4.14 Provisions

Provisions are recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.

4.15 Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.

4.16 Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, right issue and share split transaction.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period 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.

4.17 Operating segments

operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is considered to be the Board of Directors who makes strategic decisions and is responsible for allocating resources and assessing performance of the operating segments.

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 and Sale of Polyester film and Engineering plastics.

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 and expense, which are not identifiable to any business segment.

4.18 Significant management judgement and estimates

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.

Significant management judgements

Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilized.

Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Contingent liabilities - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

Significant estimates

Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or noncompliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.

Defined benefit obligation (DBO) - Management’s estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.

Allowance for expected credit losses - The allowance for doubtful debts reflects management’s estimate of losses inherent in its credit portfolio. This allowance is based on Company’s estimate of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, write-offs and collections, the careful monitoring of portfolio credit quality and current and projected economic and market conditions. Should the present economic and financial situation persist or even worsen, there could be a further deterioration in the financial situation of the Company’s debtors compared to that already taken into consideration in calculating the allowances recognised in the financial statements.

Allowance for obsolete and slow-moving inventory - The allowance for obsolete and slow-moving inventory reflects management’s estimate of the expected loss in value and has been determined on the basis of past experience and historical and expected future trends in the market. A worsening of the economic and financial situation could cause a further deterioration in conditions compared to that taken into consideration in calculating the allowances recognized in the financial statements.

Provisions - At each balance sheet date basis management estimate, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

Impairment of non-financial assets- If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

4.19 Non-current assets held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. The appropriate level of management must be committed

to a plan to sell, an active programme to locate a buyer and complete the plan has been initiated, the sale is considered highly probable and is expected within one year from the date of classification. Non-current assets (or disposal groups) held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately from other assets and liabilities in the balance sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised. A discontinued operation is a component of the Company that either has been disposed of, or is classified as held for sale, and:

a) Represents a separate major line of business or geographical area of operations,

b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or

c) Is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing operations and are presented separately in the statement of profit and loss

4.20 Share based payment

Employees of the Company receive remuneration in the form of share-based payments in consideration of the services rendered (equity settled transactions).

Under the equity settled share-based payment, the fair value on the grant date of the Options given to employees is recognised as ‘employee benefit expense’ with a corresponding increase in equity over the vesting period. The fair value of the options on the grant date is calculated using an appropriate valuation model.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. An additional expense is recognised for any modification that increases the total fair value of the shares-based payments transactions, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. When the options are exercised, the Company issues fresh equity shares.

5. Recent accounting pronouncements

The Ministry of Corporate Affairs had notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind As which are effective for annual periods beginning on or after 1 April 2023. The Company applied for the first-time these amendments.

Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments have had an impact on the Company’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any Items in the Company’s financial statements.

Definition of Accounting Estimates - Amendments to Ind AS 8

The amendments had no impact on the Company’s standalone financial statements.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments had no impact on the Company’s standalone financial statements.

For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

I. Term loans

a) From Canara Bank of ? NIL (31 March 2023 : ? 301.71 lacs) as capex loan for augmentation of capital expenditure (modification, de-bottlenecking, modernization, cost reduction and maintenance capex). The term loan bearing floating interest at the MCLR plus 0.65% per annum. The term loan is repayable in 60 equal monthly instalments starting from September 2019.#

b) From Karnataka Bank Limited of ? 931.44 lacs (31 March 2023 : ? 1,366.09 lacs) as capex loan for capital expenditure (purchase of plant and equipments). The term loan bearing floating interest at the MCLR plus 0.50% per annum. The term loan is repayable in 60 unequal monthly instalments starting from October 2020.##

c) From Tata Capital Limited of ? NIL (31 March 2023 : ? 122.86 lacs) as corporate loan for augmentation of working capital bearing floating interest at the LTLR minus 9.50% per annum. The corporate loan is repayable in 16 unequal quarterly instalments starting from Sep 2019.#

d) From Tata Capital Limited of ? 659.86 lacs (31 March 2023 : ? 1,220.01 lacs) for infusion of funds in Subsidiary Company of borrower (Ester Filmtech Limited). The term loan is secured by equitable mortgage by way of deposit of title deeds of land and corporate office building constructed thereupon in Gurgaon andfirst and exclusive charge over the hypothecation of certain plant and equipments installed at factory premises at Uttarakhand and further securedby irrevocable guarantee of its holding company and personal guarantee of Mr. Arvind Singhania. The term loan bearing floating interest at the LTLR minus 9.10% per annum. The loan is repayable in 54 equal monthly instalments starting from Dec 2020.

e) From Tata Capital Limited of ? 1,387.28 lacs (31 March 2023 : ? 2,614.84 lacs) for infusion of funds in Subsidiary Company of borrower (Ester Filmtech Limited), general corporate and capex. The term loan bearing floating interest at the LTLR minus 11.25% per annum. The loan is repayable in 60 equal monthly instalments starting fromJune 2022. ##

f) From Tata Capital Limited of ? 735.38 lacs (31 March 2023 : ? 877.24 lacs) for infusion of funds in Subsidiary Company of borrower (Ester Filmtech Limited),general corporate and capex. The term loan is secured by equitable mortgage by way of deposit of title deeds of land and corporate office building constructed thereupon in Gurgaon andfirst and exclusive charge over the hypothecation of certain plant and equipments installed at factory premises at Uttarakhand and further securedby irrevocable guarantee of its holding company and personal guarantee of Mr. Arvind Singhania. The term loan bearing floating interest at the LTLR minus 11.25% per annum. The loan is repayable in 84 equal monthly instalments starting from June 2022.

g) From Tata Capital Limited of ? 2,426.62 lacs (31 March 2023 : ? NIL) for infusion of funds in Subsidiary Company of borrower (Ester Filmtech Limited), general corporate and capex. The term loan is secured by equitable mortgage by way of deposit of title deeds of land and corporate office building constructed thereupon in Gurgaon and further securedby irrevocable personal guarantee of Mr. Arvind Singhania.. The term loan bearing floating interest at the LTLR minus 11.80% per annum. The loan is repayable in 84 monthly instalments starting from Oct 2023.

h) From Bajaj FinanceLimited of ? 1,792.33 lacs (31 March 2023 : ? 2,386.49 lacs) as loan for general corporate and capex purpose. The term loan bearing floating interest linked to BFL IRR at the rate of 8.00% per annum. The term loan is repayable in 60equal monthly instalments starting from April 2022 .##

i) From Bajaj FinanceLimited of ? 2,390.1 lacs (31 March 2023 : ? 2,984.07 lacs) as loan for general corporate and capex purpose. The term loan bearing floating interest linked to BFL IRR at the rate of 7.35% per annum. The term loan is repayable in 20 equal quarterly instalments starting from May 2023 .##

j) From IDFC Limited of ? NIL (31 March 2023 : ? 315.96 lacs) as capex loan for capital expenditure incurred by the Company. The term loan bearing floating interest at the MCLR plus 1,50% per annum. The term loan is repayable in 12 equal quarterly instalments starting from Dec 2020.#

k) From IDFC Limited of ? 215.9 lacs (31 March 2023 : ? 860.45 lacs) as capex loan for capital expenditure incurred by the Company. The term loan bearing floating interest at the MCLR plus 0.30% per annum. The term loan is repayable in 37 equal monthly instalments starting July 2021.#

Term loans (cont’d)

l) From Axis Finance Limited of ? 1,992.64 lacs (31 March 2023 : ? 2,784.82 lacs) as capex loan for capital expenditure incurred by the Company. The term loan bearing floating interest at the MCLR plus .85% per annum. The term loan is repayable in 18 unequal quarterly instalments starting March 2022.##

m) From QNB Bank of ? 2,848.9 lacs (31 March 2023 : ? 3,983.25 lacs) as capex loan for capital expenditure incurred by the Company. The term loan bearing floating interest at the MCLR plus 1.80% per annum. The term loan is repayable in 42 equal monthly instalments starting April 2023.#

n) From Shinhan Bank of ? 3,549.17 lacs (31 March 2023 : ? 3,990.16 lacs) as capex loan for capital expenditure incurred by the Company. The term loan bearing floating interest at the repo rate plus 2.10% per annum. The term loan is repayable in 18 equal quarterly instalments starting Dec 2023.##

# Above term loans are secured by first pari passu charge on fixed assets of the Company (both present and future) including factory land and building at Pilibhit Road, Sohan Nagar, P.O. Charubeta, Khatima-262308, Distt Udham Singh Nagar, Uttarakhand with other lenders, except fixed assets that are exclusively charged to Tata Capital Financial Services Limited & Vehicles and second Pari passu charge on current assets and further secured by irrevocable guarantee of its holding company and personal guarantee of Mr. Arvind Singhania.

## Above term loans are secured by first pari passu charge on fixed assets of the Company (both present and future) including factory land and building at Pilibhit Road, Sohan Nagar, P.o. Charubeta, Khatima-262308, Distt Udham Singh Nagar, Uttarakhand with other lenders, except fixed assets that are exclusively charged to Tata Capital Financial Services Limited and second Pari passu charge on current assets and further secured by irrevocablepersonal guarantee of Mr. Arvind Singhania.

II. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the loans. Vehicle loans bearing interest rates ranging from 7.25% per annum to 10.25% per annum. These loans are repayable in monthly instalments till Jan 2028.

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company’s exposure to credit risk is influenced mainly by cash and cash equivalents, investments, trade receivables and other financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

A: Low credit risk B: Moderate credit risk C: High credit risk

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period (including extension). Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

(B) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(i) Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s borrowings with floating interest rates.

(ii) Foreign exchange risk

Foreign exchange risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company’s operating, investing and financing activities. The Investment and Borrowing Committee evaluates foreign exchange rate exposure arising from foreign currency transactions on periodic basis and follows appropriate risk management policies.

The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and exports). Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency.

35. Segment reporting

The Company operates in three segments manufacturing and sale of polyester film engineering plastics and speciality polymer. The Company has chosen business segments considering the dominant source of nature of risks and returns, internal organisation, management structure and the manner chief operating decision maker (CODM) review the financial performance of the business for allocating the economic resources. A brief description of the reportable segment is as follows:

Polyester chips and film: Polyester chips andfilms that are used in primarily flexible packaging and other industrial application. Polyester film is known for high tensile strength, chemical and dimensional stability, transparency,reflective, gas and aroma barrier properties and electrical insulation. PET chips is the main raw material used to manufacture the film.

Engineering plastics-Discontinued : Engineeringplastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc. Speciality Polymer: Specialty Polymers are Polymers that are high performance material catering to the global needs of the industries / applications such as carpets, textiles, food and beverages, consumer electronics, industrial etc. which cannot be met by commodity PET grades.

Information about major customer

During the year ended 31 March 2024 revenue of approximately 6.01% (31 March 2023: 6.96%) was derived from a single external customer in the polyester chips and film business and approximately 24.03% in 31 March 2023 (31 March 2023: 66.42%) was derived from a single external customer in the speciality polymer business.

Non-current assets

Non-current assets of the Company (property, plant and equipment, capital work-in-progress, intangible assets) are held in India.

36. Capital management

The Company’s objectives when managing capital are to:

- To ensure Company’s ability to continue as a going concern, and

- To provide adequate return to shareholders

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would attract penalty/ financial interest. There have been few breaches in the financial covenants due to decline in performance of the Company. However, default in financial covenant doesn’t lead to calling of loan by banks.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The amounts managed as capital by the Company are summarised as follows:

* Due to lower performance(loss) as compared to last financial year

** Due to reduction in working capital. In current assets, inventory as a % of sale had reduced due to lesser inventory holding period, reduction in trade receivables is due to decline in sales, reduction in current investment due to sale of investments in the current year.

*** Investments in mutual funds were made in October 2022 for the fiscal year 2022-23 but were not present for the entirety of the last fiscal year.

46. Audit trail

The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

During the current year, the audit trail (edit logs) feature for any direct changes made at the database level was not enabled for the accounting software SAP S/4 HANA used for maintenance of books of account. The management will evaluate the implementation of audit logs at database level for all the accounting software in the next financial year.

47. During the year ended 31 March 2024, the Company has raised money by the way of issuing 1,05,60,250 Equity Shares of face value of ? 5 per equity share on preferential basis for cash to Promoter & Promoter Group and Non-Promoter Category at a price of ? 94.60 per equity share (including a premium of ? 89.60 per equity share) aggregating to ? 9,990 lacs. The issue was made in accordance with applicable Regulations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 [‘SEBI (ICDR)]. Expenses incurred in relation to preferential allotment amounting to ? 13.57 lacs (net of taxes) have been adjusted from securities premium account. As per the offer document, entire proceeds will be used for the purpose of repayment of term loan, investment in subsidiary of the Company and general corporate purpose. As on 31 March 2024, 100% proceeds of the aforesaid allotment were unutilised and were temporarily parked/ invested in fixed deposits

48. Additional regulatory information not disclosed elsewhere in the standalone financials statements.

(a) No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(g) No funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entities, including foreign entities (‘the intermediaries’), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.

(h) No funds have been received by the Company from any persons or entities, including foreign entities (‘the Funding Parties’), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(i) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

(j) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(k) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

49. The previous year numbers have been regrouped/ reclassified wherever necessary to conform to current year presentation.

50. No subsequent event occurred post balance sheet date which requires adjustment in the standalone financial statements for the year ended 31 March 2024.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of

Chartered Accountants Ester Industries Limited

Firm Registration No. 001076N/N500013

Sd/- Sd/- Sd/- Sd/- Sd/-

Nitin Toshniwal Arvind Singhania Pradeep Kumar Rustagi Sourabh Agarwal Poornima Gupta

Partner Chairman & CEO Executive Director - Corporate Chief Financial Officer Company Secretary

Affairs

Membership No.507568 DIN: 00934017 DIN: 00879345 Membership No. A49876

Place: New Delhi Place: New Delhi Place: New Delhi Place: New Delhi Place: New Delhi

Date: 22 May 2024 Date: 22 May 2024 Date: 22 May 2024 Date: 22 May 2024 Date: 22 May 2024