energy. Usage of conventional fuel in Ester’s plant has reduced considerably over the years. During the year 2004 – 05, 13520 MT of conventional fuel was consumed while the consumption during 2009-10 was reduced to 2267 MT. The reduction in use of conventional fuel was through use of Bio-mass, a renewable and cleaner source of energy.

CAUTIONARY STATEMENTStatements in this section relating to future status, events, circumstances, plans and objectives are forward – looking statements based on estimates and anticipated effects of future events. Such statements are subject to risks and uncertainties and accordingly are not predictive of future results. Actual results may differ materially from those anticipated in the forward – looking statements. The Company cannot be held responsible in any manner for such statements. The company undertakes no obligation to publicly update these forward looking statements to refl ect subsequent events or circumstances.

33

CORPORATE Governance Report

Corporate governance is about promoting corporate fairness, transparency, accountability and ethical business conduct. The ambit of governance involved all the stakeholders and how the corporation deals with those stakeholders, including the shareholders, employees, regulators, customers, suppliers and society. It is the combination of voluntary practices and compliance with laws and regulations leading to effective control and management of the organization.

Your Company believes in adopting the best practices in the area of corporate governance to ensure the attainment of highest levels of transparency, accountability and equity in all the facets of its operations and in all its interactions with its stakeholders. The Board continues to hold and augment the standards of Corporate Governance by ensuring that the Company pursues policies and procedures to satisfy its legal and ethical responsibilities.

1. Board of DirectorsThe Board of Directors is comprised of seven directors of which one is Chairman & Managing Director and other six are Non-executive & Independent Directors. The Company complies with the listing agreement norms for Independent Directors.

Composition of the Board and other directorships held as at March 31, 2010

Name of the Director

AttendanceParticulars

No. of directorships

in other Companies1

No of Membership/ Chairmanship of Committees in other Companies2

BoardMeeting

Last AGMCommittee

MembershipsChairperson of

Committees

Promoter and Whole-time DirectorA.K. Singhania 8 No 1 None NoneIndependent DirectorsA.K. Newatia 7 Yes None None NoneA.P. Sarwan 7 No 2 None NoneM.R. Hosangady3 5 Yes 2 None NoneM.S. Ramachandran 7 No 5 None NoneDinesh Kothari 5 No 5 2 NoneV.B. Haribhakti3 5 Yes 7 8 4

1. The Directorships held by Directors as mentioned above do not include directorships of foreign companies, Section 25 companies and private limited companies.

2. As required by clause 49 of the Listing Agreement, the disclosure includes memberships/ chairpersonship of Audit Committee and Shareholders,/Investor Grievance Committee in Indian public companies (listed and unlisted).

3. Re-appointed in the 23rd Annual General Meeting on 1st July, 2009.

Number of Board Meetings held and the dates on which held8 Board Meetings were held during the year under review. The dates on which the meetings were held are as follows: 25th April, 2009, 27th July, 2009, 22nd September, 2009, 15th October, 2009, 28th October, 2009, 27th November, 2009, 24th December, 2009 and 29th January, 2010.

34

Compliance of Code of Conduct We have laid down a code of conduct for all Board Members and senior management of the Company. The code of conduct is available on the website of the Company www.esterindustries.com. All Board members and senior management personnel of the Company have affi rmed their adherence to the code. The declaration to this effect from Chairman and Managing Director (CMD) forms a part of this report.

2. Audit CommitteeThe terms of reference stipulated by the Board to the Audit Sub Committee are, as contained under clause 49 of the Listing Agreement, as follows:

a. To oversee fi nancial reporting and disclosure process.b. To recommend the appointment and removal of statutory auditors and decide their remuneration.c. To review fi nancial results and statements, before submission to the Board, focus primarily on-

• Any change in accounting policies and practices.• Major accounting entries, based on exercise of judgment by the management.• Qualifi cations in the draft audit report.• Signifi cant adjustments arising out of the audit.• Going concern assumption. • Compliance with accounting standards.• Compliance with stock exchange and legal requirements concerning fi nancial statements.• Any related party transactions i.e. transactions of the Company of a material nature, with

promoters or the management, their subsidiaries or relatives, etc. that may have potential confl ict with larger interests of the Company.

d. To oversee adequacy of internal control systems.e. Reviewing adequacy of internal audit function, coverage and frequency of internal audit report.f. Discussion with internal auditors and concurrent auditors on any signifi cant fi ndings in their

reports and follow up thereon.g. Discussion with external auditors before audit commences, as regards nature and scope of

audit, as well as having post audit discussions to ascertain any areas of concern.h. Reviewing the Company’s fi nancial and risk management policies.

The Audit Committee of the Board as on 31st March 2010 comprised of the following three Independent, Non-executive Directors viz Mr. V.B. Haribhakti, Chairman (attended 4 meetings); Mr. A.P. Sarwan (attended 3 meetings) and Mr. M.R. Hosangady (attended 4 meetings).

Mr. V. B. Haribhakti is a qualifi ed Chartered Accountant having rich experience in Accounting and Finance. Other members of the Committee have basic accounting and fi nance knowledge with wide exposure in their relevant areas. The composition of the Committee is in conformity with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956.

During the year under review, the Committee has met 4 times on 25th April 2009, 27th July, 2009, 28th October, 2009 and 29th January, 2010.

The Chairman and Managing Director, Chief Financial Offi cer, Head- Plant Operations and audit sub committee & Accounts are invited to the meetings. Representatives of Statutory Auditors and

35

Internal Auditors are also being invited to the meetings and most of the meetings are attended by Statutory Auditors. The Company Secretary of the Company acts as the Secretary to the Committee.

Mr. V. B. Haribhakti, Chairman of the Audit Committee was present at the last Annual General Meeting held on 1st July, 2009.

3. Remuneration CommitteeThe broad terms of reference of the Committee are to appraise the performance of Managing/ Whole Time Directors, determine and recommend to the Board compensation payable to Managing/ Whole Time Directors.

The Remuneration Committee of the Board as on 31st March 2010 comprised of three Non Executive, Independent Directors viz. M r. V.B. Haribhakti as Chairman and Mr. M.R. Hosangady & Mr. A.P. Sarwan as members.

A meeting on 25th April, 2009 was held during fi nancial year 2009-10 andMr. V.B. Haribhakti, Mr. A.P. Sarwan and Mr. M.R. Hosangady attended the meeting.

The Non-Executive Directors are paid sitting fees for attending each meeting of the Board of Directors, Audit Sub Committee and Remuneration Committee thereof. The details of sitting fees paid and Commission payable for the year 2009-10 to the Non-Executive Directors are given below –

Name of the Director Sitting Fees Paid (In Rs.) Commission Payable (In Rs.)

Mr. A.K. Newatia 70,000 7,00,000Mr. A.P. Sarwan 95,000 7,00,000Mr. M.R. Hosangady 85,000 7,00,000Mr. V.B. Haribhakti 85,000 7,00,000Mr. Dinesh Kothari 45,000 7,00,000Mr. M.S. Ramachandran 65,000 7,00,000

The Company pays remuneration to its Managing Director by way of salary, perquisites and allowances, contribution to provident fund and superannuation fund and commission. Remuneration is paid within the overall limits approved by the members of the Company.

Details of remuneration paid/payable to Managing Director for the fi nancial year 2009-10 arehereinunder:-

(Figures in Rupees lakhs)

Name of Director Designation SalaryAllowances & Perquisites

Contribution to Provident Fund and

Superannuation Fund

CommissionPayable

Total

Mr. Arvind Kumar Singhania

Chairman and ManagingDirector

24.00 29.27 6.48 160.00 219.75

36

4. Shareholders’/ Investors’ Grievance CommitteeThe Company has a Shareholders’/ Investors’ Grievance Committee to look into the redressal of investors’ complaints and requests such as delay in transfer of shares, non-receipt of annual report, change of address, etc.

As on 31st March, 2010, the Committee comprised of Mr. A.K. Newatia, Non-Executive & Independent Director as Chairman and Mr. A.K. Singhania, Chairman & Managing Director as Member of the committee. Mrs. Shweta Yadav, Company Secretary acted as the Compliance Offi cer.

The Company has received 63 complaints from the shareholders and all of them have been resolved by furnishing requisite information/ documents. There was no complaint pending as on 31st March 2010.

5. General Body MeetingsDetails of the Annual General Meetings and Extra Ordinary General Meetings held during the last three years :

Year Location Date Time Special Resolutions Passed

ANNUAL GENERAL MEETINGS

2008-09

Sohan Nagar, PO Charubeta, Khatima - 262308, District Udham Singh Nagar, Uttarakhand

01.07.2009 10.30 a.m.• Increase in Remuneration of

Managing Director

2007-08 Same as above 19.09.2008 10.30 a.m.

• Commission payment to Managing Director

• Commission payment to Non-Executive Directors

• Amendments in Article of Association

2006-07 Same as above 17.09.2007 10.30 a.m.

• Re-Appointment of Whole-time Director

• Re-Appointment of Managing Director

EXTRA-ORDINARY GENERAL MEETING

2009-10 Same as above 21.10.2009 11.00 a.m.

• Preferential Allotment of Zero Coupon Fully and Compulsorily Convertible Unsecured Debentures and Zero Coupon Warrants

During the year under review no Special Resolution was passed through Postal Ballot.

6. DisclosuresRelated Party TransactionsDuring the fi nancial year 2009-10 there was no materially signifi cant related party transactions i.e. transactions of the Company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives, etc. that may have potential confl ict with the interests of the Company at large.

37

Statutory Compliance, Penalties and StricturesThe Company has complied with the requirements of the Stock Exchanges/ SEBI/ and Statutory Authorities on all matters related to capital markets during the last three years. No penalties or strictures have been imposed on the Company by the Stock Exchanges or SEBI or any statutory authority.

7. Means of communication• The quarterly and yearly fi nancial results are generally published in the following newspapers:

Economic Times, Times of India, Financial Times, Nav Bharat Times, Statesman, New Delhi & Pioneer, New Delhi and Viswamanav, Bareilly, Uttar Pradesh.

• The fi nancial results are displayed on www.esterindustries.com.

• The Company also regularly posted information relating to its fi nancial results and shareholding pattern on Electronic Data Information Filing and Retrieval System (EDIFAR) at www.sebi.gov.in.

However, Bombay Stock Exchange Limited has intimated about discontinuation of EDIFAR fi ling vide Circular no DCS/COMP/SD/013/2010-11 dated 19/04/2010 in pursuance to circular issued by Securities and Exchange Board of India (SEBI) for discontinuation of EDIFAR.

• Management Discussion and Analysis forms part of the Annual Report.

8. General Shareholder Information8.1 Forthcoming Annual General Meeting

Date and Time Tuesday, 27th July, 2010 at 10.30 a.m. Venue Sohan Nagar, P.O. Charubeta, Khatima-262308, District Udhamsingh Nagar, Uttarakhand

8.2 Financial Calendar (Tentative and subject to change) Financial Results for the Quarter ending 30th June 2010 Within 45 days from end of the quarter Financial Results for the Quarter ending 30th September 2010 Within 45 days from end of the quarter Financial Results for the Quarter ending 31st December 2010 Within 45 days from end of the quarter Financial Results for the Quarter ending 31st March 2011 April/May 2011

Annual General Meeting Any date between June 2011 - September 20118.3 Books closure date

17th July, 2010 to 20th July, 2010 (both days inclusive) for the purpose of taking the record of shareholders to whom dividend is to be paid if approved at the ensuing Annual General Meeting.

8.4 Dividend paymentThe Board of Directors has recommended Final Dividend of Rs. 1/- per share on Equity

38

Shares of Face Value of Rs. 5/- each for the Financial Year 2009-10. The dividend, if approved by shareholders at the ensuing AGM shall be paid to those shareholders, whose names appear on the Register of Members as on Saturday, the 20th July, 2010. In respect of shares held in electronic form, the dividend will be payable to the benefi cial owners of the shares as on the closing hours of business on Tuesday, the 16th July, 2010 as per the details furnished by the Depositories for this purpose.

Dividend will be paid on or after 27th July, 2010 after approval by the shareholders.

8.5 Listing of Equity Shares on Stock Exchanges at: Mumbai, Kolkata*

*The Company’s application for voluntary delisting of its securities from The Calcutta Stock Exchange, Kolkata, pursuant to the special resolution passed by the shareholders in the 17th Annual General Meeting approving delisting is pending with that exchange. The listing fees for the year 2009-10 have been paid to BSE where the shares of the Company are listed and traded.

8.6 (a) Stock Code 500136 (Bombay Stock Exchange) (b) Scrip ID ESTERIND (Bombay Stock Exchange)

(c) ISIN Number INE778B01029 8.7 Stock Market Data

The data for trading in equity shares of the Company at Bombay Stock Exchange is provided below:

MonthMonth’s High Price (in

Rs.)

Month’s Low Price

(in Rs.)

Volume

(No. of Shares)

Apr-09 15.70 10.47 1453723May-09 21.30 13.51 3355978Jun-09 25.85 17.70 8164541Jul-09 26.20 15.55 7043052Aug-09 24.90 19.90 4964937Sep-09 28.15 21.60 6928187Oct-09 25.75 19.90 2539806Nov-09 23.50 17.70 2033780Dec-09 23.50 19.75 2283762Jan-10 24.85 18.65 2511105Feb-10 20.90 18.30 1207457Mar-10 19.40 17.10 1597771

8.8 Registrar and Share Transfer Agents MCS Limited, F – 65, Okhla Industrial Area Phase - I, New Delhi – 110 020 Phone No. – 011-41406149/50/51 Fax No. – 011-41709881 E-Mail : admin@mcsdel.com

39

8.9 Share Transfer SystemPresently, the share transfer which are received in physical form are processed and the share certifi cates are returned within a period of 15 to 20 days from the date of receipts, subject to the documents being valid and complete in all respects.

8.10 Distribution of Shareholding as on 31st March 2010

Distribution No. of Shareholders % to total holders No. of shares % to total shares

1-500 20217 83.51 3770379 5.99501-1000 2055 8.50 1803603 2.871001-2000 902 3.73 1476051 2.352001-3000 330 1.36 878849 1.403001-4000 117 0.48 428241 0.684001-5000 179 0.74 869806 1.385001-10000 229 0.95 1753947 2.7910001-50000 141 0.58 2820717 4.4850001-100000 12 0.05 793609 1.26And Above 24 0.10 48298504 76.79TOTAL 24209 100.00 62893706 100.00

Shareholding Pattern as on 31st March 2010

Category of Shareholder No. of Shareholders No. of Shares % to total shares

A. PROMOTER AND PROMOTER GROUP 1. Indian a. Individual/HUF 4 5557770 8.84b. Bodies Corporate 3 3615480 5.75

Sub Total 7 9173250 14.592. Foreigna. Bodies Corporate 3 33561496 53.36

Sub Total 3 33561496 53.36

Total Shareholding of Promoter and

Promoter Group 10 42734746 67.95

B. PUBLIC SHAREHOLDING1. Institutionsa. Mutual Funds/UTI 5 32700 0.05b. Financial Institutions/Banks 10 35600 0.06c. Insurance Companies 1 300 0.00d. Foreign Institutional Investor 1 122511 0.19

Sub Total 17 191111 0.302. Non Institutionsa. Bodies Corporate 459 2219515 3.53b. Resident Individuals 23619 14001494 22.26c. Non-Resident Individual 103 1138144 1.81d. Foreign Companies 1 2608696 4.15

Sub Total 24182 19967489 31.75Total Public Shareholding 24199 20158600 32.05

GRAND TOTAL (A) + (B) 24209 62893706 100.00

40

8.11 Dematerialisation of SharesAs on 31st March 2010, 84.41% of the Company’s shares were held in dematerialised form.

8.12 Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments and their likely impact on equity

As on date there are no outstanding warrants or any convertible instruments. The Company has not issued any GDR/ ADR.

8.13 Plant location Sohan Nagar, P.O. Charubeta,

Khatima–262 308, District Udham Singh Nagar, Uttarakhand

8.14 (i) Investor Correspondence For shares held in physical form (For transfer/dematerlisation of MCS Limited shares and any other query F – 65, Okhla Industrial Area Phase - I, related to the shares of the New Delhi – 110 020 Company) Phone No. – 011-41406149/50/51 Fax No. – 011-41709881 E-Mail: - admin@mcsdel.com

For shares held in Demat form To the respective Depository Participant

(ii) Any query on Annual Report Secretarial Department DLF Building No. 8, Tower A, 2nd Floor, DLF Cyber City, DLF Phase II, Sector 25, Gurgaon, Haryana – 122 002 Phone: 0124-4572100 Fax : 0124-4572199 E-Mail: shares.deptt@ester.in Web site: www.esterindustries.com

DECLARATIONIt is hereby declared that all the Board Members and Senior Management of the Company have affi rmed adherence to and compliance with the ‘Code of Conduct’ laid down by the Company.

For Ester Industries Limited

Arvind Kumar Singhania Chairman and Managing DirectorPlace: Gurgaon Dated: 18th May, 2010

41

To,

The Members of Ester Industries Limited

We have examined the compliance of conditions of corporate governance by Ester Industries Limited,for the year ended 31st March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintained by the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the effi ciency or effectiveness with which the management has conducted the affairs of the Company.

For R S M & COCompany Secretaries

Ravi SharmaFCS No. 4468

Dated : 18TH May 2010Place : New Delh

CERTIFICATE on Corporate Governance

42

CERTIFICATE of Managing Director and Chief Financial Offi cer of The Company

In terms of clause 49 (V) of the Listing Agreement, we certify as under :

(a) We have reviewed Financial Statements and the Cash Flow Statement for the year ended on 31st March 2010 and that to the best of our knowledge and belief:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the Financial Year 2009-10 which are fraudulent, illegal or violative of the Company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for fi nancial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to fi nancial reporting and have disclosed to the auditors and the Audit Committee, that there are no defi ciencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these defi ciencies.

(d) We have indicated to the auditors and the Audit committee

(i) signifi cant changes in the internal control over fi nancial reporting during the year;

(ii) signifi cant changes in accounting policies during the year and the same have been disclosed in the notes to the fi nancial statements; and

(iii) instances of signifi cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signifi cant role in the Company’s internal control system over fi nancial reporting.

Arivnd Kumar Singhania

Chairman & Managing Director

Pradeep Rustagi

Chief Financial Offi cer

Dated : 18th May, 2010Place : Gurgaon

43

AUDITORS’ REPORT

To

The Members of Ester Industries Limited

1. We have audited the attached Balance Sheet of Ester Industries Limited (‘the Company’) as at March 31, 2010 and also

the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These

financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on

these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in

terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the

matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary

for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from

our examination of those books;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with

the books of account;

iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply

with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record

by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being

appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give

the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in

conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

b) in the case of the profit and loss account, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

For S. R. Batliboi & Co.

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta

Partner

Membership No.: 83906

Place - Gurgaon

Date – May 18, 2010

44

(i) (a) The Company has maintained proper records

showing full particulars, including quantitative

details and situation of fixed assets.

(b) All fixed assets have not been physically verified by

the management during the year but there is a regular

program of verification which, in our opinion, is

reasonable having regard to the size of the Company

and the nature of its assets. In accordance of the said

program, part of the fixed assets has been physically

verified during the year. As informed, no material

discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets

during the year.

(ii) (a) The management has conducted physical verification

of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory

followed by the management are reasonable and

adequate in relation to the size of the Company and

the nature of its business.

(c) The Company is maintaining proper records of

inventory and no material discrepancies were noticed

on physical verification.

(iii) (a) As informed, the Company has not granted any loan,

secured or unsecured to companies, firms or other

parties covered in the register maintained under

section 301 of the Companies Act, 1956. Accordingly,

paragraphs 4 (iii) (b), (c) and (d) of the Companies

(Auditor’s Report) Order, 2003 (as amended) (herein

referred to as the Order), are not applicable.

(b) As informed, the Company has not taken any loan,

secured or unsecured from companies, firms or other

parties covered in the register maintained under

Section 301 of the Companies Act, 1956.

Accordingly, paragraphs 4 (iii) (f) and (g) of the Order,

are not applicable.

(iv) In our opinion and according to the information and

explanations given to us, there is an adequate internal control

system commensurate with the size of the Company and

the nature of its business, for the purchase of inventory and

fixed assets and for the sale of goods. There is no sale of

service; hence provisions of this clause, to the extent of sale

of services are not applicable to the Company. During the

course of our audit, no major weakness has been noticed in

the internal control system in respect of these areas. During

the course of our audit, we have not observed any continuing

failure to correct major weakness in internal control system

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

RE: ESTER INDUSTRIES LIMITED

of the company.

(v) (a) According to the information and explanations

provided by the management, we are of the opinion

that the particulars of contracts or arrangements

referred to in section 301 of the Act that need to be

entered into the register maintained under section

301 have been so entered.

(b) In our opinion and according to the information and

explanations given to us, the transactions made in

pursuance of such contracts or arrangements

exceeding value of Rupees five lakhs have been

entered into during the financial year at prices which

are reasonable having regard to the prevailing market

prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system

commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained

by the Company pursuant to the rules made by the Central

Government for the maintenance of cost records under

Section 209(1)(d) of the Companies Act, 1956, and are of

the opinion that prima facie, the prescribed accounts and

records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund,

investor education and protection fund, employees’

state insurance, income-tax, sales-tax, wealth-tax,

service tax, custom duty, excise duty and other

material statutory dues have generally been regularly

deposited with the appropriate authorities.

Further, since the Central Government has till date

not prescribed the amount of cess payable under

section 441 A of the Companies Act,1956, we are

not in a position to comment upon the regularity or

otherwise of the company in depositing the same.

(b) According to the information and explanations given

to us, no undisputed amounts payable in respect of

provident fund, investor education and protection fund,

employees’ state insurance, income-tax, wealth-tax,

service tax, sales-tax, customs duty, excise duty and

other undisputed statutory dues were outstanding,

at the year end, for a period of more than six months

from the date they became payable.

(c) According to the records of the Company, the dues

outstanding of income-tax, sales-tax, wealth-tax,

service tax, custom duty, excise duty and cess on

account of any dispute, are as follows:

Name of the

Statute

Central Excise

Act, 1944

Central Excise

Act, 1944

Nature of Dues

Dispute on MODVAT credit taken on chips used in

yarn and on exempted clearance of chips. Demand

raised for duty on removal of PET Chips in custody

Dispute on MODVAT credit taken on inputs and

Capital Goods used in chips which were cleared at

NIL duty.

Amount

(Rs. in Lacs)

35.50

173.86

Period to which the

amount relates

July 87 to June 93 and

Jan 95

March 90 to Feb 92 and

Oct 94 to Feb 95

Forum where dispute is

pending

Commissioner Central

Excise (Noida)

Commissioner (Appeals),

Central Excise Ghaziabad

45

(x) The Company has no accumulated losses at the end of the

financial year and it has not incurred cash losses in the

current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information

and explanations given by the management, we are of the

opinion that the Company has not defaulted in repayment of

dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us

and based on the documents and records produced to us,

the Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures and

other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi /

mutual benefit fund / society. Therefore, the provisions of

clause 4(xiii) of the Companies (Auditor’s Report) Order,

2003 (as amended) are not applicable to the Company.

(xiv) In respect of dealing/trading in shares, securities,

debentures and other investments, in our opinion and

according to the information and explanations given to us,

proper records have been maintained of the transactions

and contracts and timely entries have been made therein.

The shares, securities, debentures and other investments

have been held by the Company in its own name.

(xv) According to the information and explanations given to us,

the Company has not given any guarantee for loans taken by

others from bank or financial institutions.

(xvi) Based on information and explanations given to us by the

management, term loans were applied for the purpose for

which the loans were obtained.

(xvii) According to the information and explanations given to us

and on an overall examination of the balance sheet of the

Company, we report that no funds raised on short-term basis

have been used for long-term investment.

(xviii) The Company has made preferential allotment of shares to

parties or companies covered in the register maintained

under Section 301 of the Companies Act, 1956. In our

opinion the price at which shares have been issued is not

prejudicial to the interest of the Company.

(xix) The Company had issued unsecured fully and compulsorily

convertible debentures during the year which were issued

for a short period and were converted into equity shares on

December 24, 2009 on which no security or charge is

required to be created on such debentures.

(xx) The Company has not raised any money through a public

issue during the year.

(xxi) Based upon the audit procedures performed for the purpose

of reporting the true and fair view of the financial statements

and as per the information and explanations given by the

management, we report that no fraud on or by the Company

has been noticed or reported during the course of our audit.

For S. R. Batliboi & Co.

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta

Partner

Membership No.: 83906

Gurgaon:

Date : May 18, 2010

Name of the

Statute

Central Excise

Act, 1944

The Customs

Act, 1962

Central Excise

Act, 1944

Central Excise

Act, 1944

The Customs

Act, 1962

Income Tax

Act, 1961

Income Tax

Act, 1961

Nature of Dues

Dispute on disallowance of MODVAT on TEG as

documents were more than six months old.

Demand for Custom Duty forgone on value based

advance license.

Demand on PET Chips waste cleared at nil rate of

duty. MEG received under chapter X after rescinding

of Notification No. 34/87 CE. Inadmissibility of

MODVAT credit against PBT Chips and Polyester

films.

Demand raised on account of differences in stocks

as per physical and book records.

Dispute on disallowance of remission on MEG lost in

Transit and utilization of MODVAT credit

Penalty imposed on difference of loss assessed by

Income Tax Department and tax return filed by the

Company.

Disallowance of 80HHC benefit in MAT computation

Amount

(Rs. in Lacs)

4.80

57.72

10.6

7.72

32.99

1.84

63.68

Period to which the

amount relates

March 92

June 93 to April 95

July 93 to May 94 and

Feb to Aug 2000

November 1992

June 87 to Oct 88, March

91 to May 91 and 1993

1988-89

AY: 2003-04 to 2004-05

Forum where dispute is

pending

Customs, Excise, Service

Tax Appellate Tribunal

(Delhi)

Commissioner/Additional

Commissioner Customs

(DEEC) Mumbai

Deputy Commissioner

Central Excise, Rampur

Commissioner Meerut II

Assistant Commissioner,

Rampur

High Court, Delhi

Commissioner Appeals

46

BALANCE SHEET AS AT MARCH 31, 2010

31.03.2010 31.03.2009

SOURCES OF FUNDS Schedules (Rs. in Lacs) (Rs. in Lacs)

Shareholders’ Funds

Share capital 1 3,144.69 2,775.12

Reserves & surplus 2 14,693.66 11,333.26

17,838.35 14,108.38

Loan Funds

Secured loans 3 5,438.57 4,619.72

Unsecured loans 4 - 713.31

5,438.57 5,333.03

Deferred Tax Liabilities (net) 5 1,801.32 1,572.03

TOTAL 25,078.24 21,013.44

APPLICATION OF FUNDS

Fixed Assets

Gross block 6 40,932.50 40,197.03

Less: Accumulated depreciation and amortisations 27,353.81 26,173.97

Net block 13,578.69 14,023.06

Capital work-in-progress including capital

advances (refer note no. 14 and 18 in Schedule 24) 3,661.18 44.86

17,239.87 14,067.92

Investments 7 26.93 10.98

Current Assets, Loans and Advances

Inventories 8 3,913.64 2,900.08

Sundry debtors 9 5,115.16 3,832.14

Cash and bank balances 10 1,817.75 798.95

Other current assets 11 282.70 216.76

Loans and advances 12 1,795.71 1,974.17

(A) 12,924.95 9,722.10

Less: Current Liabilities and Provisions

Current liabilities 13 3,886.14 1,969.09

Provisions 14 1,227.38 823.23

(B) 5,113.52 2,792.32

Net Current Assets (A-B) 7,811.44 6,929.78

Miscellaneous Expenditure 15 - 4.76

(to the extent not written off or adjusted)

TOTAL 25,078.24 21,013.44

Notes to Accounts 24

The schedules referred to above and notes to accounts form an integral part of the Balance Sheet.

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

47

31.03.2010 31.03.2009

Schedules (Rs. in Lacs) (Rs. in Lacs)

INCOME

Turnover (Gross) 42,165.81 40,421.61

Less : Excise duty on turnover

(refer note no. 8 of Schedule 24) 2,628.75 3,180.65

Turnover (Net) 39,537.06 37,240.96

Other income 16 105.88 92.45

39,642.94 37,333.41

EXPENDITURE

Purchase of goods for resale 145.28 15.21

Manufacturing expenses 17 28,388.67 25,303.19

(Increase)/decrease in inventories 18 (320.76) 137.46

Personnel expenses 19 2,046.17 1,632.05

Administrative and other expenses 20 1,971.06 1,688.00

Selling expenses 21 1,234.73 1,443.73

Depreciation /amortisation 1,429.92 1,356.28

Less : Transferred from revaluation reserve 14.60 1,415.32 14.60 1,341.68

Financial expenses 22 628.22 963.45

Profit Before Tax 4,134.25 4,808.64

Provision for Tax:

Current tax 1,127.25 540.86

(including Rs. 15 lacs (previous year Rs. nil) for MAT relating

to earlier years)

Less: MAT Credit Entitlement (8.85) (682.54)

Deferred tax charge 229.29 1347.69 1572.03 1,430.35

Fringe benefit tax - 34.90

Profit after tax 2,786.56 3,343.39

Balance brought forward from previous year 3,198.27 459.62

Profit available for appropriation 5,984.83 3,803.01

Appropriations:

Transfer to general reserve 208.99 -

Transfer to capital redemption reserve - 279.76

Dividend on preference shares - 0.26

Proposed final dividend on equity shares 628.94 277.51

Tax on dividend 104.46 47.21

Surplus carried to Balance Sheet 5,042.44 3,198.27

Earnings per share 23

Basic and Diluted (nominal value of shares Rs. 5 (previous year Rs. 5)) (Rs.) 4.85 6.02

Notes to Accounts 24

The schedules referred to above and the notes to accounts form an integral part of the Profit & Loss Account.

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2010

48

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

CASH FROM OPERATING ACTIVITIES

Net profit before tax 4,134.25 4,808.64

Adjusted for:

Depreciation/Amortisation 1,415.33 1,341.68

Loss on Fixed Assets Sold/Discarded 27.84 63.13

Interest Expenses 455.73 779.70

Interest Income (42.06) (64.19)

Dividend Income (0.04) (0.06)

Unrealised foreign exchange fluctuation loss (gain) 400.15 128.32

Miscellaneous expenditure written off 4.76 54.20

Provision for doubtful debts and advances (net) - 1.86

Bad debts written off 20.61 76.35

Provision for Obsolete Inventories 15.91 -

Provision for Diminution in Value of Investments (3.95) 5.32

Excess liability written back relating to DEPB (14.65) -

Operating Profit before Working Capital Changes 6,413.88 7,194.95

Adjustment for:

(Increase)/Decrease in Trade/Other Receivables (1,581.37) 692.82

(Increase)/Decrease in Inventories (1,013.56) 327.25

Increase/(Decrease) in Trade/Other Payables 1,546.50 (985.80)

Miscellaneous Expenditure (Paid) - (0.83)

Cash Generated from Operations 5,365.45 7,228.39

Direct Taxes Paid (758.83) (646.86)

Net Cash from Operating Activities (a) 4,606.62 6,581.53

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (4,673.59) (1,309.48)

Sale of Fixed Assets 43.88 28.09

Sale of Assets Held For Sale (6.52) 19.47

Deposits with Banks during the year (6,685.72) (1,400.49)

Proceeds from fixed deposits 5,880.00 2,061.00

Purchase of Investments (22.00) (4.99)

Sale of investment 11.19 -

Interest Received 36.73 130.61

Dividend Received 0.04 0.06

Net Cash (used in) Investing Activities (b) (5,415.99) (475.73)

CASH FLOW FROM FINANCING ACTIVITIES

Movement in Short Term Borrowings 539.93 (2,242.65)

Receipts of Long Term Borrowings 556.08 500.00

Repayment of Long Term Borrowings Including Exchange Differences (990.48) (2,911.00)

Interest Paid (455.73) (779.70)

Dividend Paid (318.75) (319.60)

Proceeds for issue of Share warrants and Zero Coupon Unsecured Fully and

Compulsorily Convertible Debentures which were subsequently

converted into equity shares (net of share issue exp) 1,691.40 -

Redemption of Cumulative Preference shares - (203.18)

Net Cash from/(used in) Financing Activities (c) 1,022.45 (5,956.13)

Net (Decrease) in Cash & Cash Equivalents (a+b+c) 213.08 149.67

Opening Balance of Cash & Cash Equivalents 359.17 209.50

Closing Balance of Cash & Cash Equivalents 572.25 359.17

Cash & Cash Equivalents as at year end includes: Closing Balance Closing Balance

Cash on Hand 6.74 4.00

Balances with Scheduled Banks :

- On current Accounts 537.54 333.43

- On Term Deposits 1,245.50 439.78

- On Unpaid Dividend Accounts* 27.97 21.74

1,817.75 798.95

Less: Deposit Pledged with banks 575.50 89.78

Less: Deposit having maturity period more than 3 months 670.00 350.00

572.25 359.17

* These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010

49

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SHARE CAPITAL

Authorised

15,00,00,000 (Previous Year 15,00,00,000) 7,500.00 7,500.00

Equity Shares of Rs. 5 each

6,00,000 (Previous Year 6,00,000) Cumulative Convertible 300.00 300.00

Preference Shares of Rs. 50 each

80,00,000 (Previous Year 80,00,000) 4,000.00 4,000.00

Redeemable Cumulative

Preference Shares of Rs. 50 each

11,800.00 11,800.00

Issued, Subscribed and Paid-up

6,28,93,706 (Previous Year 5,55,02,400)

Equity shares of Rs. 5 each fully paid-up

(Includes 38,82,000 equity shares issued

on conversion of Cumulative Convertible

Preference Shares during the year 2003-04

and 73,91,306 Equity Shares issued on 24.12.2009

(refer note no 19 in Schedule 24) 3,144.69 2,775.12

3,144.69 2,775.12

SCHEDULES TO THE ACCOUNTS

SCHEDULE - 1

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

RESERVES AND SURPLUS

a) Capital Reserve

Balance as per last Account 5,778.57 5,701.99

Add: Gain on early redemption of 0.10%

Redeemable Cumulative Preference Shares - 5,778.57 76.58 5,778.57

b) Capital Redemption Reserve

Balance as per last Account 335.37 55.61

Add: Transfer from Profit & Loss Account - 335.37 279.76 335.37

c) Securities Premium Account

Balance as per last Account 1396.94

Add: Received during the year (refer note no 19 in

Schedule 24) 1330.44

Less: Share issue expenses (8.60) 2,718.78 1,396.94

d) Revaluation Reserve

Balance as per last Account 624.11 638.71

(Created on 31st October, 1992

by Revaluation of Fixed Assets)

Less: Transferred to Profit & Loss Account 14.60 609.51 14.60 624.11

(Being depreciation on revalued asset for the year)

e) General Reserve

Balance as per last Account - -

Add: Transfer from Profit & Loss Account 208.99 208.99 - -

f) Profit & Loss Account 5,042.44 3,198.27

14,693.66 11,333.26

SCHEDULE - 2

50

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SECURED LOANS

Term Loans

From Banks 1,067.10 1,085.43

From Body corporate 243.65 -

Working capital loans from banks

Cash credit and packing credit facilities 2,846.14 2,489.46

Bills Discounting 1,135.97 952.72

Vehicle Loans

From Banks 5.27 54.89

From Bodies corporate 140.44 37.22

5,438.57 4,619.72

SCHEDULE - 3

Notes:

1. Rupee term loans

i) From Body Corporate (Tata Capital Limited) of Rs. 243.65 lacs ( Previous Years Rs. nil) is secured by first exclusive charge by way

of hypothecation of Company’s Engineering Plastics Extruder No: 3 and further secured by irrevocable guarantee of a

Director of the Company and a promoter Company.

ii) From Banks of Rs. 1067.10 lacs (Previous Year Rs. 1085.43 lacs) - Secured by first mortgage created by way of deposit of title

deeds in respect of the Copmany’s immovable properties, both present & future and first charge by way of hypothecation of

Company’s all balance movable assets (save and except inventories, book debts, vehicles acquired under vehicles loans and

machinery acquired through term loan taken from body corporate), ranking pari passu inter-se. Rupee Term Loans from banks

are further secured by second charge by way of hypothecation of stocks of raw material, finished goods, semi finished goods,

stores and spares, book debts and other receivables (both present and future) and by irrevocable gurantees of a Director of the

Company and a promoter Company.

2. Working Capital Loans from Banks are secured by first charge by way of hypothecation of stocks of raw materials, finished goods,

semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by

irrevocable guarantees of a Director of the Company and a Promoter Company. Working Capital Loans are further secured by way

of second charge in respect of Company’s immovable properties and movable fixed assets.

3. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the Loans.

4. Term Loans and Vehicle Loans installments falling due within next 12 months Rs. 644.76 lacs (Previous Year Rs.333.99 lacs).

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

UNSECURED LOANS

Short-term loans and advances:

From others

From Overseas Corporate Body - 713.31

(refer Note No. 5 of Schedule 24)

- 713.31

SCHEDULE - 4

51

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

DEFERRED TAX LIABILITIES (NET)

Deferred Tax Liability

Differences in depreciation and other differences

in block of fixed assets as per tax books

and financial books 2,148.28 2,432.60

Gross Deferred Tax Liability (a) 2,148.28 2,432.60

Deferred Tax Assets

Unabsorbed depreciation & carry forward of losses - 477.71

Provision for doubtful debts and advances 143.14 150.87

Effect of expenditure debited to profit and loss

account in the current year but allowed for

tax purposes in following years 203.82 231.99

Gross Deferred Tax Assets (b) 346.96 860.57

Net deferred tax liability / (asset) (a)-(b) 1,801.32 1,572.03

SCHEDULE - 5

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53

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

INVESTMENTS

Long Term Investments (At cost)

A. Trade (Quoted) Equity Shares fully paid Number of Shares Face Value (Rs.)

Recron Synthetics Ltd. 50 10 0.02 0.02

Pearl Polymers Ltd. 100 10 0.04 0.04

Polyplex Corporation Ltd. 100 10 0.05 0.05

Orkay Silk Mills Ltd. 100 10 0.04 0.04

J.K.Synthetics Ltd. 100 10 0.03 0.03

J.K.Cement Ltd. 10 10 0.00 0.00

Reliance Industries Ltd. 100 10 0.14 0.14

Reliance Communication Ventures Limited 100 5 0.00 0.00

Reliance Energy Ventures Limited 100 10 0.00 0.00

Reliance Capital Ventures Limited 100 10 0.00 0.00

Reliance Natural Resources Limited 100 5 0.00 0.00

Haryana Petrochemicals Ltd. 100 10 0.04 0.04

Central India Polyesters Ltd. 50 10 0.06 0.06

Sanghi Polyester Ltd. 100 10 0.08 0.08

Garware Nylons Ltd. 100 10 0.01 0.01

Venlon Enterprises Ltd. 360 5 0.10 0.10

Nirlon Ltd. 196 10 0.02 0.02

Modipon Ltd. 100 10 0.11 0.11

Garware Polyester Ltd. 100 10 0.01 0.01

SRF Ltd. 100 10 0.02 0.02

Uflex Ltd. 100 10 0.05 0.05

Jindal Poly Films Ltd. 100 10 0.03 0.03

B. Other than trade Number Face Value (Rs.)

(Quoted)

Equity Shares Partly Paid

Industrial Development Bank of India 68,700 10 25.03 25.03

(Un-quoted)

Units of Mutual Fund

SBI- Magnum COMMA Fund - Growth 21824.53 22.91 5.00

Baroda Pioneer PSU Bond Fund - Growth Plan 50000.00 10.00 5.00

Baroda Pioneer Growth Fund - Growth Plan 14,430.01 48.51 7.00 5.00

(a) 42.88 30.88

C. In Wholly Owned Subsidiary Companies :

Unquoted, fully paid-up Number of Shares Face Value (USD)

Equity Shares of Ester International (USA) Ltd. 25,000 1 9.69 9.69

(a company under the same management under section 370(1B) of the

Companies Act, 1956.)

Share Capital in Ester Europe GmbH, Germany 12.36 12.36

(a company under the same management

under section 370(1B) of the Companies Act, 1956.)

(b) 22.05 22.05

Current Investments (At lower of cost or market value): Number of Shares Face Value (Rs.)

A. Equity Shares Fully Paid (Non Trade) (Quoted)

Ispat Industries Ltd. (Previous year - 30000 Shares) 30,000 10 7.17 7.17

Bajaj Hindustan Ltd. (Previous year - 1000 Shares) 1,000 10 5.40 5.40

Current Investments (At cost) (Un-Quoted) :

B. Preference Shares Fully Paid (Non Trade)

Ispat Industries Ltd. (Previous year - 20000 Shares) 20,000 10 4.78 4.78

( c ) 17.35 17.35

Total (a) + (b) + ( c ) 82.28 70.28

Less : Provision for Diminution in the Value of :

- Long Term Investments* 47.68 47.68

- Current Investments 7.67 11.62

Net Investments 26.93 10.98

Aggregate amount of quoted investments (net of provision) 7.41 3.98

Aggregate amount of market value of quoted investments 10.76 6.12

Aggregate amount of unquoted investments (net of provision) 19.52 7.00

The following investments were purchased during the year

and outstanding at the Balance Sheet date :

21,824.531 Units (previous year nil) Mutual Fund @ Rs. 10 each in SBI-Magnum

COMMA Fund-Growth. 5.00 -

14,430.014 (previous year 18,328.44) Units Mutual Fund @ Rs. 10 each in Baroda

Pioneer Fund- Growth Plan. 7.00 5.00

50,000 Units (previous year Nil) Mutual Fund of Rs. 10.00 each in Baroda Pioneer

PSU Bond Fund- Growth Plan. 5.00 -

The following investments were sold during the year out of opening investments :

18,328.44 (previous year Nil) Mutual Fund sold of Rs. 10 each of Baroda Pioneer

Fund- Growth Plan. 5.00 -

The following investments were purchased and sold during the year :

11984.66 (previous year Nil) Units Mutual Fund of Rs. 10 each of Baroda Pioneer

Fund- Growth Plan. 5.00 -

* Includes Rs.22.05 lacs (previous year Rs.22.05 lacs) for investment in subsidiary companies

SCHEDULE - 7

54

SCHEDULE - 8

SUNDRY DEBTORS

Debts outstanding for a period exceeding six months

Unsecured, considered good 3.49 53.53

Unsecured, considered doubtful 363.65 363.65

Other debts

Secured, considered good 742.96 724.85

Unsecured, considered good 4,368.71 3,053.76

5,478.81 4,195.79

Less: Provision for doubtful debts 363.65 363.65

5,115.16 3,832.14

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

INVENTORIES (refer note no 2(j) of Schedule 24)

Raw Materials 1,941.57 1,380.93

(including materials in transit Rs 598.86 lacs

(previous year Rs.365.91 lacs))

Stores & Spares 628.17 496.01

(including material in transit Rs 21.85 lacs

(previous year Rs. 3.61 lacs))

Work-in-progress 290.22 294.66

Finished goods 1,053.25 727.25

(including material in transit Rs 18.54 lacs

(previous year Rs.7.70 lacs))

By-product and waste 0.43 1.23

3,913.64 2,900.08

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

CASH AND BANK BALANCES

Cash on Hand 6.74 4.00

Balances with Scheduled Banks :

- On current accounts (including cheque in hand of Rs. nil

lacs (previous year Rs.24.88 lacs)) 537.54 333.43

- On deposits accounts (including receipts for 1,245.50 439.78

Rs. 575.50 lacs pledged with banks,

(previous year Rs. 89.78 lacs))

- On unpaid dividend accounts 27.97 21.74

1,817.75 798.95

SCHEDULE - 9

SCHEDULE - 10

55

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

OTHER CURRENT ASSETS

Fixed Assets held for sale * 7.27 0.75

Interest receivable on deposits 9.25 3.92

Export benefits receivable 266.18 212.09

282.70 216.76

* at net book value or estimated net realisable value, whichever is lower

SCHEDULE - 11

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

LOANS AND ADVANCES

Unsecured, considered good

Advances Recoverable in cash or in kind or for

value to be received* 565.14 410.60

Income Tax Deducted at Source & Refunds Recoverable 61.69 54.51

MAT credit entitlement

Opening balance 682.54 -

Add: Created during the year 8.85 682.54

Less: Utilised during the year (406.93) 284.46 - 682.54

Balances with excise, custom etc. 560.83 293.20

Loans to employees 52.67 30.37

Deposits-others 232.65 227.91

VAT Credit (Input) Receivables 38.27 275.04

Unsecured, considered doubtful

Advances recoverable in cash or in kind or for value to be received 67.24 80.21

1,862.95 2,054.38

Less: Provision for Doubtful Advances 67.24 80.21

1,795.71 1,974.17

*Included in the loans and advances are

Dues from companies under the same management

under Section 370(1B) of the Companies Act, 1956

Ester International USA Limited, a Subsidiary Company 63.21 63.21

(Maximum amount due during the year Rs.63.21 lacs

(previous year Rs.63.21 lacs))

SCHEDULE - 12

56

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

CURRENT LIABILITIES*

Acceptances 1,519.79 516.63

Sundry Creditors

-Total outstanding dues of Micro and Small Enterprises - -

(refer to note no. 12 of Schedule no. 24)

-Total outstanding dues of creditors other than Micro and Small Enterprises 1,485.36 984.56

(includes Rs. 212.11 lacs (previous year nil) relating to capital goods)

Subsidiary company 60.00 60.00

Advances from customers 245.56 306.21

Investor Education and Protection Fund shall be credited

by following amounts (as and when due)

- Unpaid dividend 27.96 21.74

Forward Contract 402.13 -

Deposits from dealers/customers & others 2.58 2.57

Other liabilities 142.76 77.38

3,886.14 1,969.09

*Included in the current liablities are

Dues from companies under the same management under

Section 370(1B) of the Companies Act, 1956

Ester International USA Limited, a Subsidiary cpmpany 60.00 60.00

(Maximum amount due during the year Rs.60.00 lacs (previous year Rs.60.00 lacs))

SCHEDULE - 13

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

PROVISIONS

Provision for Taxation (net of advance tax payments) 464.11 95.48

Less: MAT utilised during the year (406.93) 57.18 - 95.48

Provision for Gratuity (refer note no. 9 of Schedule 24) 333.16 306.32

Provision for Leave Encashment 102.72 95.32

Provision for wealth tax 0.92 1.13

Proposed dividends 628.94 277.77

Tax on proposed dividends 104.46 47.21

1,227.38 823.23

SCHEDULE - 14

57

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)

Payments under Voluntary Retirement Scheme

Opening Balance 4.76 58.13

Add: Incurred during the year - 0.83

4.76 58.96

Less: Written off during the year 4.76 - 54.20 4.76

- 4.76

SCHEDULE - 15

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

OTHER INCOME

Interest on:

Bank deposits (tax deducted at source Rs. 4.67 lacs

(previous year Rs. 11.56 lacs)) 31.56 56.08

Others (on deposits with electricity department (tax deducted at

source Rs. nil (previous year Rs. nil))) 10.50 8.10

Dividend:

Current investments - Non Trade 0.04 0.06

Profit on sale of current investments - non trade (net) 1.19 -

Reversal of provision for doubtful debts - 7.42

Provision no longer required / unspent liabilities:

Balance written back 7.40 8.01

DEPB provision written back 14.65 -

Provision for on diminution in the value investment written back 3.95 26.00 - 8.01

Miscellaneous income 36.59 12.78

105.88 92.45

SCHEDULE - 16

58

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

MANUFACTURING EXPENSES

(refer note no 18 in Schedule 24)

Raw materials & chemicals consumed 24,353.12 21,010.41

(net of Export Incentive of Rs 638.37 Lacs

(Previous year Rs. 649.23 lacs))

Packing materials consumed 698.77 680.99

Power & fuel 2,468.00 2,910.15

Consumption of Stores & Spare parts 745.79 686.02

Material handling charges 90.70 67.54

(Decrease) / increase in excise duty on closing stock 32.29 (51.92)

(refer Note No. 8 of Schedule 24)

28,388.67 25,303.19

SCHEDULE - 17

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

(INCREASE) / DECREASE IN INVENTORIES

Closing inventories

- Work in progress 290.22 294.66

- Finished Goods 1,053.25 727.25

- By-product and waste 0.43 1,343.90 1.23 1,023.14

Opening inventories

- Work in progress 294.66 429.99

- Finished Goods 727.25 730.11

- By-product and waste 1.23 1,023.14 0.50 1,160.60

(320.76) 137.46

SCHEDULE - 18

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

PERSONNEL EXPENSES

(refer note no 18 in Schedule 24)

Salaries, Wages and Bonus 1,700.99 1,299.57

Contribution to Provident Fund 100.10 93.40

Gratuity Expense (refer Note No. 9 of Schedule 24) 39.45 69.99

Other Post-employment funds 74.53 71.70

Workmen and Staff welfare Expenses 131.10 97.39

2,046.17 1,632.05

SCHEDULE - 19

59

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

ADMINISTRATIVE AND OTHER EXPENSES

(refer note no 18 in Schedule 24)

Rent 148.97 93.55

Rates and taxes 8.59 18.35

Insurance 99.52 122.97

Repairs & maintenance

- Plant and machinary 89.16 82.97

- Buildings 12.11 18.55

- Others 89.37 190.64 93.81 195.33

Travelling & Conveyance 417.05 320.52

Communication Costs 92.88 70.09

Legal & Professional Charges 213.96 186.06

Printing & Stationary 19.14 17.61

Donations (other than Political Parties) 22.62 10.87

Commission to non-executive directors 42.00 -

Directors’ Sitting Fees 4.45 1.90

Auditors’ Remuneration * / @

-As Auditors 20.00 20.00

-Out of pocket expenses 1.25 1.02

Provision for Doubtful Debts and Advances - 9.27

Loss on fixed assets sold / discarded (net of gain of Rs. 0.12 lacs 27.84 63.13

(Previous Year: Rs. nil ))

Bad debts, advances and irrecoverable balances 20.61 76.35

written off (net)

Diminution in the value of current investments - 5.32

Loss on Sale of DEPB licence - 47.49

Foreign exchange fluctuation loss 329.92 105.47

(net of gain of Rs.147.32 lacs (previous year Rs.265.33 lacs))

(refer note no 20 in Schedule 24)

Obsolete Inventories Written off 15.91 45.86

Miscellaneous Expenditure Written Off 4.77 54.20

Miscellaneous Expenses 290.94 222.64

1,971.06 1,688.00

* Excluding service tax of Rs. 2.19 lacs (previous year Rs. 2.62 lacs)

@ Net-off of Rs. 1.00 lacs (previous year Rs. nil) has been paid to the auditors in respect of their services in preferential allotment of

securities and has been charged off against securities premium account as share issue expenses.

SCHEDULE - 20

60

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SELLING EXPENSES

Freight 1,027.33 1,073.91

Commission and brokerage (other than Sole Selling Agents) 93.44 181.58

Discount, claims & rebates 72.27 129.84

Others 41.69 58.40

1,234.73 1,443.73

SCHEDULE - 21

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

FINANCIAL EXPENSES

(Refer note no 18 in Schedule 24)

Interest

- on Term Loans 152.08 234.19

- on Banks 303.65 545.51

Bank Charges 172.49 183.75

628.22 963.45

SCHEDULE - 22

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

EARNINGS PER SHARE (EPS)

Net Profit/(Loss) as per Profit & Loss Account 2,786.56 3,343.39

Less: Preference dividends and tax thereon - 0.31

Net Profit/(Loss) for calculation of EPS 2,786.56 3,343.08

Weighted average number of equity shares in calculating EPS (in absolute no’s) 57,486,915 55,502,400

Number of Equity Shares at the beginning of the year

(outstanding for 365 days) (in absolute no’s) 55,502,400 55,502,400

Number of Equity Shares issued on December 24, 2009

(outstanding for 98 days) (in absolute no’s) 7,391,306 -

Number of Equity Shares at the end of the year

(in absolute no’s) 62,893,706 55,502,400

Weighted average number of equity shares in calculating EPS (in absolute no’s) 57,486,915 55,502,400

- Basic EPS Computed on the basis of earnings (Rs.) 4.85 6.02

- Diluted EPS Computed on the basis of earnings (Rs.) 4.85 6.02

SCHEDULE - 23

61

NOTES TO ACCOUNTS

1. Nature of Operations

Ester Industries Limited (hereinafter referred to as ‘the Company’) is a manufacturer of Polyester Film and Engineering

Plastics.

2. Statement of Significant Accounting Policies

a) Basis of Preparation

The financial statements have been prepared to comply in all material respects with the Notified accounting standard

by Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act,

1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in

case of assets for which revaluation is carried out. The accounting policies have been consistently applied by the

Company and are consistent with those used in the previous year.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent liabilities at the date of the financial statements and the results of operations during the

reporting period end. Although these estimates are based upon management’s best knowledge of current events and

actions, actual results could differ from these estimates.

c) Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any, except Land, Building and

Plant & Machinery, which had been revalued on 31.10.1992 by a Government registered valuer on the basis of the

then replacement value. Cost comprises the purchase price and any directly attributable cost of bringing the asset to

its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial

period of time to get ready for its intended use are also included to the extent they relate to the period till such assets

are ready to be put to use.

d) Depreciation

i. Depreciation on fixed assets (other than lease hold improvements) is provided on Straight Line Method as per

Schedule XIV of the Companies Act, 1956 on pro-rata basis with reference to the days of addition/sale. The

management of the company is of the view that this depreciation rate fairly represents the useful life of the assets

except for the following assets where a higher rate is used:

Rates (SLM) Schedule XIV

Rates (SLM)

Batteries under UPS Project (Plant and Machinery) 19.60% 5.28%

ii. Fixed Assets costing below Rs.5000 are fully depreciated in the year of acquisition.

iii. Depreciation on the amount of additions made to Fixed Assets on Revaluation is adjusted against the Revaluation

Reserve.

iv. Depreciation on the amount of addition made to Fixed Assets due to upgradations / improvements is provided

over the remaining useful life of the asset to which it relates.

v. Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

vi. Lease hold improvements (LHI) are amortised over a primary period of lease or useful life, whichever is lower.

e) Expenditure incurred during the construction period

Expenditure directly relating to construction activity is capitalized (net of income, if any). Indirect expenditure

incurred during construction period is capitalized as part of the indirect construction cost to the extent to which

SCHEDULE - 24

62

the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred

during the construction period which is not related to construction activity nor is incidental thereto is charged to

Profit & Loss account.

f) Intangibles

Software costs relating to acquisition of initial software license fee and installation costs are capitalized in the year of

purchase.

Softwares are amortized on a straight-line basis over its useful life, which is considered to be of a period of three

years.

(g) Impairment of assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based

on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its

recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In

assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average

cost of capital.

(h) Leases

Where the Company is the lessee

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to

ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease

payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned

between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance

charges are charged directly against income. Lease management fees, legal charges and other initial direct

costs are capitalised.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized

leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are

classified as operating leases. Operating lease payments are recognized as an expense in the Profit & Loss Account

on a straight-line basis over the lease term.

(i) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current

investments. All other investments are classified as long-term investments. Current investments are carried at

lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at

cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of

such investments.

(j) Inventories

Inventories are valued as follows:

Raw materials, Lower of cost and net realizable value. However, materials and other items held

Components and stores for use in the production of inventories are not written down below cost if the finished

& spares products, in which they will be incorporated, are expected to be sold at or above cost. Cost of

Raw materials is determined on a monthly moving weighted average basis and cost of Components

and stores & spares is determined on transaction moving weighted average.

Work-in-progress and Lower of cost and net realizable value. Cost includes direct materials and labour

finished goods and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished

goods includes excise duty. Cost is determined on moving weighted average basis.

By Products and waste Net realizable value

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and

estimated costs necessary to make the sale.

63

(k) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the

revenue can be reliably measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer.

Excise Duty, Sales Tax and VAT deducted from turnover (gross) are the amount that is included in the amount of

turnover (gross) and not the entire amount of liability arised during the year.

Export Benefit

Export Benefits constituting import duty benefits under Duty Exemption Pass Book (DEPB) and advance license scheme

are accounted for on accrual basis and have been credited to Raw material and Chemical Consumption Account.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends

Dividend is recognised when the shareholders’ right to receive payment is established by the balance sheet

date. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but

pertains to period on or before the date of balance sheet as per the requirement of schedule VI of the Companies

Act, 1956.

(l) Deferred revenue expenditure

The Company recognizes payments made under voluntary retirement schemes as Deferred Revenue Expenses and

write off the same in monthly instalments over a period of 36 months or by March 31, 2010, whichever is earlier.

(m) Foreign currency transactions

Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount

the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in

terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the

transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a

foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on a monetary item that, in substance, form part of the company’s net investment in a

non-integral foreign operation is accumulated in a foreign currency translation reserve in the financial statements

until the disposal of the net investment, at which time they are recognised as income or as expense.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary

items of company at rates different from those at which they were initially recorded during the year, or reported in

previous financial statements, are recognized as income or as expenses in the year in which they arise.

Forward Exchange Contracts (Derivative Instruments) not intended for trading or speculation purposes

The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated

with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts

is amortised as expense or income over the life of the contract. Exchange differences on such contracts are

recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss

arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the

year.

64

(n) Retirement and other Employee Benefits

i. Retirement benefits in the form of Superannuation Fund (being funded to LIC) are funded defined contribution

schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to

the respective funds are due. There are no other obligations other than the contribution payable.

ii. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected

unit credit method made at the end of each financial year.

iii. Retirement benefits in the form of Provident Fund (where contributed to the Regional PF Commissioner) and

employee state insurance are defined contribution scheme and the contributions are charged to the Profit and

Loss Account of the year when the contributions to the fund are due. There are no other obligations other than

the contribution payable to the respective authorities.

Provident Fund (Where administered by a Trust) is a defined benefit scheme whereby the Company deposits an

amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon

commencement of employment. The interest credited to the accounts of the employees is adjusted on an annual

basis to confirm to the interest rate declared by the government for the Employees Provident Fund. The Guidance

Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB)

states that provident funds set up by employers, which requires interest shortfall to be met by the employer,

needs to be treated as defined benefit plan. Based on the computation done by the Company, there is no deficit

in the fund.

iv. Short term compensated absences are provided for based on estimates. Long term compensated absences are

provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

v. Actuarial gains/losses are immediately taken to Profit and Loss account and are not deferred.

(o) Income Taxes

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is

measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting

income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance

sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such deferred tax assets can be realised. If the company has

unabsorbed depreciation and carry forward of tax losses, all deferred tax assets are recognised only if there is virtual

certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable

profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised

deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that

sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the

carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the

case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised.

Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may

be, that sufficient future taxable income will be available.

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will

pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit

becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note

issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and

loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and

writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to

the effect that Company will pay normal Income Tax during the specified period.

65

(p) Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that

an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

Provisions are not discounted to its present value and are determined based on best management estimate required

to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to

reflect the current management estimates. Provision for expenditure relating to voluntary retirement is made when

the employee accepts the offer of early retirement.

(q) Derivative Instruments

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, are

marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge

item is charged to the income statement. Net gains are ignored.

(r) Segment Reporting Policies

Identification of segments:

Primary Segment

Business Segment

The Company’s operating businesses are organized and managed separately according to the nature of products,

with each segment representing a strategic business unit that offers different products and serves different markets.

The identified segments are Manufacturing & Sale of Polyester film and Engineering plastics.

Secondary Segment

Geographical Segment

The analysis of geographical segments is based on the geographical location of the customers.

The geographical segments considered for disclosure are as follows:

• Sales within India include sales to customers located within India.

• Sales outside India include sales to customers located outside India.

Inter Segment Transfers:

Inter Segment transfers of goods, as marketable products produced by separate segments of the Company for

captive consumption, are not accounted for in the books of account of the Company. For the purpose of segment

disclosures, however, inter segment transfers have been taken at cost.

Allocation of common costs:

Common allocable costs are allocated to each segment in proportion to the turnover of the segment, except where

a more logical allocation is possible.

Unallocated items:

Corporate income and expense are considered as a part of un-allocable income & expense, which are not identifiable

to any business segment.

(s) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with

an original maturity of three months or less.

(t) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity

shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of

equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share

to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the

66

reporting period. The weighted average numbers of equity shares outstanding during the period are adjusted for

events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split

(consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity

shareholders and the weighted average number of shares outstanding during the period are adjusted for the

effects of all dilutive potential equity shares.

3. Capital Commitments

March 31, 2010 March 31, 2009

(Rs. In Lacs) (Rs. In Lacs)

Estimated amount of contracts remaining to be executed on capital 13,890.27 248.95

account and not provided for

4. Contingent Liabilities not provided for

March 31, 2010 March 31, 2009

(Rs. In Lacs) (Rs. In Lacs)

(a) Excise Duty and Custom Duty pending hearing of appeals/writ petitions:

(i) Cenvat credit disallowed on certain items 8.06 8.06

(ii) Removal of PET chips without payment of duty 6.95 6.95

(iii) Goods sold from depot at higher value than one declared at

factory gate price 26.96 26.96

(iv) Cenvat credit disallowed on inputs 164.20 164.20

(v) Reversal of Cenvat credit availed on HSD 206.92 206.92

(vi) Cenvat credit availed on raw material utilized on prorata basis. 11.72 11.72

(vii) Availment of credit on import of Dimethyl Terephalate 57.71 57.71

(viii) Other Miscellaneous Cases 39.85 40.21

(ix) Show cause notice issued by Commissioner, based on CAG audit,

alleging short reversal of Modvat Credit while disposing Yarn Plant. - 63.83

Total (a) 522.37 586.56

(b) Show cause notices related to denial of Service Tax credit & Excise

rebate on export 2.59 2.59

(c) Income Tax:

Demand raised during assessment (A.Y. 89-90) 1.84 1.84

Demand of MAT (including interest) A.Y.04-05 46.63 46.63

Demand of MAT (including interest) A.Y.05-06 17.05 17.05

(d) Labour Cases:

Workers suspended, pending in High Court, Delhi 1.67 1.67

Total (a to d) 592.15 656.34

(e) Other claims not acknowledged as debts 46.70 46.00

(f) Contingent liability in respect of partly paid up shares 5.15 5.15

(g) Bonds amounting to Rs 510 lacs executed in favour of Central Excise

& Customs Authorities, out of which, amount to be re-credited on

receiving the proof of export is yet to be submitted. 264.06 88.69

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors

etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a)

to (e) above and hence no provision is considered necessary against the same.

67

5. Company had taken an unsecured interest free loan in 1999-2000 from an overseas corporate body (Spring Falls Limited -

Related Party) in the form of External Commercial Borrowing (ECB). Loan was due for repayment in one installment on March 31,

2005 but it was rescheduled with the consent of lender and was repayable by March 31, 2006. Company was not able to repay

the loan on that date and the same was not renewed in the previous year as per the guidelines of Reserve Bank of India. The

Company has repaid the said Loan during the year.

6. In the opinion of the Board of Directors of the Company, Loans and Advances have a realisable value at least at the amounts at

which they are stated.

7a. Directors’ Remuneration

Particulars 2009-10 2008-09

(Rs. in Lacs) (Rs. in Lacs)

(a) Salary 24.00 24.00

(b) Allowances 18.00 18.00

(c) Perquisites 11.27 2.02

(d) Contribution to Provident fund 2.88 2.88

(e) Contribution to Superannuation fund 3.60 3.60

(f) Commission payable to Whole time Director 160.00 -

(g) Commission payable to Non -Whole time Director 42.00 -

Total 261.75 50.50

As the liabilities for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, the

amounts pertaining to the whole time director is not included above.

Note:

In respect of the Managerial Remuneration of Rs.15.50 lacs paid during earlier years and not sanctioned by the

Department of Company Affairs, an interim stay has been granted by the Hon’ble High Court of Delhi on the writ

petition filed by the Company.

7b. Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 for calculation of commission

payable to directors

(Rs. in Lacs)

Particulars 2009-10 2008-09

Profit before tax (as per Profit and Loss Account) 4,134.25 4,808.64

Add:

Depreciation as per Profit and Loss Account 1,415.32 1,341.68

Directors remuneration 261.75 50.50

Sitting fees 4.45 1.90

Provision for doubtful debts and advances - 9.27

Loss on sale of fixed assets 27.84 63.13

Miscellaneous Expenses written off 4.76 54.20

Loss on sale of current investment - 5.32

Profit before adjustment of earlier year losses 5,848.37 6,334.64

Less:

DEPB provision written back (14.65) -

Provision for on diminution in the value investment written back (3.95) -

Profit on sale of current investments - non trade (net) (1.19) -

Losses for the earlier years - (1595.53)

Advances written off during the year (12.97) -

Depreciation (to the extent specified in section 350 of the

Companies Act, 1956) (1,401.83) (1,331.02)

Net Profit as per Section 198 4,413.78 3,408.09

68

(Rs. in Lacs)

Particulars 2009-10 2008-09

Commission to Managing director

- Maximum commission (net of remuneration of Rs. 59.75 lacs

(previous year Rs. 50.50 lacs) u/s 309 of Companies Act, 1956 at

5% of net profits 160.93 119.90

- Commission actually approved for payment 160.00 -

Commission to Other directors

- Maximum commission u/s 309 of Companies Act, 1956

at 1% of net profits 44.13 34.09

- Commission actually approved for payment 42.00 -

8. Excise duty on sales amounting to Rs. 2,628.75 lacs (previous year Rs. 3,180.65 lacs) has been reduced from sales

in profit & loss account and excise duty on increase of stock Rs. 32.29 lacs in the current year is considered as

expense and excise duty on decreased in stock of Rs. 51.92 Lacs is considered as income in previous year in Schedule

17.

9. Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of

service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit

vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded.

Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per

the Projected unit credit method.

The following tables summarise the components of net benefit expense recognized in the profit and loss account and

the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Profit and Loss account

Net employee benefit expense (recognised in Employee Cost)

(Rs. in Lacs)

Gratuity

March 31, 2010 March 31, 2009

Current service cost 25.05 23.24

Interest cost on benefit obligation 24.51 21.50

Expected return on plan assets - -

Net actuarial loss recognised in the year (10.11) 25.25

Past service cost - -

Net benefit expense 39.45 69.99

Actual return on plan assets - -

Balance sheet

Details of provision for Gratuity

(Rs. in Lacs)

March 31, 2010 March 31, 2009

Defined benefit obligation 333.16 306.32

Fair value of plan assets - -

Less: Un-recognised past service cost - -

Plan liability 333.16 306.32

69

Changes in the present value of the defined benefit obligation are as follows:

(Rs. in Lacs)

March 31, 2010 March 31, 2009

Opening defined benefit obligation 306.32 268.72

Interest cost 24.50 21.50

Current service cost 25.05 23.24

Benefits paid (12.60) (32.39)

Actuarial losses on obligation (10.11) 25.25

Closing defined benefit obligation 333.16 306.32

Since the entire amount of plan obligation is unfunded therefore changes in the fair value of plan assets, categories of

plan assets as a percentage of the fair value of total plan assets and Company’s expected contribution to the plan assets

in the next year is not given.

The principal assumptions used in determining gratuity benefit obligations for the Company’s plans are shown below:

March 31, 2010 March 31, 2009

% %

Discount rate 8.00 8.00

Increase in Compensation cost 5.50 5.50

Employee turnover – Age Group

Up to 30 years 3.00 3.00

30 – 44 years 2.00 2.00

Above 44 years 1.00 1.00

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion

and other relevant factors, such as supply and demand in the employment market.

Amounts for the current and previous two years are as follows:

(Rs. in Lacs)

Gratuity

March 31, 2010 March 31, 2009 March 31, 2008

Defined benefit obligation 333.16 306.32 268.72

Plan assets - - -

Deficit 333.16 306.32 268.72

Experience adjustments on plan liabilities (10.11) 25.24 -

Loss/(Gain)

Experience adjustments on plan assets - - -

Contribution to Defined Contribution Plans:

(Rs. in Lacs)

2009-10 2008-09

Superannuation fund 74.53 71.37

Provident fund contribution to Government authority 76.47 58.02

70

10. The Company has taken various residential, office and warehouse premises under operating lease agreements. These

are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions

imposed by Lease Agreement. There are no subleases.

(Rs.in Lacs)

Particular Lease Payments

2009-10 2008-09

Total lease payment for the year 148.97 93.55

(Recognised in Profit and Loss Account)

Minimum Lease Payments

Not later than one year 97.62 102.09

Later than one year but not later than five years 295.52 309.11

Later than five years 2.89 77.13

11. Derivative Instruments and Un-hedged Foreign Currency Exposure

Forward contract outstanding as at Balance Sheet date

(in absolute fig's)

Particulars of Derivatives C.Y. P.Y. Purpose

Purchase EURO 9,500,000 -- Firm commitment against capital goods order

(Cross Currency)

Particulars of Un-hedged foreign Currency Exposure as at the Balance Sheet date

Particulars Currency Amount In Foreign Rates Amount

Currency (in absolute fig's) (Rs. in Lacs)

31-Mar-10 31-Mar-09 31-Mar-10 31-Mar-09 31-Mar-10 31-Mar-09

Import Creditors Euro - 293.00 - 68.26 - 0.20

(Acceptances)

Import Creditors USD 902,065.00 968,208.54 45.39 51.00 409.45 493.79

(Acceptances)

Import Creditors JPY 1,940,400.00 10,705,200.00 0.49 0.52 9.45 55.56

(Acceptances)

Unsecured Loan USD - 1,399,754.00 - 50.96 - 713.31

Export Debtors USD 1,338,263.00 2,851,172.81 44.68 50.91 597.88 1,451.53

Euro 147,628.00 28,094.76 60.87 67.39 89.86 18.93

GBP 26,227.00 28,950.75 71.84 72.79 18.84 21.07

Advances for Euro 60,044.00 23,119.41 63.78 67.52 38.30 15.61

goods & Services

USD 673,092.00 398,948.00 45.57 51 306.71 203.46

GBP 2,472.00 - 73.86 - 1.83 -

JPY 6,494,400.00 - 0.51 - 33.16 -

CHF 850.00 - 42.86 - 0.36 -

71

12. Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006

(Rs. in Lacs)

No Details of dues to Micro, Small and Medium Enterprises as per 2010 2009

MSMED Act, 2006

i The principal amount and the interest due there on remaining unpaid to any

supplier as at the end of year

Principal Amount Unpaid - -

Interest Due - -

ii The amount of interest paid by the buyer in terms of section 16, of the Micro

Small and Medium Enterprise Development Act, 2006 along with the amounts

of the payment made to the supplier beyond the appointed day during the

year

Payment made beyond the Appointed Date 134.17 15.70

Interest Paid beyond the Appointed Date - -

iii The amount of interest due and payable for the period of delay in making payment

(which have been paid but beyond the appointed day during the year) but without

adding the interest specified under Micro Small and Medium Enterprise

Development Act, 2006.

iv The amount of interest accrued and remaining unpaid at the end of the year; and - -

v The amount of further interest remaining due and payable even in the succeeding

years, until such date when the interest dues as above are actually paid to the

small enterprise for the purpose of disallowance as a deductible expenditure under

section 23 of the Micro Small and Medium Enterprise Development Act, 2006.

- -

- -

- -

72

13

.S

eg

me

nt R

ep

ortin

g

Th

e C

om

pa

ny op

era

tes in

tw

o seg

men

ts m

an

ufa

ctu

rin

g a

nd

sa

le of p

oly

ester film

a

nd

en

gin

eerin

g p

lastic

s. T

he C

om

pa

ny h

as ch

osa

n b

usn

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men

ts a

s it

s

prim

ary seg

men

ts con

sid

erin

g th

e d

om

ina

nt sou

rce of n

atu

re of ris

ks a

nd

retu

rn

s, in

tern

al org

an

sa

tio

n a

nd

m

an

gem

en

t stru

ctu

re.

AS

eg

men

t D

isclo

su

re

(R

s. In

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cs)

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rtic

ula

rs

Po

lyester F

ilm

En

gin

eerin

g P

lastic

sIn

ter S

eg

men

t E

lim

ina

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otal

20

09

-10

20

08

-09

20

09

-10

20

08

-09

20

09

-10

20

08

-09

20

09

-10

20

08

-09

RE

VE

NU

E

Extern

al T

urn

over

3

2,9

66

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3

3,8

24

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6

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0.5

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2.2

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9,5

37

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3

7,2

36

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t S

ale

s/

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e -

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53

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7,9

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8

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9.3

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alloca

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ses

3

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3.5

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2.2

2

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4

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7.1

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Interest &

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9

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com

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6 6

4.1

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Extra

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s -

-

Un

alloca

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th

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8.7

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0.7

8

Incom

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axes

1

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7.6

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5.2

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Net P

rofit

2

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6.5

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3.3

7

OT

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AT

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Seg

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1

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bilit

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3

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5.0

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3

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12

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9

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exp

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3

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74

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1

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4

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9

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73

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1

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Un

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D

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08

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2

69

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73

(R

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8-0

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00

9-1

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9

To

ta

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tio

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Am

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15

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1

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1.6

8

Am

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9

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-

1

0.8

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0.3

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Un

alloca

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8

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5

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exp

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a

mortis

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2

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4.7

5

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sh

exp

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exp

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dep

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BIN

FO

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CO

ND

AR

Y S

EG

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NT

S

a)

Reven

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s p

er G

eog

ra

ph

ica

l M

arkets

(R

s. In

La

cs)

20

09

-10

20

08

-09

Ind

ia *

30

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9.3

72

6,5

56

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Ou

tsid

e In

dia

8,5

67

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10

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4.0

0

Total

39

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7.0

63

7,2

40

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* In

clu

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eem

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exp

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ith

in

In

dia

b)

Ca

rryin

g a

mou

nt of S

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men

t A

ssets (D

eb

tors) b

y g

eog

ra

ph

ica

l lo

ca

tio

n of a

ssets

(R

s. In

La

cs)

20

09

-10

20

08

-09

Ind

ia3

,52

2.2

32

,25

0.1

4

Ou

tsid

e In

dia

1,5

92

.93

1,5

82

.00

Total

5,1

15

.16

3,8

32

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Rest of th

e cu

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ssets a

re com

mon

a

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n

ot seg

reg

ab

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ra

ph

ica

l seg

men

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ise.

c)

Th

e C

om

pa

ny h

as com

mon

fix

ed

a

ssets for p

rod

ucin

g g

ood

s for D

om

estic

M

arket a

nd

O

versea

s M

arket. H

en

ce, sep

ara

te fig

ures for fix

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a

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a

dd

itio

ns

to fix

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a

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nn

ot b

e fu

rn

ish

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.

74

15. b. Related Party Disclosures

(Rs. in Lacs)

Nature of Subsidiaries Key Relative of Individuals owning, Enterprises owned Total

Transactions Management Key directly or indirectly, or significantly

Personnel Management a substantial interest influenced by key

Personnel in the voting power management

of the Company personnel or

their relatives

Transactions during the year

Managerial Remuneration

A.K. Singhania - 219.75 - - - 219.75

(-) (50.50) (-) (-) (-) (50.50)

Rent Paid

Super Leasing - - - - 18.00 18.00

Ltd (-) (-) (-) (-) (18.00) (18.00)

Amount paid for redemption of 0.10% Redeemable Cumulative Preference Shares

Super Leasing - - - - - -

Ltd (-) (-) (-) (-) (203.18) (203.18)

Preference dividend for the year

Super Leasing - - - - - -

Ltd (-) (-) (-) (-) (0.26) (0.26)

Interest free loan repaid during the year *

Spring Falls - - - - 661.03 661.03

Limited (-) (-) (-) (-) (-) (-)

Sale of Polyester Chips

Polyplex - - - - 373.17 373.17

Corporation Limited (-) (-) (-) (-) (0.17) (0.17)

14. Capital work in progress includes capital advances of Rs 2,306.50 lacs (previous year Rs. 12.78 lacs) which are unsecured,

considered good.

15. a. Names of Related parties

Nature of Relationship Name of Related Party

Subsidiaries - Ester International USA Limited (EIUL)

- Ester Europe GmbH (EEG)

Individuals owning, directly or indirectly, a substantial - Uma Devi Singhania*

interest in the voting power of the Company.

Key Management Personnel - Mr. A.K. Singhania

(Chairman & Managing Director)

Relatives of Key Management Personnel - Mr. Sitaram Singhania

(Father of Mr. A.K. Singhania)

- Jai Vardhan Singhania

(Son of Mr.A.K.Singhania)

- Ayush Vardhan Singhania

(Son of Mr.A.K.Singhania)

Enterprises owned or significantly influenced by - Spring Falls Limited

key management personnel or their relatives - Super Leasing Limited

- Saraswati Trading Company Limited**

- Sri Lakshmi Investment Limited

- Wilemina Finance Corporation

- Polyplex Corporation Limited

* Also relative of Key Management Personnel

** Also the investing party in respect of which the Company is an associate.

75

Amount received on issue of unsecured fully and Compulsorily Convertible Debentures

M/s. Wilemina - - - - 600.00 600.00

Finance Corporation (-) (-) (-) (-) (-) (-)

Amount received on issue of Share Warrants

M/s. Super Leasing - - - - 500.00 500.00

Limited (-) (-) (-) (-) (-) (-)

Conversion of unsecured fully Compulsorily Convertible Debenture into Equity Shares

M/s. Wilemina - - - - 130.44 130.44

Finance Corporation (-) (-) (-) (-) (-) (-)

Conversion of Share Warrants into Equity Shares

M/s. Super - - - - 108.70 108.70

Leasing Limited (-) (-) (-) (-) (-) (-)

Security Premium on Equity Shares

M/s. Wilemina - - - - 469.56 469.56

Finance Corporation (-) (-) (-) (-) (-) (-)

M/s. Super - - - - 391.30 391.30

Leasing Limited (-) (-) (-) (-) (-) (-)

Total - - - - 860.86 860.86

(-) (-) (-) (-) (-) (-)

Balances Outstanding as at year end

Commission Payable

A.K. Singhania 160.00 - - - - 160.00

(-) (-) (-) (-) (-) (-)

Total 160.00 160.00

(-) (-) (-) (-) (-) (-)

Balance payable

Ester International 60.00 - - - - 60.00

USA Limited (60.00) (-) (-) (-) (-) (60.00)

Balance Recoverable

Ester International 63.33 - - - - 63.33

USA Limited (63.21) (-) (-) (-) (-) (63.21)

Interest Free Loan Outstanding*

Spring Falls Limited - - - - - -

(-) (-) (-) (-) (713.31) (713.31)

Security deposit

Super Leasing - - - - 4.50 4.50

Limited (-) (-) (-) (-) (4.50) (4.50)

Preference dividend payable

Super Leasing - - - - - -

Limited (-) (-) (-) (-) (0.26) (0.26)

Receivable for sale of goods

Polyplex - - - - 2.84 2.84

Corporation Limited (-) (-) (-) (-) (-) (-)

Guarantees given against Loans Taken (jointly and severally) by the Parent Company

-Sitaram Singhania

-A.K. Singhania - 6,812.65 - - 6,812.65 6,812.65

- Saraswati Trading (-) (5,044.24) (5,044.24) (-) (5,044.24) (5,044.24)

Company Limited

- Previous year figures are given in brackets.

- No amount has been written off or provided for in respect of transactions with the related parties.

* The difference is on account of Foreign` Exchange Fluctuation.

15. b. Related Party Disclosures (continued)

(Rs. in Lacs)

Nature of Subsidiaries Key Relative of Individuals owning, Enterprises owned Total

Transactions Management Key directly or indirectly, or significantly

Personnel Management a substantial interest influenced by key

Personnel in the voting power management

of the Company personnel or

their relatives

}

76

16. Details of Loans and Advances to Parties in which Directors are interested and investment by the loanee in the shares of the

Company (as required by Clause 32 of the Listing Agreement):

(Rs. in Lacs)

Description Outstanding Maximum amount

amount as at outstanding

2009-10 2008-09 2009-10 2008-09

- Super Leasing Ltd. - - - -

Investment by the above mentioned loanee (Super Leasing Ltd.) 180.77 71.36 180.77 351.12

in the share capital of the Parent Company

17. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies

Act, 1956

17.1 Installed Capacity (as per best technical estimates of management) and Actual Production

Class of Goods Unit Licensed Capacity * Installed Capacity Actual Production

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

Polyester Chips MT NA NA 36,000 36,000 36,177 35,873

Polyester Film MT NA NA 27,000 27,000** 30,122 29,534

Engineering Plastic MT NA NA 14,400@

3,600 5,996 2,683

* Delicensed Products

** Operating Capacity

@

Operating Capacity of Extruder installed in December 2007 increased by 1,200 MT P.A. & a new

Extruder of 9,600MT P.A. capacity installed in November 2009.

17.2 Consumption of raw materials

Particulars 2009-10 2008-09

Qty. Value Qty. Value

(MT) (Rs. In Lacs) (MT) (Rs. In Lacs)

PTA 31,012 13,949.89 30,759 12,986.04

MEG 12,431 4,439.29 12,575 5,106.22

Super Bright Chips - - 29 22.58

PBT Chips 3,812 2,626.08 1,628 1,372.27

Chemicals & Consumables etc 3,092.54 1,840.90

24,107.80 21,328.01

Add : Freight 883.69 331.62

24,991.49 21,659.63

Less : Export Incentives 638.37 649.22

TOTAL 24,353.12 21,010.41

17.3 Imported and indigenous raw materials and spare parts consumed

2009-10 2008-09

Percentage Value Percentage Value

(Rs. in Lacs) (Rs. in Lacs)

i) Raw materials

Imported 46.18 11,247.12 13.28 2,790.10

Indigenous 53.82 13,106.00 86.72 18,220.31

Total 100.00 24,353.12 100.00 21,010.41

ii) Stores & Spare Parts

Imported 56.76 423.22 44.97 308.51

Indigenous 43.24 322.57 55.03 377.51

Total 100.00 745.79 100.00 686.02

77

17.4 Details of Trading Goods

Opening Stock Purchases Turnover Closing Stock

Qty. Value Qty. Value Qty. Value Qty. Value

(MT) (Rs. in (MT) (Rs. in (MT) (Rs. in (MT) (Rs. in

Lacs) Lacs) Lacs) Lacs)

MEG - - 435.70 130.23 435.70 163.92 - -

(-) (-) (-) (-) (-) (-) (-) (-)

Others* - - - 15.05 - 8.84 - -

(-) (-) (-) (15.21) (-) (4.82) (-) (-)

(Previous year figures are given in brackets)

* It is not practicable to furnish quantitative information in view of the large number of items which

differ in size and nature, each being less than 10% in value of the total

17.5 Production, Turnover and Stocks in respect of Manufactured Goods:

Opening Stock Production Turnover Closing Stock

Qty% Value Qty Qty Value* Qty@ Value@

(MT) (Rs. in (MT) (MT) (Rs. in (MT) (Rs. in

Lacs) Lacs) Lacs)

Polyester/ 945 480.39 36,177 6,084(i) 3,882.05 872 560.26

PBT Chips

(521) (322.64) (35,873) (5,483)(i) (3,483.78) (945) (480.39)

Polyester 84 64.29 30,122 29,842(ii) 31,001.53 158 147.61

Film

(173) (154.92) (29,534) (29,477)(ii) (33,253.66) (84) (64.29)

Engg. 120 130.73 5,996 5,832 7,097.46 284 291.19

Plastics

(181) (176.22) (2,683) (2,744) (3,669.10) (120) (130.73)

Resin 103 51.79 609 - (iii) - 85 54.15

Pellets

(134) (76.27) (398) (-) (iii) - (103) (51.79)

(i) Excludes captive consumption of 30166 MT (previous year 29,966 MT) but inclusive of export sales 993 MT (previous year

1673 MT).

(ii) Excludes captive consumption of 206 MT (previous year 146 MT) but inclusive of export sales of 8136 MT (previous year 9164

MT).

(iii) Excludes captive consumption of 627 MT (previous year 429 MT)

* Do not include Rs.12.00 lacs (previous year Rs.10.25 lacs) on account of sale of waste.

% Excludes stock of waste of 122.643 MT having value of Rs. 1.29 lacs as on 31st

March 2009.

@ Excludes stock of waste of 42.511 MT having value of Rs. 0.47 lacs as on 31st

March 2010.

Previous year figures are given in brackets.

17.6 Value of imports calculated on CIF basis

(Cash basis)

2009-10 2008-09

(Rs. in Lacs) (Rs. in Lacs)

Raw Materials 9,660.03 2,138.09

Stores & Spare Parts 369.03 447.54

Capital Goods 2,571.71 1,198.73

TOTAL 12,600.77 3,784.36

78

17.7 Net dividend remitted in foreign exchange

2009-10 2008-09

Period to which it relates 1st

April 08 to 1st

April 07 to

31st

March 09 31st

March 08

Number of non-resident shareholders (in absolute no’s) 2 2

Number of equity shares held on which dividend was due 30,952,800 30,952,800

(in absolute no’s)

Amount remitted (USD) (in absolute no’s) 317,334.41 331,187.67

Amount remitted in (Rs. in lacs) 154.70 154.70

17.8 Expenditure in Foreign Currency:

2009-10 2008-09

(Rs. in Lacs) (Rs. in Lacs)

Bank Charges 27.53 24.64

Legal & Professional — 5.28

Expense on foreign technicians 14.35 8.44

Brokerage & commission 42.62 114.55

Travelling Expenses 82.55 35.37

Quality compensation and discounts 5.06 51.15

Miscellaneous Expenses 18.97 8.62

TOTAL 191.08 248.05

17.9 Earnings in Foreign Currency:

2009-10 2008-09

(Rs. in Lacs) (Rs. in Lacs)

FOB value of Export of Goods 8,357.35 10,337.52

TOTAL 8,357.35 10,337.52

(FOB Value of Exports does not include Deemed Exports of Rs.94.89 lacs (previous year Rs.186.70 lacs).

18. Expenditure during construction period

Particulars As at March 31, 2010 As at March 31, 2009

(Rs. in Lacs) (Rs. in Lacs)

Tangible Tangible

Balance brought forward - -

Add: Incurred during the year

-Salaries, Wages and Bonus 18.44 -

-Travelling & Conveyance 20.09 -

-Legal & Professional Charges 7.60 -

-Insurance 50.44 -

- Power and fuel 94.02

-Bank Charges 114.07 -

Less: Allocated to fixed assets during the period - -

Balance Carried Forward* 304.66 -

* Included in Capital Work in progress

79

19. Pursuant to the resolution passed by the Shareholders of the Company at the Extra Ordinary General Meeting (EGM) held on 21st

October 2009, the Company has by way of preferential issue allotted 21,73,914 Shares Warrants of face value of

Rs. 5/- each to Promoters, 26,08,696 Zero Coupon Unsecured Fully and Compulsorily Convertible Debentures (FCCD) of face

value of Rs. 5/-each to an independent Overseas Investor and 26,08,696 Zero Coupon unsecured Fully and Compulsorily Convertible

Debentures (FCCD) of Face Value of Rs. 5/- each to Person Acting in Concert with Promoters for cash at a premium of Rs. 18/- as

part financing of the Polyester Film Expansion project. Board of Directors in their meeting dated 24th December 2009 has converted

these Share Warrants and FCDs into 73,91,306 equity shares at a price of Rs. 23/- including a premium of Rs. 18/- per equity

share.

20. Loss on foreign exchange fluctuation during the year includes Mark – to – Market losses of Rs. 402.13 lacs (previous year nil)

towards forward contracts booked to hedge the foreign currency liabilities related to Polyester Film Expansion Project.

21. Previous year figures have been regrouped / reclassified wherever considered necessary, so as to confirm with the current year’s

classification.

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

80

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

Information pursuant to of Part III of Schedule VI to the Companies Act, 1956.

a. Registration Details:

1. Registration No. L24111UR1985PLC015063

2. State Code 20

3. Balance Sheet Date 31.03.2010

b. Capital raised during the year (Amount in Rs/lacs)

1. Public Issue 0.00

2. Rights Issue 0.00

3. Bonus Issue 0.00

4. Private Placement 1700.00

c. Position of Mobilisation and Deployment of Funds (Amount in Rs./lacs)

1. Total Liabilities 30,191.76

2. Total Assets 30,191.76

3. Sources of Funds :

- Paid-up Capital 3,144.69

- Reserves & Surplus 14,693.67

- Secured Loans 5,438.57

- Unsecured Loans --

- Liabilities under Deferred 1,801.32

payments

Total 25,078.24

4. Application of Funds :

- Net Fixed Assets 17,239.87

(including Capital work in progress)

- Investments 26.93

- Net Current Assets 7,811.44

- Misc.Expenditure –

Total 25,078.24

d. Performance of Company (Rs.in lacs)

1. Turnover/Other Income 42,271.69

2. Total Expenditure 38,137.45

3. Profit Before Tax 4134.25

4. Profit After Tax 2786.56

5. Basic Earnings per share (Rs.) 4.85

6. Diluted Earnings per share (Rs.) 4.85

7. Dividend Rate (in % ) 20.00%

e. Generic Names of Three Principal Products/Services of Company

(as per monetary terms)

1. - Item Code No. : 392069

(ITC Code)

- Product Description : Polyester Chips

2. - Item Code No. : 392069

(ITC Code)

- Product Description : Polyester Film

3. - Item Code No. : 392069

(ITC Code)

- Product Description : Engineering Plastic

For and on behalf of the Board of Directors

of Ester Industries Limited

Shweta Yadav A.K. Singhania

Company Secretary Chairman &

Managing Director

Place: Gurgaon Pradeep Rustagi A.P.Sarwan

Date: May 18, 2010 Chief Financial Officer Director

81

AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF ESTER INDUSTRIES

LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ESTER

INDUSTRIES LIMITED AND ITS SUBSIDIARIES

To

The Board of Directors of Ester Industries Limited

1. We have audited the attached Consolidated Balance Sheet of Ester Industries Limited and its subsidiaries (the Ester

Group) as at 31st March 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statements

for the year ended on that date annexed thereto. These financial statements are the responsibility of the Ester Group’s

management and have been prepared by the management on the basis of separate financial statements and other

financial information regarding components. Our responsibility is to express an opinion on these financial statements

based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures

in the financial statements. An audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. We report that the consolidated financial statements have been prepared by the Ester Group’s Management in accordance

with the requirements of Accounting Standards (AS) 21, Consolidated financial statements notified pursuant to the

Companies (Accounting Standards) Rules, 2006, (as amended).

4. Based on our audit and on consideration of report of other auditor on separate financial statements and on the other

financial information of the components, and to the best of our information and according to the explanations given to us,

we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the

accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Ester Group as at 31st March 2010;

(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Ester Group for the year ended on that

date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Ester Group for the year ended on that

date.

For S. R. Batliboi & Co.

Firm registration number: 301003E

Chartered Accountants

per Manoj Gupta

Membership No.: 83906

Place: Gurgaon

Date: May 18, 2010

82

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

31.03.2010 31.03.2009

SOURCES OF FUNDS Schedules (Rs. in Lacs) (Rs. in Lacs)

Shareholders' Funds

Share capital 1 3,144.69 2,775.12

Reserves & surplus 2 14,621.25 11,253.53

17,765.94 14,028.65

Loan Funds

Secured loans 3 5,438.57 4,619.72

Unsecured loans 4 6.74 719.95

5,445.31 5,339.67

Deferred Tax Liabilities (net) 5 1,801.32 1,572.04

TOTAL 25,012.57 20,940.36

APPLICATION OF FUNDS

Fixed Assets

Gross block 6 40,932.50 40,197.06

Less: Accumulated depreciation and amortisations 27,353.81 26,173.97

Net block 13,578.69 14,023.09

Capital work-in-progress including capital advances

(refer note no. 14 and 17 in Schedule 24) 3,661.18 44.86

17,239.87 14,067.95

Investments 7 26.93 10.98

Current Assets, Loans and Advances

Inventories 8 3,913.64 2,900.08

Sundry debtors 9 5,115.16 3,832.14

Cash and bank balances 10 1,823.02 804.35

Other current assets 11 282.70 216.76

Loans and advances 12 1,733.82 1,912.35

(A) 12,868.34 9,665.68

Less: Current Liabilities and Provisions

Current liabilities 13 3,895.19 1,985.78

Provisions 14 1,227.38 823.23

(B) 5,122.57 2,809.01

Net Current Assets (A-B) 7,745.77 6,856.67

Miscellaneous Expenditure 15 - 4.76

(to the extent not written off or adjusted)

TOTAL 25,012.57 20,940.36

Notes to Accounts 24

The schedules referred to above and notes to accounts form an integral part of the Balance Sheet.

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

83

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2010

31.03.2010 31.03.2009

INCOME Schedules (Rs. in Lacs) (Rs. in Lacs)

Turnover (Gross) 42,165.81 40,421.61

Less : Excise duty on turnover

(refer note no. 8 of Schedule 24) 2,628.75 3,180.65

Turnover (Net) 39,537.06 37,240.96

Other income 16 105.88 92.45

39,642.94 37,333.41

EXPENDITURE

Purchase of goods for resale 145.28 15.21

Manufacturing expenses 17 28,388.67 25,303.19

(Increase)/decrease in inventories 18 (320.76) 137.46

Personnel expenses 19 2,046.17 1,632.05

Administrative and other expenses 20 1,971.96 1,689.02

Selling expenses 21 1,234.73 1,443.73

Depreciation /amortisation 1,429.93 1,356.28

Less : Transferred from revaluation reserve 14.60 1,415.33 14.60 1,341.68

Financial expenses 22 628.22 963.45

Profit Before Tax 4,133.34 4,807.62

Provision for Tax:

Current tax 1,127.54 541.19

(including Rs. 15 lacs (previous year Rs. nil)

for MAT relating to earlier years)

Less: MAT Credit Entitlement (8.85) (682.54)

Deferred tax charge 229.29 1347.98 1572.04 1,430.69

Fringe benefit tax - 34.90

Profit after tax 2,785.36 3,342.03

Balance brought forward from previous year 3,122.14 384.85

Profit available for appropriation 5,907.50 3,726.88

Appropriations:

Transfer to general reserve 208.99

Transfer to capital redemption reserve - 279.76

Dividend on preference shares - 0.26

Proposed final dividend on equity shares 628.94 277.51

Tax on dividend 104.46 47.21

Surplus carried to Balance Sheet 4,965.11 3,122.14

Earnings per share 23

Basic and Diluted (nominal value of shares Rs. 5

(previous year Rs. 5)) (Rs.) 4.85 6.02

Notes to Accounts 24

The schedules referred to above and the notes to accounts form an integral part of the Profit & Loss Account.

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

84

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010

31.03.2010 31.03.2009

CASH FROM OPERATING ACTIVITIES (Rs. in Lacs) (Rs. in Lacs)

Net profit before tax 4,133.34 4,807.62

Adjusted for:

Depreciation/Amortisation 1,415.33 1,341.68

Loss on Fixed Assets Sold/Discarded 27.84 63.13

Interest Expenses 455.73 779.70

Interest Income (42.06) (64.18)

Dividend Income (0.04) (0.06)

Unrealised foreign exchange fluctuation loss (gain) 400.15 128.74

Miscellaneous expenditure written off 4.76 54.20

Provision for doubtful debts and advances (net) - 1.86

Bad debts written off 20.62 76.35

Provision for Obsolete Inventories 15.90 -

Provision for Diminution in Value of Investments (3.95) 5.32

Excess liability written back relating to DEPB (14.65) -

Operating Profit before Working Capital Changes 6,412.97 7,194.36

Adjustment for:

(Increase)/Decrease in Trade/Other Receivables (1,581.28) 695.63

(Increase)/Decrease in Inventories (1,013.56) 327.25

Increase/(Decrease) in Trade/Other Payables 1,538.86 (971.33)

Miscellaneous Expenditure (Paid) - (0.83)

Cash Generated from Operations 5,356.99 7,245.08

Direct Taxes Paid (759.13) (646.87)

Net Cash from Operating Activities (a) 4,597.86 6,598.21

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (4,673.59) (1,309.48)

Sale of Fixed Assets 43.88 28.09

Sale of Assets Held For Sale (6.52) 19.47

Deposits with Banks during the year (6,685.72) (1,400.49)

Proceeds from fixed deposits 5,880.00 2,061.00

Purchase of Investments (22.00) (4.99)

Sale of investment 11.19 -

Interest Received 36.73 130.61

Dividend Received 0.04 0.06

Net Cash (used in) Investing Activities (b) (5,415.97) (475.73)

CASH FLOW FROM FINANCING ACTIVITIES

Movement in Short Term Borrowings 539.93 (2,242.66)

Receipts of Long Term Borrowings 556.08 500.00

Repayment of Long Term Borrowings Including Exchange Differences (990.38) (2,911.00)

Interest Paid (455.73) (779.70)

Dividend Paid (318.76) (319.60)

Proceeds for issue of Share warrants and Zero Coupon Unsecured Fully and Compulsorily

Convertible Debentures which were subsequently converted into equity shares (net of share issue exp) 1,691.40 -

Redemption of Cumulative Preference shares - (203.18)

Net Cash from/(used in) Financing Activities (c) 1,022.54 (5,956.14)

Net (Decrease) in Cash & Cash Equivalents (a+b+c) 204.43 166.34

Opening Balance of Cash & Cash Equivalents 364.57 214.85

Foreign currency translation difference 8.52 (16.62)

Closing Balance of Cash & Cash Equivalents 577.50 364.57

Cash & Cash Equivalents as at year end includes: Closing Balance Closing Balance

Cash on Hand 6.74 4.00

Balances with Scheduled Banks :

- On current Accounts 537.54 333.43

- On Term Deposits 1,245.50 439.78

- On Unpaid Dividend Accounts* 27.97 21.74

Balances with Other Banks :

- On current Accounts 5.27 5.40

1,823.02 804.35

Less: Deposit Pledged with banks 575.50 89.78

Less: Deposit having maturity period more than 3 months 670.00 350.00

577.52 364.57

* These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

85

SCHEDULES TO THE ACCOUNTS

SCHEDULE - 1

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SHARE CAPITAL

Authorised

15,00,00,000 (Previous Year 15,00,00,000)

Equity Shares of Rs. 5 each 7,500.00 7,500.00

6,00,000 (Previous Year 6,00,000) Cumulative Convertible

Preference Shares of Rs. 50 each 300.00 300.00

80,00,000 (Previous Year 80,00,000) Redeemable Cumulative

Preference Shares of Rs. 50 each 4,000.00 4,000.00

11,800.00 11,800.00

Issued, Subscribed and Paid-up

6,28,93,706 (Previous Year 5,55,02,400) Equity

shares of Rs. 5 each fully paid-up (Includes 38,82,000 equity shares issued

on conversion of Cumulative Convertible

Preference Shares during the year 2003-04 and 73,91,306

Equity Shares issued on 24.12.2009 (refer note no 18 in Schedule 24)) 3,144.69 2,775.12

3,144.69 2,775.12

86

SCHEDULE - 2

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

RESERVES AND SURPLUS

a) Capital Reserve

Balance as per last Account 5,778.57 5,701.99

Add: Gain on early redemption of

0.10% Redeemable Cumulative Preference - 5,778.57 76.58 5,778.57

b) Capital Redemption Reserve

Balance as per last Account 335.37 55.61

Add: Transfer from Profit & Loss Account - 335.37 279.76 335.37

c) Securities Premium Account

Balance as per last Account 1396.94

Add: Received during the year

(refer note no 18 in Schedule 24) 1330.44

Less: Share issue expenses (8.60) 2,718.78 1,396.94

d) Revaluation Reserve

Balance as per last Account 624.11 638.71

(Created on 31st October, 1992

by Revaluation of Fixed Assets)

Less: Transferred to Profit & Loss Account 14.60 609.51 14.60 624.11

(Being depreciation on revalued asset for the year)

e) Foreign Exchange Translation Reserve

Balance as per last Account (3.60) 13.02

Add: Addition during the year 8.52 -

Less: Reduction during the year - 4.92 16.62 (3.60)

f) General Reserve

Balance as per last Account - -

Add: Transfer from Profit & Loss Account 208.99 208.99 - -

g) Profit & Loss Account 4,965.11 3,122.14

14,621.25 11,253.53

87

SCHEDULE - 3

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SECURED LOANS

Term Loans

From Banks 1,067.10 1,085.43

From Body corporate 243.65 -

Working capital loans from banks

Cash credit and packing credit facilities 2,846.14 2,489.46

Bills Discounting 1,135.97 952.72

Vehicle Loans

From Banks 5.27 54.89

From Bodies corporate 140.44 37.22

5,438.57 4,619.72

Notes:

1. Rupee term loans

i) From Body Corporate (Tata Capital Limited) of Rs. 243.65 lacs ( Previous Years Rs. NIL) is secured by first exclusive charge by

way of hypothecation of Company's Engineering Plastics Extruder No: 3 and further secured by irrevocable guarantee of a Director

of the Company and a promoter Company.

ii) From Banks of Rs. 1067.10 Lacs (Previous Year Rs. 1085.43 lacs) - Secured by first mortgage created by way of deposit of title

deeds in respect of the Company's immovable properties, both present & future and first charge by way of hypothecation of

Company's all balance movable assets (save and except inventories, book debts, vehicles acquired under vehicles loans and

machinery acquired through term loan taken from body corporate), ranking pari passu inter-se. Rupee Term Loans from banks

are further secured by second charge by way of hypothecation of stocks of raw material, finished goods, semi finished goods,

stores and spares, book debts and other receivables (both present and future) and by irrevocable gurantees of a Director of the

Company and a promoter Company.

2. Working Capital Loans from Banks are secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi

finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable

guarantees of a Director of the Company and a Promoter Company. Working Capital Loans are further secured by way of second

charge in respect of Company's immovable properties and movable fixed assets.

3. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the Loans.

4. Term Loans and Vehicle Loans installments falling due within next 12 months Rs. 644.76 lacs (Previous Year Rs.333.99 lacs).

88

SCHEDULE - 4

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

UNSECURED LOANS

Short-term loans and advances:

From others

From Overseas Corporate Body - 713.31

(refer Note No. 5 of Schedule 24)

Other Loan (Other than from Banks) 6.74 6.64

6.74 719.95

SCHEDULE - 5

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

DEFERRED TAX LIABILITIES (NET)

Deferred Tax Liability

Differences in depreciation and other differences

in block of fixed assets as per tax books and financial books 2,148.28 2,432.60

Gross Deferred Tax Liability (a) 2,148.28 2,432.60

Deferred Tax Assets

Unabsorbed depreciation & carry forward of losses - 477.70

Provision for doubtful debts and advances 143.14 150.87

Effect of expenditure debited to profit and loss account

in the current year but allowed for tax purposes in following years 203.82 231.99

Gross Deferred Tax Assets (b) 346.96 860.56

Net deferred tax liability / (asset) (a)-(b) 1,801.32 1,572.04

89

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90

SCHEDULE - 7

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

INVESTMENTS

Long Term Investments (At cost)

A. Trade (Quoted) Equity Shares fully paid Number of Shares Face Value (Rs.)

Recron Synthetics Ltd. 50 10 0.02 0.02

Pearl Polymers Ltd. 100 10 0.04 0.04

Polyplex Corporation Ltd. 100 10 0.05 0.05

Orkay Silk Mills Ltd. 100 10 0.04 0.04

J.K.Synthetics Ltd. 100 10 0.03 0.03

J.K.Cement Ltd 10 10 0.00 0.00

Reliance Industries Ltd. 100 10 0.14 0.14

Reliance Communication Ventures Limited 100 5 0.00 0.00

Reliance Energy Ventures Limited 100 10 0.00 0.00

Reliance Capital Ventures Limited 100 10 0.00 0.00

Reliance Natural Resources Limited 100 5 0.00 0.00

Haryana Petrochemicals Ltd. 100 10 0.04 0.04

Central India Polyesters Ltd. 50 10 0.06 0.06

Sanghi Polyester Ltd. 100 10 0.08 0.08

Garware Nylons Ltd. 100 10 0.01 0.01

Venlon Enterprises Ltd. 360 5 0.10 0.10

Nirlon Ltd. 196 10 0.02 0.02

Modipon Ltd. 100 10 0.11 0.11

Garware Polyester Ltd. 100 10 0.01 0.01

SRF Ltd. 100 10 0.02 0.02

Uflex Ltd. 100 10 0.05 0.05

Jindal Poly Films Ltd. 100 10 0.03 0.03

B. Other than trade

(Quoted) Number Face Value (Rs.)

Equity Shares Partly Paid

Industrial Development Bank of India 68,700 10 25.03 25.03

(Un-quoted)

Units of Mutual Fund

SBI- Magnum COMMA Fund - Growth 21824.53 22.91 5.00

Baroda Pioneer PSU Bond Fund - Growth Plan 50000.00 10.00 5.00

Baroda Pioneer Growth Fund - Growth Plan 14,430.01 48.51 7.00 5.00

(a) 42.88 30.88

Current Investments

(At lower of cost or market value): Number of Shares Face Value (Rs.)

A. Equity Shares Fully Paid (Non Trade) (Quoted)

Ispat Industries Ltd. (Previous year - 30000 Shares) 30,000 10 7.17 7.17

Bajaj Hindustan Ltd. (Previous year - 1000 Shares) 1,000 10 5.40 5.40

Current Investments (At cost) (Un-Quoted) :

B. Preference Shares Fully Paid (Non Trade)

Ispat Industries Ltd. (Previous year - 20000 Shares) 20,000 10 4.78 4.78

(b) 17.35 17.35

Total (a) + (b) 60.23 48.23

Less : Provision for Diminution in the Value of :

- Long Term Investments 25.63 25.63

- Current Investments 7.67 11.62

Net Investments 26.93 10.98

Aggregate amount of quoted investments (net of provision) 7.42 3.98

Aggregate amount of market value of quoted investments 10.76 6.12

Aggregate amount of unquoted investments (net of provision) 19.52 7.00

The following investments were purchased during the year and outstanding at the Balance Sheet date :

21,824.531 Units (previous year nil) Mutual Fund @ Rs. 10 each in SBI-Magnum COMMA Fund-Growth. 5.00 -

14,430.014 (previous year 18,328.44) Units Mutual Fund @ Rs. 10 each in Baroda Pioneer Fund- Growth Plan. 7.00 5.00

50,000 Units (previous year Nil) Mutual Fund of Rs. 10.00 each in Baroda Pioneer PSU Bond Fund- Growth Plan. 5.00 -

The following investments were sold during the year out of opening investments :

18,328.44 (previous year Nil) Mutual Fund sold of Rs. 10 each of Baroda Pioneer Fund- Growth Plan. 5.00 -

The following investments were purchased and sold during the year :

11984.66 (previous year Nil) Units Mutual Fund of Rs. 10 each of Baroda Pioneer Fund- Growth Plan. 5.00

91

SCHEDULE - 8

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

INVENTORIES (refer note no 2(j) of Schedule 24)

Raw Materials 1,941.57 1,380.93

(including materials in transit Rs 598.86 lacs

(previous year Rs.365.91 lacs))

Stores & Spares 628.17 496.01

(including material in transit Rs 21.85 lacs

(previous year Rs. 3.61 lacs))

Work-in-progress 290.22 294.66

Finished goods 1,053.25 727.25

(including material in transit Rs 18.54 lacs

(previous year Rs.7.70 lacs))

By-product and waste 0.43 1.23

3,913.64 2,900.08

SCHEDULE - 9

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SUNDRY DEBTORS

Debts outstanding for a period exceeding six months

Unsecured, considered good 3.49 53.53

Unsecured, considered doubtful 363.65 363.65

Other debts

Secured, considered good 742.96 724.85

Unsecured, considered good 4,368.71 3,053.76

5,478.81 4,195.79

Less: Provision for doubtful debts 363.65 363.65

5,115.16 3,832.14

SCHEDULE - 10

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

CASH AND BANK BALANCES

Cash on Hand 6.74 4.00

Balances with Scheduled Banks :

- On current accounts (including cheque in hand of Rs. nil lacs

(previous year Rs.24.88 lacs )) 537.54 333.43

- On deposits accounts (including receipts for 1,245.50 439.78

Rs. 575.50 lacs pledged with banks, (previous year Rs. 89.78 lacs))

- On unpaid dividend accounts 27.97 21.74

Balances with Other Banks :

- On current accounts 5.27 5.40

1,823.02 804.35

Bank balances with other banks include: Balance Outstanding Maximum amount

outstanding during the year

31.03.2010 31.03.2009 31.03.2010 31.03.2009

Commerz Bank 3.70 3.64 3.70 3.64

Bank Of India Ny 1.57 1.76 1.76 1.76

92

SCHEDULE - 11

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

OTHER CURRENT ASSETS

Fixed Assets held for sale * 7.27 0.75

Interest receivable on deposits 9.25 3.92

Export benefits receivable 266.18 212.09

282.70 216.76

* at net book value or estimated net realisable value, whichever is lower

SCHEDULE - 12

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

LOANS AND ADVANCES

Unsecured, considered good

Advances Recoverable in cash or in kind or for value to be received 502.54 348.11

Income Tax Deducted at Source & Refunds Recoverable 61.69 54.51

MAT credit entitlement

Opening balance 682.54 -

Add: Created during the year 8.85 682.54

Less: Utilised during the year (406.93) 284.46 - 682.54

Balances with excise, custom Etc. 560.83 293.20

Loans to employees 52.67 30.37

Deposits-others 233.36 228.58

VAT Credit (Input) Receivables 38.27 275.04

Unsecured, considered doubtful

Advances recoverable in cash or in kind or for

value to be received 67.24 80.21

1,801.06 1,992.56

Less: Provision for Doubtful Advances 67.24 80.21

1,733.82 1,912.35

SCHEDULE - 13

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

CURRENT LIABILITIES

Acceptances 1,519.79 516.63

Sundry Creditors

-Total outstanding dues of Micro and Small Enterprises - -

(refer to note no. 12 of Schedule no. 24)

-Total outstanding dues of creditors other than Micro and Small Enterprises 1,554.41 1,061.24

(includes Rs. 212.11 lacs (previous year nil) relating to capital goods)

Advances from customers 245.56 306.21

Investor Education and Protection Fund shall be credited

by following amounts (as and when due)

- Unpaid dividend 27.96 21.74

Provision for Loss on forward contracts 402.13 -

Deposits from dealers/customers & others 2.58 2.58

Other liabilities 142.76 77.38

3,895.19 1,985.78

93

SCHEDULE - 14

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

PROVISIONS

Provision for Taxation (net of advance tax payments) 464.11 95.48

Less: MAT utilised during the year (406.93) 57.18 - 95.48

Provision for Gratuity (refer note no. 9 of Schedule 24) 333.16 306.32

Provision for Leave Encashment 102.72 95.32

Provision for wealth tax 0.92 1.13

Proposed dividends 628.94 277.77

Tax on proposed dividends 104.46 47.21

1,227.38 823.23

SCHEDULE - 15

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)

Payments under Voluntary Retirement Scheme

Opening Balance 4.76 58.13

Add: Incurred during the year - 0.83

4.76 58.96

Less: Written off during the year 4.76 - 54.20 4.76

- 4.76

SCHEDULE - 16

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

OTHER INCOME

Interest on:

Bank deposits (tax deducted at source Rs. 4.67 lacs

(previous year Rs. 11.56 lacs)) 31.56 56.08

Others (on deposits with electricity department

(tax deducted at source Rs. nil (previous year Rs. nil))) 10.50 8.10

Dividend:

Current investments - Non Trade 0.04 0.06

Profit on sale of current investments - non trade (net) 1.19 -

Reversal of provision for doubtful debts - 7.42

Provision no longer required / unspent liabilities:

Balance written back 7.40 -

DEPB provision written back 14.65 -

Provision for on diminution in the

value investment written back 3.95 26.00 - -

Miscellaneous income 36.59 20.79

105.88 92.45

94

SCHEDULE - 17

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

MANUFACTURING EXPENSES

(refer note no 17 in Schedule 24)

Raw materials & chemicals consumed 24,353.11 21,010.41

(net of Export Incentive of Rs 638.37 Lacs (Previous year Rs. 649.23 lacs))

Packing materials consumed 698.77 680.99

Power & fuel 2,468.01 2,910.15

Consumption of Stores & Spare parts 745.79 686.02

Material handling charges 90.70 67.54

(Decrease) / increase in excise duty on closing stock 32.29 (51.92)

(refer Note No. 8 of Schedule 24)

28,388.67 25,303.19

SCHEDULE - 18

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

(INCREASE) / DECREASE IN INVENTORIES

Closing inventories

- Work in progress 290.22 294.66

- Finished Goods 1,053.25 727.25

- By-product and waste 0.43 1,343.90 1.23 1,023.14

Opening inventories

- Work in progress 294.66 429.99

- Finished Goods 727.25 730.11

- By-product and waste 1.23 1,023.14 0.50 1,160.60

(320.76) 137.46

SCHEDULE - 19

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

PERSONNEL EXPENSES

(refer note no 17 in Schedule 24)

Salaries, Wages and Bonus 1,700.99 1,299.57

Contribution to Provident Fund 100.10 93.40

Gratuity Expense (refer Note No. 9 of Schedule 24) 39.45 69.99

Other Post-employment funds 74.53 71.70

Workmen and Staff Welfare Expenses 131.10 97.39

2,046.17 1,632.05

95

SCHEDULE - 20

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

ADMINISTRATIVE AND OTHER EXPENSES

(refer note no 17 in Schedule 24)

Rent 148.97 93.55

Rates and taxes 8.59 18.35

Insurance 99.52 122.97

Repairs & maintenance

- Plant and machinary 89.16 82.97

- Buildings 12.11 18.55

- Others 89.37 190.64 93.81 195.33

Travelling & Conveyance 417.05 320.52

Communication Costs 92.88 70.09

Legal & Professional Charges 213.96 186.06

Printing & Stationary 19.15 17.61

Donations (other than Political Parties) 22.62 10.87

Commission to non-executive directors 42.00 -

Directors' Sitting Fees 4.45 1.90

Auditors' Remuneration * / @

-As Auditors 20.91 21.02

-Out of pocket expenses 1.25 1.02

Provision for Doubtful Debts and Advances - 9.27

Loss on fixed assets sold / discarded (net of gain of Rs. 0.12 lacs 27.84 63.13

(Previous Year: Rs. nil ))

Bad debts, advances and irrecoverable balances 20.62 76.35

written off (net)

Diminution in the value of current investments - 5.32

Loss on Sale of DEPB licence - 47.49

Foreign exchange fluctuation loss 329.91 105.47

(net of gain of Rs.147.32 lacs (previous year Rs.265.33 lacs))

(refer note no 19 in Schedule 24)

Obsolete Inventories Written off 15.90 45.86

Miscellaneous Expenditure Written Off 4.76 54.20

Miscellaneous Expenses 290.94 222.64

1,971.96 1,689.02

* Excluding service tax of Rs. 2.19 lacs (previous year Rs. 2.62 lacs)

@ Net-off of Rs. 1.00 lacs (previous year Rs. nil) has been paid to the auditors in respect of their services in preferential allotment of

securities and has been charged off against securities premium account as share issue expenses.

SCHEDULE - 21

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

SELLING EXPENSES

Freight 1,027.33 1,073.91

Commission and brokerage (other than Sole Selling Agents) 93.44 181.58

Discount, claims & rebates 72.27 129.84

Others 41.69 58.40

1,234.73 1,443.73

96

SCHEDULE - 22

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

FINANCIAL EXPENSES

(refer note no 17 in Schedule 24)

Interest

- on Term Loans 152.08 234.19

- on Banks 303.65 545.51

Bank Charges 172.49 183.75

628.22 963.45

SCHEDULE - 23

31.03.2010 31.03.2009

(Rs. in Lacs) (Rs. in Lacs)

EARNINGS PER SHARE (EPS)

Net Profit/(Loss) as per Profit & Loss Account 2,785.36 3,342.03

Less: Preference dividends and tax thereon - 0.31

Net Profit/(Loss) for calculation of EPS 2,785.36 3,341.72

Weighted average number of equity shares

in calculating EPS (in absolute no's) 57,486,915 55,502,400

Number of Equity Shares at the beginning of the year

(outstanding for 365 days) (in absolute no's) 55,502,400 55,502,400

Number of Equity Shares issued on December 24, 2009

(outstanding for 98 days) (in absolute no's) 7,391,306 -

Number of Equity Shares at the end of the year (in absolute no's) 62,893,706 55,502,400

Weighted average number of equity shares in calculating EPS

(in absolute no's) 57,486,915 55,502,400

- Basic EPS Computed on the basis of earnings (Rs.) 4.85 6.02

- Diluted EPS Computed on the basis of earnings (Rs.) 4.85 6.02

97

SCHEDULE - 24

NOTES TO ACCOUNTS

SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

ESTER INDUSTRIES LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR 2009-10

1. PRINCIPLES OF CONSOLIDATION

a. The Consolidated Financial Statements relate to Ester Industries Limited and its wholly owned subsidiary companies.

The Consolidated Financial Statements have been prepared on the following basis:

• The financial statements of the Parent Company and its subsidiary companies have been combined on a line by

line basis by adding together the book values of like items of assets, liabilities, income and expenses. Intra group

balances and intra group transactions and resulting unrealised profits are eliminated in full as per Accounting

Standard - 21, Consolidated Financial Statements Notified under Companies Accounting Standards Rules, 2006

(as amended). Unrealised losses resulting from intra group transactions are also eliminated unless cost cannot

be recovered.

• The financial statements of the Subsidiary Companies used in the consolidation are drawn for the same period as

that of the Parent Company i.e. year ended March 31, 2010.

• The financial statements of Ester Europe GmbH have been consolidated in Group financial statements on the

basis of un-audited financial statements as at March 31, 2010 (total assets of Ester Europe GmbH as a

proportion of Group assets as at 31st March, 2010 amount to 0.01 per cent and as at March 31, 2009

amount to 0.02 per cent. There are no operations during the year in this subsidiary. Also the Parent Company

has applied for the closure of the subsidiary, for which necessary approvals are pending with the regulatory

authorities in Germany.

b. List of subsidiary companies which are considered in the consolidation and the Parent Company's holding therein are

as under:

Sl. Name of the subsidiary Country of Extent of holding (%) as

No. Company Incorporation on March 31, 2010

1. Ester International (USA) Limited USA 100

2. Ester Europe GmbH Germany 100

As far as possible, the Consolidated Financial Statements have been prepared using uniform accounting policies for

like transactions and other events in similar circumstances and are presented to the extent possible, in the same

manner as the Parent Company's separate financial statements.

2. Statement of Significant Accounting Policies

a) Basis of Preparation

The financial statements have been prepared to comply in all material respects with the Notified accounting standard

by Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act,

1956. The financial statements have been prepared under the historical cost convention on an accrual basis except

in case of assets for which revaluation is carried out. The accounting policies have been consistently applied by the

Group and are consistent with those used in the previous year.

The Consolidated Financial Statement (CFS) related to Ester Industries Limited (hereinafter referred as the "Parent

Company") and its wholly owned subsidiaries (hereinafter referred as the "Group")

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent liabilities at the date of the financial statements and the results of operations during the

reporting period end. Although these estimates are based upon management's best knowledge of current events

and actions, actual results could differ from these estimates.

98

c) Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any, except Land, Building

and Plant & Machinery, which had been revalued on 31.10.1992 by a Government registered valuer on the basis of

the then replacement value. Cost comprises the purchase price and any directly attributable cost of bringing the

asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes

substantial period of time to get ready for its intended use are also included to the extent they relate to the period till

such assets are ready to be put to use.

d) Depreciation

i. Depreciation on fixed assets (other than lease hold improvements) is provided on Straight Line Method as per

Schedule XIV of the Companies Act, 1956 on pro-rata basis with reference to the days of addition/sale. The

management of the Group is of the view that this depreciation rate fairly represents the useful life of the assets

except for the following assets where a higher rate is used:

Rates (SLM) Schedule XIV

Rates (SLM)

Batteries under UPS Project (Plant and Machinery) 19.60% 5.28%

ii. Fixed Assets costing below Rs.5000 are fully depreciated in the year of acquisition.

iii. Depreciation on the amount of additions made to Fixed Assets on Revaluation is adjusted against the Revaluation

Reserve.

iv. Depreciation on the amount of addition made to Fixed Assets due to upgradations / improvements is provided

over the remaining useful life of the asset to which it relates.

v. Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

vi. Lease hold improvements (LHI) are amortised over a primary period of lease or useful life, whichever is lower.

e) Expenditure incurred during the construction period

Expenditure directly relating to construction activity is capitalized (net of income, if any). Indirect expenditure incurred

during construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure

is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction

period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss account.

f) Intangibles

Software costs relating to acquisition of initial software license fee and installation costs are capitalized in the year of

purchase. Softwares are amortized on a straight-line basis over its useful life, which is considered to be of a period of

three years.

(g) Impairment of assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment

based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset

exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in

use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted

average cost of capital.

(h) Leases

Where the Parent Company is the lessee

Finance leases, which effectively transfer to the Parent Company substantially all the risks and benefits incidental

to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum

lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned

between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance

charges are charged directly against income. Lease management fees, legal charges and other initial direct costs

are capitalised.

99

If there is no reasonable certainty that the Parent Company will obtain the ownership by the end of the lease term,

capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are

classified as operating leases. Operating lease payments are recognized as an expense in the Profit & Loss Account

on a straight-line basis over the lease term.

(i) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current

investments. All other investments are classified as long-term investments. Current investments are carried at lower

of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost.

However, provision for diminution in value is made to recognize a decline other than temporary in the value of such

investments.

(j) Inventories

Inventories are valued as follows:

Raw materials, Components and Lower of cost and net realizable value. However, materials and other

stores & spares items held for use in the production of inventories are not written down

below cost if the finished products, in which they will be incorporated,

are expected to be sold at or above cost. Cost of Raw materials is

determined on a monthly moving weighted average basis and cost of

Components and stores & spares is determined on transaction moving

weighted average.

Work-in-progress and finished Lower of cost and net realizable value. Cost includes direct materials

goods and labour and a proportion of manufacturing overheads based on normal

operating capacity. Cost of finished goods includes excise duty. Cost is

determined on moving weighted average basis.

By Products and waste Net realizable value

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion

and estimated costs necessary to make the sale.

(k) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the

revenue can be reliably measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer.

Excise Duty, Sales Tax and VAT deducted from turnover (gross) are the amount that is included in the amount of

turnover (gross) and not the entire amount of liability arised during the year.

Export Benefit

Export Benefits constituting import duty benefits under Duty Exemption Pass Book (DEPB) and advance license scheme

are accounted for on accrual basis and have been credited to Raw material and Chemical Consumption Account.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends

Dividend is recognised when the shareholders' right to receive payment is established by the balance sheet

date. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but pertains

to period on or before the date of balance sheet as per the requirement of schedule VI of the Companies

Act, 1956.

100

(l) Deferred revenue expenditure

The Parent Company recognises payments made under voluntary retirement schemes as Deferred Revenue Expenses

and write off the same in monthly installments over a period of 36 months or by March 31, 2010, whichever is

earlier.

(m) Foreign currency transactions

Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount

the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in

terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the

transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a

foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on a monetary item that, in substance, form part of the Parent Company's net investment

in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the financial statements

until the disposal of the net investment, at which time they are recognised as income or as expense.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary

items of Group at rates different from those at which they were initially recorded during the year, or reported in

previous financial statements, are recognized as income or as expenses in the year in which they arise.

Forward Exchange Contracts (Derivative Instruments) not intended for trading or speculation purposes

The Parent Company uses derivative financial instruments including forward exchange contracts to hedge its risk

associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange

contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts

are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or

loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for

the year.

Translation of Integral and Non-integral foreign operation

The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation

have been those of the company itself.

In translating the financial statements of a non-integral foreign operation for incorporation in financial statements,

the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the

closing rate; income and expense items of the non-integral foreign operation are translated at exchange rates at the

dates of the transactions; and all resulting exchange differences are accumulated in a foreign currency translation

reserve until the disposal of the net investment.

On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have

been deferred and which relate to that operation are recognised as income or as expenses in the same period in

which the gain or loss on disposal is recognised.

When there is a change in the classification of a foreign operation, the translation procedures applicable to the

revised classification are applied from the date of the change in the classification.

(n) Retirement and other Employee Benefits

i. Retirement benefits in the form of Superannuation Fund (being funded to LIC) are funded defined contribution

schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to

the respective funds are due. There are no other obligations other than the contribution payable.

101

ii. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected

unit credit method made at the end of each financial year.

iii. Retirement benefits in the form of Provident Fund (where contributed to the Regional PF Commissioner) and

employee state insurance are defined contribution scheme and the contributions are charged to the Profit and

Loss Account of the year when the contributions to the fund are due. There are no other obligations other than

the contribution payable to the respective authorities.

Provident Fund (Where administered by a Trust) is a defined benefit scheme whereby the Parent Company

deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests

upon commencement of employment. The interest credited to the accounts of the employees is adjusted on an

annual basis to confirm to the interest rate declared by the government for the Employees Provident Fund. The

Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard

Board (ASB) states that provident funds set up by employers, which requires interest shortfall to be met by the

employer, needs to be treated as defined benefit plan. Based on the computation done by the Parent Company,

there is no deficit in the fund.

iv. Short term compensated absences are provided for based on estimates. Long term compensated absences are

provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

v. Actuarial gains/losses are immediately taken to Profit and Loss account and are not deferred.

(o) Income Taxes

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is

measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting

income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance

sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such deferred tax assets can be realised. If the Group has

unabsorbed depreciation and carry forward of tax losses, all deferred tax assets are recognised only if there is virtual

certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable

profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised

deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that

sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Group writes-down the

carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the

case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised.

Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may

be, that sufficient future taxable income will be available.

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Parent

Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax

(MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in

guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to

the profit and loss account and shown as MAT Credit Entitlement. The Parent Company reviews the same at each

balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer

convincing evidence to the effect that Parent Company will pay normal Income Tax during the specified period.

(p) Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that

an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

Provisions are not discounted to its present value and are determined based on best management estimate required

to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to

102

reflect the current management estimates. Provision for expenditure relating to voluntary retirement is made when

the employee accepts the offer of early retirement.

(q) Derivative Instruments

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, are

marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge

item is charged to the income statement. Net gains are ignored.

(r) Segment Reporting Policies

Identification of segments:

Primary Segment

Business Segment

The Group's operating businesses are organized and managed separately according to the nature of products, with

each segment representing a strategic business unit that offers different products and serves different markets.

The identified segments are Manufacturing & Sale of Polyester film and Engineering plastics.

Secondary Segment

Geographical Segment

The analysis of geographical segments is based on the geographical location of the customers.

The geographical segments considered for disclosure are as follows:

• Sales within India include sales to customers located within India.

• Sales outside India include sales to customers located outside India.

Inter Segment Transfers:

Inter Segment transfers of goods, as marketable products produced by separate segments of the Group for captive

consumption, are not accounted for in the books of account of the Group. For the purpose of segment disclosures,

however, inter segment transfers have been taken at cost.

Allocation of common costs:

Common allocable costs are allocated to each segment in proportion to the turnover of the segment, except where

a more logical allocation is possible.

Unallocated items:

Corporate income and expense are considered as a part of un-allocable income & expense, which are not identifiable

to any business segment.

(s) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with

an original maturity of three months or less.

(t) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity

shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of

equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share

to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the

reporting period. The weighted average numbers of equity shares outstanding during the period are adjusted for

events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split

(consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity

shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects

of all dilutive potential equity shares.

103

3. Capital Commitments

March 31, 2010 March 31, 2009

(Rs. in Lacs) (Rs. in Lacs)

Estimated amount of contracts remaining to be executed 13,890.27 248.95

on capital account and not provided for

4. Contingent Liabilities not provided for

March 31, 2010 March 31, 2009

(Rs. in Lacs) (Rs. in Lacs)

(a) Excise Duty and Customs Duty pending

hearing of appeals/writ petitions:

(i) Cenvat credit disallowed on certain items 8.06 8.06

(ii) Removal of PET chips without payment of duty 6.95 6.95

(iii) Goods sold from depot at higher value than one

declared at factory gate price 26.96 26.96

(iv) Cenvat credit disallowed on inputs 164.20 164.20

(v) Reversal of Cenvat credit availed on HSD 206.92 206.92

(vi) Cenvat credit availed on raw material utilized

on prorata basis. 11.72 11.72

(vii) Availment of credit on import of Dimethyl Terephalate 57.71 57.71

(viii) Other Miscellaneous Cases 39.85 40.21

(ix) Show cause notice issued by Commissioner, based on

CAG audit, alleging short reversal of MODVAT Credit while

disposing Yarn Plant. - 63.83

Total (a) 522.37 586.56

(b) Show cause notices related to denial of Service Tax credit &

Excise rebate on export 2.59 2.59

(c) Income Tax:

Demand raised during assessment (A.Y. 89-90) 1.84 1.84

Demand of MAT (including interest) (A.Y.04-05) 46.63 46.63

Demand of MAT (including interest) (A.Y.05-06) 17.05 17.05

(d) Labour Cases:

Workers suspended, pending in High Court, Delhi 1.67 1.67

Total (a to d) 592.15 656.34

(e) Other claims not acknowledged as debts 46.70 46.00

(f) Contingent liability in respect of partly paid up shares 5.15 5.15

(g) Bonds amounting to Rs 510 lacs executed in favour of Central

Excise & Customs Authorities, out of which, amount to be

re-credited on receiving the proof of export is yet to be submitted. 264.06 88.69

Based on favourable decisions in similar cases, legal opinion taken by the Parent Company, discussions with the solicitors

etc., the Parent Company believes that there is fair chance of decisions in its favour in respect of all the items listed in

(a) to (e) above and hence no provision is considered necessary against the same.

5. Parent Company has taken an unsecured interest free loan in 1999-2000 from an overseas corporate body (Spring

Falls Limited - Related Party) in the form of External Commercial Borrowing (ECB). Loan was due for repayment in one

installment on March 31, 2005 but it was rescheduled with the consent of lender and was repayable by March 31,

2006. Parent Company was not able to repay the loan on that date and the same was not renewed in the previous year

as per the guidelines of Reserve Bank of India. The Parent Company has repaid the said Loan during the year.

104

6. In the opinion of the Board of Directors of the Group, Loans and Advances have a realisable value at least at the

amounts at which they are stated.

7. Directors' Remuneration

Particulars 2009-10 2008-09

(Rs. in Lacs) (Rs. in Lacs)

(a) Salary 24.00 24.00

(b) Allowances 18.00 18.00

(c) Perquisites 11.27 2.02

(d) Contribution to Provident fund 2.88 2.88

(e) Contribution to Superannuation fund 3.60 3.60

(f) Commission payable to Whole time Director 160.00 -

(g) Commission payable to Non -Whole time Director 42.00 -

Total 261.75 50.50

As the liabilities for gratuity and leave encashment are provided on actuarial basis for the Group as a whole, the

amounts pertaining to the whole time director is not included above.

Note:

In respect of the Managerial Remuneration of Rs.15.50 lacs paid during earlier years and not sanctioned by the

Department of Company Affairs, an interim stay has been granted by the Hon'ble High Court of Delhi on the writ

petition filed by the Parent Company.

8. Excise duty on sales amounting to Rs. 2,628.75 lacs (previous year Rs. 3,180.65 Lacs) has been reduced from sales

in profit & loss account and excise duty on increase of stock Rs. 32.29 lacs in the current year is considered as

expense and excise duty on decreased in stock of Rs. 51.92 Lacs is considered as income in previous year in Schedule

17.

9. Gratuity and other post-employment benefit plans:

The Parent Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed

year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The

benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally

funded. Parent Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial

valuation as per the Projected unit credit method.

The following tables summarise the components of net benefit expense recognized in the profit and loss account and

the unfunded status and amounts recognized in the balance sheet for the Gratuity.

Profit and Loss account

Net employee benefit expense (recognised in Employee Cost)

(Rs. in Lacs)

Gratuity

March 31, 2010 March 31, 2009

Current service cost 25.05 23.24

Interest cost on benefit obligation 24.51 21.50

Expected return on plan assets - -

Net actuarial loss recognised in the year (10.11) 25.25

Past service cost - -

Net benefit expense 39.45 69.99

Actual return on plan assets - -

105

(Rs. in Lacs)

Balance sheet

Details of provision for Gratuity

March 31, 2010 March 31, 2009

Defined benefit obligation 333.16 306.32

Fair value of plan assets - -

Less: Un-recognised past service cost - -

Plan liability 333.16 306.32

Changes in the present value of the defined benefit obligation are as follows:

March 31, 2010 March 31, 2009

Opening defined benefit obligation 306.32 268.72

Interest cost 24.50 21.50

Current service cost 25.05 23.24

Benefits paid (12.60) (32.39)

Actuarial losses on obligation (10.11) 25.25

Closing defined benefit obligation 333.16 306.32

Since the entire amount of plan obligation is unfunded therefore changes in the fair value of plan assets, categories

of plan assets as a percentage of the fair value of total plan assets and Parent Company's expected contribution to

the plan assets in the next year is not given.

The principal assumptions used in determining gratuity benefit obligations for the Parent Company's plans are shown

below:

March 31, 2010 March 31, 2009

% %

Discount rate 8.00 8.00

Increase in Compensation cost 5.50 5.50

Employee turnover - Age Group

Up to 30 years 3.00 3.00

30 – 44 years 2.00 2.00

Above 44 years 1.00 1.00

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion

and other relevant factors, such as supply and demand in the employment market.

Amounts for the current and previous two years are as follows:

(Rs. in Lacs)

Gratuity

March 31, 2010 March 31, 2009 March 31, 2008

Defined benefit obligation 333.16 306.32 268.72

Plan assets - - -

Deficit 333.16 306.32 268.72

Experience adjustments on plan

liabilities Loss/(Gain) (10.11) 25.24 -

Experience adjustments on plan assets - -

106

Contribution to Defined Contribution Plans:

(Rs. in Lacs)

2009-10 2008-09

Superannuation fund 74.53 71.37

Provident Fund contribution to Government authority 76.47 58.02

10. The Parent Company has taken various residential, office and warehouse premises under operating lease agreements.

These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no

restrictions imposed by Lease Agreement. There are no subleases.

(Rs. in Lacs)

Particular Lease Payments

2009-10 2008-09

Total lease payment for the year (Recognised in Profit and Loss Account) 148.97 93.55

Minimum Lease Payments

Not later than one year 97.62 102.09

Later than one year but not later than five years 295.52 309.11

Later than five years 2.89 77.13

11. Derivative Instruments and Un-hedged Foreign Currency Exposure

Forward contract outstanding as at Balance Sheet date

(in absolute fig's)

Particulars of Derivatives C.Y. P.Y. Purpose

Purchase EURO 9,500,000 -- Firm commitment against capital goods order

(Cross Currency)

Particulars of Un-hedged foreign Currency Exposure as at the Balance Sheet date

Particulars Currency Amount In Foreign Rates Amount

Currency (in absolute fig's) (Rs in Lacs)

31-Mar-10 31-Mar-09 31-Mar-10 31-Mar-09 31-Mar-10 31-Mar-09

Import Creditors Euro - 293.00 - 68.26 - 0.20

(Acceptances)

Import Creditors USD 902,065.00 968,208.54 45.39 51.00 409.45 493.79

(Acceptances)

Import Creditors JPY 1,940,400.00 10,705,200.00 0.49 0.52 9.45 55.56

(Acceptances)

Unsecured Loan USD - 1,399,754.00 - 50.96 - 713.31

Export Debtors USD 1,338,263.00 2,851,172.81 44.68 50.91 597.88 1,451.53

Euro 147,628.00 28,094.76 60.87 67.39 89.86 18.93

GBP 26,227.00 28,950.75 71.84 72.79 18.84 21.07

Advances for Euro 60,044.00 23,119.41 63.78 67.52 38.30 15.61

goods & Services

USD 673,092.00 398,948.00 45.57 51 306.71 203.46

GBP 2,472.00 - 73.86 - 1.83 -

JPY 6,494,400.00 - 0.51 - 33.16 -

CHF 850.00 - 42.86 - 0.36 -

107

12. Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006

(Rs. in Lacs)

No Details of dues to Micro, Small and Medium Enterprises as per 2010 2009

MSMED Act, 2006

i The principal amount and the interest due there on remaining unpaid to any

supplier as at the end of year

Principal Amount Unpaid - -

Interest Due - -

ii The amount of interest paid by the buyer in terms of section 16, of the Micro

Small and Medium Enterprise Development Act, 2006 along with the amounts

of the payment made to the supplier beyond the appointed day during the

year

Payment made beyond the Appointed Date 134.17 15.70

Interest Paid beyond the Appointed Date - -

iii The amount of interest due and payable for the period of delay in making payment

(which have been paid but beyond the appointed day during the year) but without

adding the interest specified under Micro Small and Medium Enterprise

Development Act, 2006.

iv The amount of interest accrued and remaining unpaid at the end of the year; and - -

v The amount of further interest remaining due and payable even in the succeeding

years, until such date when the interest dues as above are actually paid to the

small enterprise for the purpose of disallowance as a deductible expenditure under

section 23 of the Micro Small and Medium Enterprise Development Act, 2006.

- -

- -

- -

108

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110

14. Capital work in progress includes capital advances of Rs 2,306.50 lacs (previous year Rs. 12.78 lacs) which are unsecured,

considered good.

15. a. Names of Related parties

Nature of Relationship Name of Related Party

Individuals owning, directly or indirectly, - Uma Devi Singhania*

a substantial interest in the voting power

of the Group.

Key Management Personnel - Mr. A. K. Singhania (Chairman & Managing Director)

Relatives of Key Management Personnel - Mr. Sitaram Singhania (Father of Mr. A. K. Singhania)

- Jai Vardhan Singhania (Son of Mr. A. K. Singhania)

- Ayush Vardhan Singhania (Son of Mr. A. K. Singhania)

Enterprises owned or significantly influenced by - Spring Falls Limited

key management personnel or their relatives - Super Leasing Limited

- Saraswati Trading Company Limited**

- Sri Lakshmi Investment Limited

- Wilemina Finance Corporation

- Polyplex Corporation Limited

* Also relative of Key Management Personnel

** Also the investing party in respect of which the Parent Company is an associate.

15. b. Related Party Disclosures

(Rs. in Lacs)

Nature of Transactions Subsidiaries Key Relative of Individuals Enterprises Total

Management Key owning, owned or

Personnel Management directly or significantly

Personnel indirectly, a influenced by

substantial key

interest in the management

voting power personnel or

of the Group their relatives

Transactions during the year

Managerial Remuneration

A.K.Singhania - 219.75 - - - 219.75

(-) (50.50) (-) (-) (-) (50.50)

Rent Paid

Super Leasing Ltd - - - - 18.00 18.00

(-) (-) (-) (-) (18.00) (18.00)

Amount paid for redemption of 0.10% Redeemable Cumulative Preference Shares

Super Leasing Ltd - - - - - -

(-) (-) (-) (-) (203.18) (203.18)

Preference dividend for the year

Super Leasing Ltd - - - - - -

(-) (-) (-) (-) (0.26) (0.26)

Interest free loan repaid during the year *

Spring Falls Limited - - - - 661.03 661.03

(-) (-) (-) (-) (-) (-)

Sale of Polyester Chips

Polyplex Corporation Limited - - - - 373.17 373.17

(-) (-) (-) (-) (0.17) (0.17)

Amount received on issue of unsecured fully and Compulsorily Convertible Debentures

M/s. Wilemina Finance - - - - 600.00 600.00

Corporation (-) (-) (-) (-) (-) (-)

111

(Rs. in Lacs)

Nature of Transactions Subsidiaries Key Relative of Individuals Enterprises Total

Management Key owning, owned or

Personnel Management directly or significantly

Personnel indirectly, a influenced by

substantial key

interest in the management

voting power personnel or

of the Group their relatives

}

Amount received on issue of Share Warrants

M/s. Super Leasing Limited - - - - 500.00 500.00

(-) (-) (-) (-) (-) (-)

Conversion of unsecured fully Compulsorily Convertible Debenture into Equity Shares

M/s. Wilemina Finance - - - - 130.44 130.44

Corporation (-) (-) (-) (-) (-) (-)

Conversion of Share Warrants into Equity Shares

M/s. Super Leasing Limited - - - - 108.70 108.70

(-) (-) (-) (-) (-) (-)

Security Premium on Equity Shares

M/s. Wilemina Finance - - - - 469.56 469.56

Corporation (-) (-) (-) (-) (-) (-)

M/s. Super Leasing Limited - - - - 391.30 391.30

(-) (-) (-) (-) (-) (-)

Total - - - - 860.86 860.86

(-) (-) (-) (-) (-) (-)

Balances Outstanding as at year end

Commission Payable

A.K.Singhania 160.00 - - - - 160.00

(-) (-) (-) (-) (-) (-)

Total 160.00 160.00

(-) (-) (-) (-) (-) (-)

Balance payable

Interest Free Loan Outstanding*

Spring Falls Limited - - - - - -

(-) (-) (-) (-) (713.31) (713.31)

Security deposit

Super Leasing limited - - - - 4.50 4.50

(-) (-) (-) (-) (4.50) (4.50)

Preference dividend payable

Super Leasing limited - - - - - -

(-) (-) (-) (-) (0.26) (0.26)

Receivable for sale of goods

Polyplex Corporation Limited - - - - 2.84 2.84

(-) (-) (-) (-) (-) (-)

Guarantees given against Loans Taken (jointly and severally) by the Parent Company

- Sitaram Singhania

- A.K.Singhania - 6,812.65 - - 6,812.65 6,812.65

- Saraswati Trading (-) (5,044.24) (5,044.24) (-) (5,044.24) (5,044.24)

- Company Limited

- Previous year figures are given in brackets.

- No amount has been written off or provided for in respect of transactions with the related parties.

*The difference is on account of foreign exchange fluctuation.

112

As per our report of even date

For S.R.Batliboi & Co. For and on behalf of the Board of Directors

Firm registration No. 301003E

Chartered Accountants

per Manoj Gupta Shweta Yadav A.K.Singhania

Partner Company Secretary Chairman &

Membership No. 83906 Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

16. Details of Loans and Advances to Parties in which Directors are interested and investment by the loanee in the

shares of the Parent Company (as required by Clause 32 of the Listing Agreement):

(Rs. in Lacs)

Description Outstanding Maximum amount

amount as at outstanding

2009-10 2008-09 2009-10 2008-09

- Super Leasing Ltd. - - - -

Investment by the above mentioned loanee (Super Leasing Ltd.) 180.77 71.36 180.77 351.12

in the share capital of the Parent Company

17. Expenditure during construction period (Rs. in Lacs)

Particulars As at As at

March 31,2010 March 31,2009

Tangible Tangible

Balance brought forward - -

Add: Incurred during the year

-Salaries, Wages and Bonus 18.44 -

-Travelling & Conveyance 20.09 -

-Legal & Professional Charges 7.60 -

-Insurance 50.44 -

- Power and fuel 94.02

-Bank Charges 114.07 -

Less: Allocated to fixed assets during the period - -

Balance Carried Forward* 304.66 -

* Included in Capital Work in progress

18. Pursuant to the resolution passed by the Shareholders of the Parent Company at the Extra Ordinary General Meeting

(EGM) held on 21st October 2009, the Parent Company has by way of preferential issue allotted 21,73,914 Shares

Warrants of face value of Rs. 5/- each to Promoters, 26,08,696 Zero Coupon Unsecured Fully and Compulsorily Convertible

Debentures (FCCD) of face value of Rs. 5/-each to an independent Overseas Investor and 26,08,696 Zero Coupon

unsecured Fully and Compulsorily Convertible Debentures (FCCD) of Face Value of Rs. 5/- each to Person Acting in

Concert with Promoters for cash at a premium of Rs. 18/- as part financing of the Polyester Film Expansion project.

Board of Directors in their meeting dated 24th December 2009 has converted these Share Warrants and FCDs into

73,91,306 equity shares at a price of Rs. 23/- including a premium of Rs. 18/- per equity share.

19. Loss on foreign exchange fluctuation during the year includes Mark – to – Market losses of Rs. 402.13 lacs (previous

year nil) towards forward contracts booked to hedge the foreign currency liabilities related to Polyester Film Expansion

Project.

20. There are no business activities in subsidiary – Ester Europe GmbH during the current year and the company has already

applied for its closure and approval of the appropriate authority in Germany is awaited.

21. Previous year figures have been regrouped / reclassified wherever considered necessary, so as to confirm with the

current year's classification.

113

STATEMENT PURSUANT TO SECTION 212 OF THE

COMPANIES ACT, 1956, RELATING TO

SUBSIDIARY COMPANY

A) Name of the Subsidiary Company : Ester International Ester Europe

(USA) Ltd. GmbH

B) Financial Year of the Subsidiary : 31st March 2010 31st March 2010

Company ended on

C) Shares of the Subsidiary held by :

Ester Industries Limited, on the above date:

a) Number and Face Value : 25,000 Equity

Shares of USD 1 each

b) Extent of holding : 100% 100%

D) The net aggregate amount of Profit/(Losses) of

the Subsidiary Company so far as it concerns

the members of Ester Industries Limited :

a) not dealt with in the accounts of

Ester Industries Limited, for the

year ended 31.03.2010 amounted to

i) for the subsidiary : US$ (2563) DM NIL

Financial Year ended on the respective date equivalent to equivalent to

Rs. 1.20 Lac Rs. NIL

ii) for the previous Financial Years of the : US$(177005.00) DM (60153.39)

Subsidiary since it became the Holding equivalent to equivalent to

Company's Subsidiary Rs. 85.03 Lacs Rs.14.70 Lacs

b) dealt with in the accounts of

Ester Industries Limited for the

year ended 31.03.2010 amounted to

i) for the Subsidiary's Financial Year : NIL NIL

ii) for the previous Financial Years of : NIL NIL

the Subsidiary since it became the

Holding Company's Subsidiary

E) Changes in the interest of Ester : NIL NIL

Industries Ltd. the end of the

Subsidiary Financial Year and 31.03.2010

F) Material changes between the end of the : NIL NIL

Subsidiary's Financial Year and 31.03.2010

1) Fixed Assets

2) Investments

3) Monies lent by the Subsidiary

4) Monies borrowed by the Subsidiary Company

other than for meeting Current Liabilities

For and on behalf of the Board of Directors

Shweta Yadav A.K.Singhania

Company Secretary Chairman &

Managing Director

Place : Gurgaon Pradeep Rustagi A. P. Sarwan

Date : May 18, 2010 Chief Financial Officer Director

114

INDEPENDENT ACCOUNTANTS’ REPORT

The Board of Directors

Ester International (USA) Ltd.

We have audited the accompanying balance sheet of Ester International (USA) Ltd. as at March 31, 2010 and the related

statements of income and retained earnings and cash flows for the year then ended. These financial statements are the

responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based

on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for

our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ester

International (USA) Ltd. as at March 31, 2010 and the results of its operations and its cash flows for the year then ended in

conformity with principles generally accepted in the United States of America.

New York

April 16, 2010

ESTER INTERNATIONAL (USA) LTD.

DIRECTORS’ REPORT

The Directors present their report and the financial statement for the year ended on 31th March 2010.

PRINCIPAL ACTIVITY

The principal activity of the Company is to trade in Polyester Film in the North and South American markets, manufactured by

Ester Industries Limited.

PERFORMANCE

The Directors of the Company report that the Company has discontinued its operations as custom duties were increased to

24.96% consequent to the imposition of Anti-subsidy and Anti-dumping duties on Indian manufacturers of Polyester Film

including the Parent Company, Ester Industries Limited. This has resulted into making the product uncompetitive in North

American markets.

The results are enclosed herewith.

The Board approved this report on 21st April 2010.

A. K. Singhania A. K. Newatia

Chairman Director

115

ESTER INTERNATIONAL (USA), LTD.

BALANCE SHEET

AS AT MARCH 31, 2010

(DISCONTINUED OPERATIONS)

ASSETS

Current assets: $ 3,457

Cash 1,406

Other current assets

Total current assets 4,863

Total Assets $ 4,863

LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities:

Accrued expenses $ 7,250

Custom duties payable - note 2 145,978

Due to parent company 6,203

Total current liabilities 159,431

Stockholder’s equity:

Common stock, no par value; authorized 200 shares: 200

issued and outstanding 200 shares 24,800

Additional paid in capital (179,568)

Retained earnings (deficit)

Total stockholder’s equity (154,568)

Total liabilities and stockholder’s equity $ 4,863

See accompanying notes and accountants’ report

116

ESTER INTERNATIONAL (USA), LTD.

STATEMENT OF CASH FLOWS

YEAR ENDED MARCH 31, 2010

(DISCONTINUED OPERATIONS)

Increase (decrease) in cash:

Cash flows from operating activities:

Net loss $ (2,563)

Changes in assets and liabilities:

Accrued expenses 2,650

Net cash provided by operating activities 87

Cash flows provided by financing activities:

Due from parent company (87)

Net cash provided by financing activities: (87)

Net increase (decrease) in cash —

Cash - beginning 3,457

Cash - end $ 3,457

Supplemental disclosures:

Taxes paid $ —

ESTER INTERNATIONAL (USA), LTD.

STATEMENT OF INCOME AND RETAINED EARNINGS

YEAR ENDED MARCH 31, 2010

(DISCONTINUED OPERATIONS)

Income:

Receipts $ —

Expenses:

Professional fees 2,000

Business taxes 650

2,650

Loss before other income and expenses (2,650)

Other Income & Expenses:

Difference in exchange 87

Total expenses 2,563

Net loss (2,563)

Retained earnings (deficit) - beginning (177,005)

Retained earnings (deficit) - end $ (179,568)

See accompanying notes and accountants’ report

117

ESTER INTERNATIONAL (USA), LTD.

NOTES TO FINANCIAL STATEMENTS

YEAR ENDED MARCH 31, 2010

(DISCONTINUED OPERATIONS)

Note 1 - Summary of significant accounting policies:

a) Organization and business activity :

Ester International (USA) Ltd. was incorporated under the laws of the State of New Jersey on May 8, 1997. The

company was in the business of importing polyester film and engineering polymer products from its parent

company in India. The company has discontinued its operations in 2003 due to increase in custom duties to

24.96% making the product uncompetitive in the USA market.

b) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates that affect the amounts reported in the financial statements and accompanying

notes. Actual results could differ from the estimates.

Note 2 - Custom duties payable:

The company is under an investigation by Department of Commerce for anti-dumping and countervailing duties

on import of PET films from India. The Department of Commerce has determined a preliminary combined rate of

24.96% on PET film imports by the company beginning October 23, 2001. The company estimated and provided

an additional duty of $171,821 on such imports between October 23, 2001 and March 31, 2003. Present

outstanding against this liability is $145,978.

118

ESTER INTERNATIONAL (USA) LTD.

BALANCE SHEET

AS AT MARCH 31, 2010

(DISCONTINUED OPERATIONS)

ASSETS

As at 31st As at 31st

March 2010 March 2009

(INR in Lacs) (INR in Lacs)

Current assets

Cash 1.57 1.76

Due from Parent Company 0.00 0.00

Other current assets 0.64 0.72

Total current assets 2.21 2.48

Total Assets* 2.21 2.48

LIABILITIES AND STOCKHOLDER’S EQUITY

Current Liabilities

Accrued expenses 3.29 2.34

Customer duties payable - note 2 66.16 74.36

Due to parent company 2.81 3.21

Total current liabilities 72.26 79.91

Stockholder’s equity

Common stock, no par value; authorized 200 shares;

issued and outstanding 200 shares 0.08 0.08

Additional paid in capital 9.61 9.61

Retained earning (deficit) (79.74) (87.12)

Total stockholder’s equity (70.05) (77.43)

TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY** 2.21 2.48

119

ESTER INTERNATIONAL (USA) LTD.

STATEMENT OF INCOME AND RETAINED EARNING

AS AT MARCH 31, 2010

(DISCONTINUED OPERATIONS)

For the Year Ended For the Year Ended

31st March 2010 31st March 2009

(INR in Lacs) (INR in Lacs)

Income:***

Receipts - -

Difference in exchange 8.58 -

Total income 8.58 -

Expenses:****

Professional fees 0.91 1.02

Business taxes 0.29 0.33

Difference in exchange - 16.51

Total expenses 1.20 17.86

Net (loss)/Gain 7.38 (17.86)

Retained earnings (deficit) -beginning (87.12) (69.26)

Retained earnings (deficit) -end (79.74) (87.12)

ESTER INTERNATIONAL (USA) LTD.

STATEMENT OF CASH FLOW

AS AT MARCH 31, 2010

(DISCONTINUED OPERATIONS)

For the Year Ended For the Year Ended

31st March 2010 31st March 2009

(INR in Lacs) (INR in Lacs)

Increase (decrease) in cash :

Cash flows from operating activities :

Profit/ (Net loss) 7.38 (17.86)

Changes in assets and Liabilities :

Other current assets (0.08) (0.72)

Accrued expenses (0.95) (2.22)

Net cash used in operating activities 6.35 (20.80)

Cash flows provided by financing activities :

Due from parent company (6.54) 20.62

Net cash provided by financing activities : (6.54) 20.62

Net decrease in cash (0.19) (0.18)

Cash -beginning 1.76 1.94

Cash -end 1.57 1.76

Supplemental disclosures:

Taxes paid 0.00 0.00

Note : The above said accounts have been converted into INR as per the requirement of Schedule VI of the companies Act, 1956.

* Total assets have been converted at TT Buying Rate as on 31st March 2010 & 31st March 2009 respectively.

** Total liabilities have been converted at TT Selling Rate as on 31st March 2010 & 31st March 2009 respectively.

*** All income have been converted at TT Buying Rate as on 31st March 2010 & 31st March 2009 respectively.

**** All expenses have been converted at TT Selling Rate as on 31st March 2010 & 31st March 2009 respectively.

120

ESTER EUROPE GmbH

DIRECTORS' REPORT

The Directors present their report and the financial statement for the year ended on 31st March, 2010.

PRINCIPAL ACTIVITY AND REVIEW OF THE BUSINESS

Ester Europe GmbH was established in 1998 with the primary objective to trade in Polyester Film manufactured by Ester

Industries Limited in the European market. The objective was also procure orders for Polyester Film and Engineering Plastics

for its parent company on commission basis.

PERFORMANCE

During the year under review, there was no business activities in the Company due to the fact that Company has already

applied for closure and is awaiting approval of the appropriate authority.

The results are enclosed herewith.

The Board approved this report on 03rd May, 2010

Rajiv Arora

Managing Director

121

ESTER EUROPE GmbH

BALANCE SHEET

AS AT MARCH 31, 2010

As At 31st As At 31st As At 31st As At 31st

March, 2010 March, 2010 March, 2009 March, 2009

(DM) (INR in Lacs) (DM) (INR in Lacs)

ASSETS

Current assets:

Cash 10575.53 3.70 10575.53 3.64

Merchandise inventory 0.00 0.00 0.00 0.00

Accounts receivable - trade 0.00 0.00 0.00 0.00

Other current assets 0.00 0.00 0.00 0.00

Total current assets 10575.53 3.70 10575.53 3.64

Property and equipment:

At cost, less accumulated depreciation 0.00 0.00 0.00 0.00

Other Assets:

Security deposits 2000.00 0.70 2000.00 0.69

Retained deficit 60153.39 14.70 60153.39 14.67

TOTAL ASSETS 72728.92 19.10 72728.92 19.00

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable 0.00 0.00 0.00 0.00

Loans payable 19246.93 6.74 19246.93 6.64

Accrued expenses 0.00 0.00 0.00 0.00

Total current liabilities 19246.93 6.74 19246.93 6.64

Stockholders' equity:

Common stock 53481.99 12.36 53481.99 12.36

Retained earnings 0.00 0.00 0.00 0.00

Total stockholders’ equity 53481.99 12.36 53481.99 12.36

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 72728.92 19.10 72728.92 19.00

ESTER EUROPE GmbH

STATEMENT OF INCOME AND RETAINED EARNINGS

YEAR ENDED MARCH 31, 2010

As At 31st As At 31st As At 31st As At 31st

March, 2010 March, 2010 March, 2009 March, 2009

(DM) (INR in Lacs) (DM) (INR in Lacs)

Sales 0.00 0.00 0.00 0.00

Commission received/(paid) 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

Cost of sales 0.00 0.00 0.00 0.00

Gross profit 0.00 0.00 0.00 0.00

Operating expenses:

Selling, general, administrative and other Expenses 0.00 0.00 0.00 0.00

Bank charges 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

Operating income/(loss) 0.00 0.00 0.00 0.00

Other income and (expenses):

Interest income 0.00 0.00 0.00 0.00

Miscellaneous income 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

Net income/(loss) 0.00 0.00 0.00 0.00

Retained earnings /(deficit) - beginning (60153.39) (14.70) (60153.39) (14.67)

Retained earnings /(deficit) - end (60153.39) (14.70) (60153.39) (14.67)

122

ESTER EUROPE GmbH

SCHEDULES OF SUPPLEMENTARY INFORMATION

YEAR ENDED MARCH 31, 2010

For the For the For the For the

year ended year ended year ended year ended

31st March, 31st March, 31st March, 31st March,

2010 2010 2009 2009

(DM) (INR in Lacs) (DM) (INR in Lacs)

Cost of sales:

Inventory - beginning 0.00 0.00 0.00 0.00

Purchases 0.00 0.00 0.00 0.00

Freight 0.00 0.00 0.00 0.00

Other costs 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

Inventory - ending 0.00 0.00 0.00 0.00

Total cost of sales 0.00 0.00 0.00 0.00

Selling, general, administrative and other expenses:

Telephone 0.00 0.00 0.00 0.00

Professional & legal fees 0.00 0.00 0.00 0.00

Tax paid 0.00 0.00 0.00 0.00

Total selling, general, administrative and other expenses 0.00 0.00 0.00 0.00

ESTER EUROPE GmbH

NOTES TO FINANCIAL STATEMENTS MARCH 31, 2010

1. Ester Europe GmbH was incorporated under the laws of the Germany and presently is under closure.

2. During the year ended March 31, 2010 the company has no transactions with its overseas parent company.

3. The Company has no contingent liability as on the date of the Balance Sheet, that is March 31, 2010.

Supplemental Disclosures:

Taxes Paid 0.00

Note : The above said accounts have been converted into INR as per the requirement of Schedule VI of the companies Act, 1956.

* Total assets have been converted at TT Buying Rate as on 31st March 2010 & 31st March 2009 respectively.

** Total liabilities have been converted at TT Selling Rate as on 31st March 2010 & 31st March 2009 respectively.

All income have been converted at TT Buying Rate as on 31st March 2010 & 31st March 2009 respectively.

All expenses have been converted at TT Selling Rate as on 31st March 2010 & 31st March 2009 respectively.

ELECTRONIC CLEARING SERVICE MANDATE FORM

To To

MCS Limited The Depository Participant Concerned

Unit - Ester Industries Limited (In case of Electronic Holding)

F - 65, Okhla Industrial Area, Phase - I,

New Delhi - 110 020

(In case of Physical Holding)

Dear Sir,

Form for Electronic Clearing Services for payment of dividend

I hereby give my mandate to credit my Dividend on the shares held by me under the aforesaid Folio Number directly to my

account through Electronic Clearing Service (ECS). The details are given below -

1. For shares held in physical form

Registered Folio No. :-

2. For shares held in electronic form

(Shareholders holding shares in electronic form should forward this form to their respective Depository participant)

DP ID

Client ID

3. First Shareholder's Name : Shri / Smt. / Kum. / M/s.

4. First Shareholder's Address :

Pin Code

5. Particulars of bank :

Bank Name

Branch Name

& Address

9 Digit Code

(9 Digits code number appearing on the MICR Band of the cheque supplied by the Bank. Please attach a Xerox copy of a

cheque or a blank cheque of your bank duly cancelled for ensuring accuracy of the bank name, branch name and code

number)

Account Type Savings Current Cash Credit

(Tick the appropriate box)

Account no.

(as appearing in the cheque book)

6. Date from which the mandate should be effective :

I hereby declare that the particulars given above are correct and complete. If any transaction is delayed or not effected at

all for reasons of incomplete or incorrect information, I shall not hold Ester Industries Limited or MCS Limited responsible.

I also undertake to advise any change in the particulars of my account to facilitate updation of records for purpose of

credit of dividend amount through ECS.

PLACE :

(Signature of shareholder)

DATE :

REGISTERED OFFICE: Sohan Nagar, P.O. Charubeta, Khatima - 262 308,

District Udham Singh Nagar, Uttarakhand

PROXY FORM

D. P. Id No. Folio No.

Client Id No. No. of Shares

I/We R/o

being a Member/Members of ESTER INDUSTRIES LIMITED hereby appoint Mr./Ms.

R/o or failing him/her Mr./Ms

R/o as my/our Proxy to attend and vote for me/us on my/our

behalf at the 24th Annual General Meeting of the Company to be held on Tuesday, the 27th Day of July, 2010 at 10.30 a.m.

at Sohan Nagar, P.O. Charubeta, Khatima - 262 308, District Udham Singh Nagar, Uttarakhand and/or any adjournment

thereof.

Signed this day of 2010.

Signed by the said

Note: 1. A proxy need not be a member of the Company.

2. A Proxy can not speak at the meeting or vote on show of hand.

3. This form duly completed and signed as per specimen signature registered with the Company should be deposited

at the Registered Office of the Company not less than 48 hours before the time fixed for the commencement of the

Meeting.

4. Strike out whichever is not applicable.

Re. 1/-RevenueStamp

Registered Office: Sohan Nagar, P.O. Charubeta, Khatima - 262 308,

District Udham Singh Nagar, Uttarakhand

24th ANNUAL GENERAL MEETING

ATTENDANCE SLIP

DULY FILLED IN ATTENDENCE SLIP SHALL BE HANDED OVER AT THE ENTRANCE OF THE MEETING HALL

D. P. Id No. Folio No.

Client Id No. No. of Shares

I/We hereby record my/our presence at the 24th Annual General Meeting of the Company to be held on Tuesday, the 27th

Day of July, 2010 at 10.30 a.m. at Sohan Nagar, P.O. Charubeta, Khatima - 262 308, District Udham Singh Nagar, Uttarakhand.

Name of the Shareholder

(IN CAPITAL LETTER)

Name of Proxy

(IN CAPITAL LETTER)

SIGNATURE/S OF THE SHAREHOLDER/S OR PROXY

(To be signed at the time of handing over the slip)

127

Corp. Office:DLF Building No.8 Tower A, 2nd Floor, DLF Cyber City,DLF Phase -II, Sector 25, Gurgaon, Haryana-122 002, India.Phone No.: +91-124-4572100, Fax No.: +91-124-4572199E-mail: info@esterindustries.com

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