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Ester Industries Limited Q4 FY '24 Earnings Conference Call Summary
Submission Details • Date of submission: May 27, 2024 • Earnings call date: May 24, 2024 • Compliance: Submitted transcript to BSE and NSE as per SEBI regulations • Key executives present: Chairman and CEO Arvind Singhania, moderated by Gavin Desa from CDR India
Joint Venture Announcement • Partnership: Joint venture with Loop Industries • Purpose: Establish manufacturing facility in India for lower-carbon-footprint recycled dimethyl terephthalate (rDMT) and recycled monoethylene glycol (rMEG) • Investment: Estimated cost of $165 million • Projected outcomes: • Operations to start in early 2027 • Internal rate of return (IRR) of 25% • Equity IRR of 35%
Financial Performance Insights • Film Business Challenges: Temporary demand-supply imbalance affecting pricing and margins • Specialty Polymer Recovery: 20% sequential growth in key products • Revenue Decline: 14% drop in standalone revenues due to pricing pressures
Q&A Highlights • BOPET Film Demand: Improving with growth exceeding 15% • Specialty Polymer Projections: Expected turnover growth from INR 100 crore to INR 350-400 crore in 3-4 years • BOPET vs. BOPP: Acknowledgment of better demand-supply situation in BOPP; optimism for BOPET recovery • Debt and Financing: Gross debt at INR 780 crore; net debt at INR 610 crore; fundraising of INR 100 crore confirmed
Future Outlook • Utilization and Margins: Anticipated increase in utilization levels and improved margins • Specialty Polymers Revenue: Projected to double to INR 200 crore in FY '25 • Capex Plans: No additional capex until current capacity is fully utilized; maintenance capex estimated at INR 15-20 crore annually
Capital Work in Progress (CWIP) • Investments: INR 20 crore in offline coater for specialty films; revamping of continuous polymerization plant • Sustainability: Confirmation of availability of required waste for recycling project • Debt-Equity Ratio for JV: Stated as 60:40
Conclusion • Positive demand trends noted in the core film business, with expectations for recovery in FY '25 to FY '26.
Ester Industries Limited Q3 FY24 Earnings Call Summary
Date and Participants • Date of Call: February 15, 2024 • Key Executives: • Arvind Singhania (Chairman and CEO) • Sourabh Agarwal (CFO)
Financial Performance • Standalone Revenues: Rs. 204 crore for Q3 FY24 • EBITDA Loss: Rs. 1 crore • Causes: • Disruptions in the film business • Inflation concerns in the specialty polymer sector • Film Business Challenges: • Excess market capacity leading to declining prices and margins • Robust demand growth rate not translating to improved performance • Specialty Polymer Business: • Volume growth below historical levels due to U.S. economic uncertainties
Fundraising and Liquidity • Equity Placement: Raising Rs. 100 crore to strengthen liquidity and meet obligations • Use of Proceeds: • Strengthen cash flow • Meet repayment obligations • Cover losses
Business Segments and Shareholder Update • Value-Added Products: • 24% of sales from high-margin packaging films • New Shareholder: Modi Rubber classified as a promoter • Background on RJ Corp: Holding company for Varun Beverages and Devyani International
Operational Performance • Cash Losses: Rs. 22 crore (including depreciation) • Utilization Rates: • Esther Filmtech: 50-60% • Khatima Plant: 75-80% • Raw Material Prices: Stable
Future Outlook • Management Confidence: Long-term growth prospects for both business segments • Next Earnings Call: Scheduled for May 2024 for further updates
Ester Industries Limited Q2 FY24 Earnings Conference Call Summary
Key Highlights • Date of Call: November 9, 2023 • Revenue: Rs. 244 crore • EBITDA: Rs. 3 crore • Net Loss: Rs. 13 crore
Sector Challenges • BOPET Films: • Experiencing excess supply due to new capacities. • Resulting in reduced pricing and margins.
• Specialty Polymers: • Affected by economic uncertainties in the U.S. • Significant volume decline attributed to the ongoing recession.
Financial Performance • Revenue Decline: 21% drop in standalone revenues. • EBITDA Drop: 91% decrease, leading to a loss compared to a profit in Q2 FY23. • Ester Filmtech: Generated Rs. 64 crore in revenue but incurred an EBITDA loss of Rs. 3 crore.
Future Outlook • Recovery Expectations: • Optimism for recovery in margins and demand, especially for polyester film. • Anticipated recovery in specialty polymers by mid-2024.
• New Regulations: • Plastic waste management regulations effective April 2025 expected to boost demand for polyester films.
Raw Material Prices • Stability in PTA and MEG prices noted. • Consolidated debt at Rs. 750 crore, with a comfortable liquidity position.
Industry Dynamics • Projected growth rates of 10-12% domestically and 6% globally. • FMCG sectors, particularly snack foods, driving growth.
Capacity and Production • Telangana facility operating at 65% capacity. • Limited domestic expansions; international capacity increases, especially in China, are uncertain.
Conclusion • Projected future margins in the range of Rs. 40 to Rs. 45 per kg. • Confidence in overcoming current challenges and returning to previous performance levels in the medium to long term.
Ester Industries Limited Q1 FY24 Earnings Conference Call Summary
Key Financial Highlights • Revenue: Rs. 206 crore, down 49% year-over-year • EBITDA: Rs. 13 crore, reflecting an 82% decrease • Net Loss: Rs. 5 crore compared to a profit of Rs. 42 crore in Q1 FY23
Business Segment Performance • Film Business: • Faced excess supply and muted export demand • Specialty Polymer Segment: • Impacted by recessionary concerns in the US
Management Outlook • Expressed optimism for future growth • Ongoing efforts to enhance product offerings and operational efficiency
Plant Operations and Utilization • Telangana Plant: • Shutdown for stabilization post-commissioning • Full capacity: 48,000 tons; only 5,800 tons produced last quarter • Uttarakhand Plant Utilization: • 50% for EFL, 90% for Ester Industries • Expected above 90% for September quarter
Financial Details • Total Debt: Approximately Rs. 650 crore • Debt Repayment: Rs. 100 crore scheduled for the current year • Raw Material Prices: Stable • Film Business Margins: Less than 2% • Specialty Business Margins: Around 30%
Value-Added Sales • Percentage: 28% in June quarter • Target: 20% to 30% for the full year
Future Expectations • Anticipated turnover for Specialty Polymer segment: Rs. 200 crore in FY23-24, contingent on US market recovery
Additional Notes • Request for Mr. Rustagi or Mr. Singhania's presence in future calls • Plant visit arrangements suggested through IR or Secretarial team • Revenue targets for the next two years are uncertain, dependent on product realization and raw material costs
Conclusion • Call concluded with thanks and hope for the next earnings call.
Ester Industries Limited Earnings Call Summary (June 5, 2023)
Compliance and Call Overview • Transcript submitted to BSE and NSE on June 8, 2023. • Moderated by Suraj Digawalekar from CDR India. • Key executives included Pradeep Kumar Rustagi and Girish Behal. • Included opening remarks and Q&A; forward-looking statements noted.
Q4FY23 Performance Highlights • Recovery in Specialty Polymers and Films segments post Q3FY23 challenges. • New Film Plant in Hyderabad began operations in January 2023. • Films business faced pricing and margin pressures; Specialty Polymer segment rebounded.
Financial Results for FY23 • Revenue increased by 14% to Rs. 198 crores. • Total revenue declined to Rs. 1,213 crores from Rs. 1,406 crores in FY22. • EBITDA decreased to Rs. 136 crores; net profit was Rs. 49 crores. • Capital gain from divestment of Engineering Plastics business included.
Q1 FY24 Financials • EBITDA of Rs. 136 crores, down from Rs. 252 crores in FY22. • PAT for the quarter was Rs. 3 crores. • Consolidated interest-bearing debt at Rs. 625 crores; improved net debt on a stand-alone basis.
Management Insights and Projections • Gradual margin improvements expected for FY '24 and '25. • Specialty Polymers segment turnover projected at Rs. 200 crores for FY '24. • Current capacity utilization at 65%, with potential to reach 75-80%.
Strategic Focus and Challenges • Emphasis on innovation, product mix improvement, and operational efficiency. • Cautious optimism about future performance amid global economic uncertainties. • Plans to enhance value-added Specialty Films to improve margins.
Sustainability Initiatives • Use of bio-waste for fuel to reduce carbon footprint. • Development of products with 30%-100% post-consumer recycled content. • Anticipated price increase of 15%-30% for recycled products.
Additional Notes • Dividend payout of INR 0.50 per share announced. • No commission for the CMD despite profits; only salary of Rs. 3 crore withdrawn. • Production loss due to breakdown in continuous polymerisation plant addressed. • Future earnings call planned for late July or early August for Q2 results.
Ester Industries Limited Earnings Call Summary
Submission Details • Date of earnings call: February 16, 2023 • Transcript submitted to BSE and NSE on February 23, 2023 • Moderated by Gavin Desa from CDR India • Key executives present: Pradeep Kumar Rustagi (Executive Director) and Girish Behal (Business Head) • Transcript available on the company's website
Company Performance Overview • Quarterly Results: 32% decline in revenues to Rs. 197 crore; negative PAT of Rs. 9 crore • Nine-Month Performance: Steady revenues at Rs. 825 crore • Future Growth: New plant in Telangana expected to contribute positively
Business Segment Challenges • Film Business: Facing excess supply and margin compression due to increased market capacity • Specialty Polymer Business: Impacted by US recession concerns, leading to lower sales and profitability • Optimism: Management remains hopeful for recovery, especially in the Specialty Polymer segment
Capacity and Utilization • Telangana Plant: Operating at 70% capacity; Khatima plant nearly at full capacity • Production Loss: 3,000-ton loss due to breakdown equating to a 20% reduction in quarterly capacity
Pricing and Market Conditions • Pricing Trends: Decline in selling prices for films due to competition and new capacities • Raw Material Costs: Stabilized; focus on increasing value-added products from 23% to 30-35%
Financial Insights • Foreign Exchange Gains: Approximately Rs. 5 crore reported this financial year • Revenue Projections: Rs. 70-75 crore expected from Telangana in Q4
Operational Challenges • Breakdown Impact: 20% loss in volume translating to Rs. 30 crore revenue loss in December quarter • Future Expectations: Return to normal operational levels anticipated in the next quarter
Communication and Transparency • Investor Communication: Suggestions for improvements acknowledged by management • Land Holdings: 50 acres in Khatima and 50 acres in Telangana available for future expansion
Conclusion • Commitment: Focus on reviving profitability and addressing operational challenges amidst market dynamics.