Ester Industries Limited (500136) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ester Industries Limited Q4 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj from CDR India. Thank you, and over to you.

Thank you. Good day, everyone, and welcome to Ester Industries Q4 and FY '23 Analyst and Investor Conference Call. We have with us today Mr. Pradeep Kumar Rustagi, Executive Director, Corporate Affairs; and Mr. Girish Behal, Business Head. We will begin this call with opening remarks from the management, following which we'll have the floor open for interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward-looking in nature and a note to this effect was sent to you in the invite earlier. We trust you have had a chance to go through the documents on the financial performance. I would now like to invite Mr. Pradeep Rustagi to make his opening remarks. Over to you, Pradeep.

Thank you, Suraj, and thank you, everyone, for joining us today. I have alongside with me Mr. Girish Behal; Business Head present and Sourabh Agarwal, CFO. We will begin the call with a brief overview of our businesses, followed by a walk-through of our financial performance for the quarter and year ended March 31, '23. Starting with Q4 FY '23 performance, both Specialty Polymers and Film demonstrated some recovery during the quarter after a muted Q3 FY '23. Furthermore, our new film plant in Hyderabad as well started commercial operations on 20th January '23. While the utilization levels are expectedly at the lower end, but we are confident of ramping up capacity utilization over the quarters to come. As expected and indicated in earlier calls, the overall pricing and margin environment for the Film business continues to remain weak due to oversupply situation caused by bunching of new capacities and inflationary pressure on costs. As far as Specialty Polymers business is concerned, we saw a sharp recovery in Q4 FY '23 in the performance over Q3 FY '23 with sales of marquee products making a comeback. Q3 performance, as we indicated in our previous call, was largely impacted by recessionary worries and trends in end user markets, mainly U.S. On an overall basis, during FY '23, we have achieved higher revenue by 14% from INR 173 crores to INR 198 crores with profitability in absolute terms, almost in line with FY '22. It is pertinent to mention that FY '21 was impacted by COVID-19-related restrictions [indiscernible] we witnessed significant recovery growth in FY '22. While H1 FY '23 turned out to be very good as compared to H1 FY '22, with revenues improving from INR 81 crores to INR 130 crores that is up by 60%. As to FY '23 was impacted by headwinds caused by recessionary trends in U.S. and other geopolitical issues. If there had been no recession, the performance of SBU would have been much better. However, the prospects of the business remained robust. This is innovative products already commercialized and expected to be introduced in near future. The persistent efforts of R&D deemed to improve innovation pipeline and process enables us to build a healthy product pipeline. Let us now elaborate on the performance of each segment. Starting with Specialty Polymers business, as we mentioned earlier, Q4 FY '23, so the business making the sharp come back with revenues and profitability, both improving significantly on a sequential basis. Q3 FY '23 performance, as we mentioned in our earlier call, was reflective of the recessionary uncertainty prevailing in core market U.S. As Q4 FY '23 witnessed good recovery in volumes of both our marquee products, which helped improve our revenues and profitability. Sales of our lead and established MB03 stood at 285 metric tons as against 143 metric tons in Q3 FY '23 and 299 metric tons in Q4 FY '22. Sales of innovative PBT as well improved to 468 metric tons as against 74 metric tons in Q3 FY '23 and 398 metric tons in Q4 FY '22. On an annual basis, while our top line has seen good growth of 14%, EBIT in absolute term has been relatively steady due to challenging external environment and inflationary pressure on costs. Specialty Polymers, as you may be aware, is largely export-oriented business and any uncertainties and headwinds to global economy are likely to have an impact on its financial performance and growth momentum. The performance of Specialty Polymers is likely to remain impacted during the next 2 to 3 quarters until economic revival in U.S. We expect rapid expansion in both volume and value of sales post economic revival in U.S. We expect business to deliver steady growth over long term, given its innate nature that is limited competition in IT protected business. Our R&D team as well continues to work towards building an exciting and innovative product pipeline, which further reassured us of the robustness and long-term growth prospects of the business. We don't foresee any major risks to the business bring global uncertainties, which may impact its growth momentum. We are also seeing global freight rates moderate, which should help us serve our customers better. Moving on to Film business. On a yearly basis, Film delivered a muted performance in a challenging environment. However, revenue and profitability both improved on a sequential basis during the quarter. Our new Film plant in Hyderabad started its commercial operations during the quarter. To quantify, the unit has achieved sales of 4,757 metric tons, translating into revenues of INR 50 crores. On a consolidated basis, volume improvement over Q3 is largely owing to the commissioning of the new plant in Hyderabad. Despite higher volumes, the financial performance was muted on account of pricing and margin environment that continues to remain challenging. Addition of new capacities in India in a bunch manner has resulted in an increase in overall supply, which in turn has resulted in pressure on margins. The slowdown in the U.S. to Europe and demand-supply imbalance in India is expected to see the industry continue to experience challenges in the near to medium term. In addition to excess supply and recessionary slowdown, we are also witnessing higher prices of inputs, including power and fuel, which in turn are exerting pressure on -- further pressure on profitability. While near- to medium-term outlook is expected to be challenging due to excess supplies and benign realizations and margin, we are working towards improving our product mix by increasing proportion of value-added and specialty portfolio, ramping up the utilization levels of the new plant and cost rationalization to help us offset the headwinds and improve margins and profitability. To achieve higher proportion of value-adding and specialty portfolio, we have invested in an off-line quarter that is expected to be commissioned soon. Buildup of volumes from the new quarter will be achieved gradually and continuously. We are also working on new products that will enable us to improve profitability despite adverse market scenario. The new plant, as we had mentioned in our earlier call, is of 48,000 metric tons per annum capacity. It's split over 50 acres and is built at an approximate cost of INR 680 crores, including margin money for working capital and GST accumulation. The plant is expected to generate revenues worth approximately INR 500 crores to INR 550 crores upon achieving optimal utilization. We have plans in place to export part of the output from the food plant. We would just like to reiterate that both our businesses are well positioned to deliver steady growth over the coming years and create value for our shareholders. While the near-term challenges for Film business persist, we believe we are among the best place players in the industry to tie over the hurdle as demonstrated in the past. Our efforts towards improving product mix, operating leverage, especially in the new plant and cutting down on costs should help us improve profitability. Speciality polymers business at such rate is not ahead of competition and therefore, should continue its growth momentum over the coming years. Furthermore, given that it is IT-protected margins as well will sustain going forward. We are embarking upon a journal of business Process Re-engineering, Digital Transformation and Business Process Automation to make processes more productive, lean, efficient and cost effective. We would now quickly walk you through our financial performance for the quarter and year ended March 31, '23, post which we can begin the question-and-answer session. Starting with the top line. On a stand-alone basis, revenue from operations stood at INR 254 crores as against INR 388 crores reported during Q4 FY '22, lower by 34%, mainly due to effect of divestment of Engineering Plastics business in September '22 and drop in realization of this margin in Polyester Films. However, on a sequential basis, though we have seen a good recovery with Q3 sales being at INR 197 crores, the sequential improvement was on the back of significantly better performance by Specialty Polymers, ably supported by Film business. Revenue from Specialty Polymers for the quarter stood at INR 52 crores as against INR 16 crores generated in Q3 FY '23 and INR 47 crores reported in Q4 FY '22. [indiscernible] Film segment as well reported good recovery on a sequential basis with revenues of INR 400 crores as against INR 181 crores reported in Q3 FY '23 and INR 255 crores in Q4 FY '22. On an annual basis, FY '23 reported revenue of the sales worth INR 1,213 crores as against INR 1,406 crores registered during FY '22. Specialty Polymers reported revenues worth INR 198 crores as against INR 173 crores registered during FY '22, while Film business garnered revenues were INR 879 crores during FY '23 as against INR 937 crores reported during FY '22. Revenue from Engineering Plastics business, SBU, were available for about 6 months and during FY '23 EP SBU generated revenues of INR 136 crores as against INR 295 crores during FY '22. EBITDA, including other income for the quarter stood at INR 19 crores as against INR 56 crores reported in during Q3 FY '23 and INR 65 crores reported during Q4 FY '22. Higher EBITDA on a sequential basis was owing to better profitability in Specialty Polymers business. As mentioned earlier, the pricing and margin environment for Film continues to remain challenging and is expected to remain so in U.S. in medium-term on excess supply in the market, though some recovery in price and margin is due during Q1 FY '24 over Q4 FY '23. For the year, EBITDA including other income stood at INR 136 crores as against INR 252 crores reported during FY '22. Profit after tax from both continuing and discontinued operations for the quarter end FY '23 stood at INR 3 crores and INR 49 crores, respectively. We also made a capital gain after tax of INR 112 crores from slump sale of Indian plastics business. On a stand-alone basis, despite lower EBITDA during FY '23, the net interest-bearing debt is at better than prudent levels of INR 183 crores, which is 1.35x. Such low level of debt was achieved due to profit retained and cash flow generated from slump sale of Indian Plastic SBU. On a consolidated basis, as of March 31, '23, outstanding interest-bearing debt stood at INR 625 crores, which is 6.7x our annualized EBITDA for the current financial year. The multiple looks on the [indiscernible] on account of new plant operations built available only for a quarter. Lower contribution from the same given that it just started commercial production. And that down for the funding of Hyderabad plant owned by our wholly owned facility Ester Filmtech Limited. It is important to mention that higher multiple is not because of higher debt but because of lower EBITDA. As the EBITDA earnings return to normal levels, the debt EBITDA multiple will improve and fall within the prudent levels of about 3 to 3.5x. We believe that our new plants will start contributing to the overall profitability and cash flow as operations and market situation starts to normalize. We consider it necessary to mention that servicing of debt is not considered an issue at all as we have enough liquidity in the form of underutilized working capital limits, investment in liquid and instruments. We remain committed towards maintaining a strong balance sheet that is supportive of our growth initiatives. That brings us to the end of our opening remarks. We would now like to throw open the floor for question and answer.

[Operator Instructions] We have a first question from the line of Tejas Sonawane from Dolat Capital.

Firstly, on the Film business side, we have seen a marginal recovery during the quarter. So what exactly are the drivers for our growth during the quarter in the Film business?

Your voice is not clear? I think you are not using handsets.

Is it better now?

Not yet.

Can you use your handset mode, please?

Am I audible?

Yes, better.

Okay. Sorry for that, sir. So in the Films business, we have seen a marginal recovery during the quarter, so what was the key driver behind the growth for this quarter? And what is your outlook for FY '24 and '25. If you can give us some color on that.

So the December quarter was badly affected because there was loss of production and the margins were very low. There was some recovery in the margins in the March quarter, and therefore -- and the volumes were also higher. So the film plant showed some recovery in March quarter. We have started to see some improvement in the month of May, and we expect, therefore, the March quarter -- June quarter to be better than March. If you were to talk of the yearly outlook, let's say, for the financial year ended March '24, March '25, gradually, there should be improvement in the margin, but it may take more than 2 to 3 quarters for us to be seeing reasonably, let's say, margins at reasonable levels. We have seen gradual improvement. And overall, we expect Films business to be positive, better than, let's say, second half of FY '23 during March '24 and '25.

Okay. Understood. Secondly, on the Speciality...

We are focusing a lot on value-added and Specialty portfolio within Films segment. We had recently made a small investment in the offline quarter, which would help us enable -- achieve higher volumes of that going forward.

Okay. Understood, sir. Secondly, on the Specialty Polymers side. So we have seen good recovery during Q4, so what are your expectations for FY '24? And the kind of growth we have seen in Q4, will that be sustainable over FY '24?

So the first half of FY '23 was very good. Second half was affected, though there was some revival in the Q4. Overall, we expect these to achieve turnover of close to INR 200 crores in '23 -- FY '23. We expect that we would be able to operate within that range in FY '23 because the U.S. is now technical, so it did not declare a recession, but we are seeing signs of recession in there and therefore, we believe that we would still be able to achieve a turnover of close to INR 200 crores in FY '24, which will be almost in line with the FY '23.

Okay. Got it, sir. One last question from my side. What sort of run rate are we expecting on the Ester to impact to achieve in FY '24? And at what utilization level do we expect it to break even?

What happens at were more important than the capacity utilization it is the margin. As the margins start to improve, you should be able to see better performance from Ester Filmtech. Currently, we are operating at about 65% capacity utilization. Technically, we should be able to reach 75% to 80% in a very short period of time, but much will depend on the market conditions. As the margins improve, then we will be able to -- it's not basically dependent too much on capacity, it is rather dependent on margins for the business to be reporting good numbers.

[Operator Instructions] We have a next question from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly is just there's a comment which you made about the performance of our Specialty Polymers, we will be clocking revenue closer to INR 200 crores for FY '24.

That is the estimate we have by the current market scenario.

Okay. And what should be the margin profile from the segment?

Saket, we have always been telling that the margins in Specialty Polymers is not a matter of discussion with the customer because the products are patent protected and the margin is calculated over the raw material costs. So the margin profile should remain more or less in the region that we are seeing now. There could be, let's for example, plus of 30% EBIT margin that we could be seeing in future also.

Because sir Q4, we did 23.5% and for the year as a whole, it was closer to 29%. So what should be the number we should consider for?

It is difficult to assign a number, but if you were to go by, we should be seeing the repeat of the FY '23 in terms of margins.

Okay. The whole year number. Sir, when we look at your performance from the wholly owned subsidiary, if you could explain towards the cash losses higher than the EBITDA part -- when you look at the quarter also EBITDA is INR 10 crore loss and cash profit under cash profit column it is INR 16 crores. So if you could explain the same sir?

So this was the first -- rather, it was not a full quarter when we started commercial production on 20th January, so the first quarter is never indicated because we -- in the first quarter of commercial production, we had a certain stabilization issues -- related issues we plant the efficiencies of the operations is not so much. The margins were also very low during the quarter. But as I said earlier, as we have stated earlier, that as the margins start to improve, which have started. And as we stabilize the operations, we should be seeing better performance from Ester Filmtech as well. We hope to see a rest of the cash losses in after 2 to 3 quarters, that should be possible in Ester Filmtech as well.

Correct, sir. Sir, in your notes to account, it was also mentioned that around INR 4.4 crores was mark-to-market because of foreign exchange restatement. So where is this line item being presented in the P&L?

Yes. So this is nothing we have a foreign country loan of EUR 27 million. So we have done some principle on this fact, and there is some portion which is outstanding not held. So it can mark-to-market because at the end of the each reporting quarter, we have to reinstate the liability. So it's not that we have -- there is an outgo of cash, it is just that the liability has been reinstated at the prevailing rate as on 31st March '23.

So sir under which line item? Is it in the other income?

It's a noncash item.

Yes, it's a noncash item, but where have we clubbed it, whether it's in the other income you have rounded it off or in the other expenses?

Other expenses.

In the other expenses. Also about the value-added segment, you did mention that we did 22%, 23% value-added film. So what should be our target for the current year? And how is the margin profile?

So we are talking about Ester Industries. The value-added segments are not going to be so much in Ester Filmtech because they will have a plain line and a Metallizer. In Ester, we are targeting about 28% to 30% and the margin profile should be in that range. Basically, a 23% value added in volume with close to 34% in value terms that's the kind of -- so I suppose we are able to achieve 30% then our sales value -- in sales value terms, it should be contributing close to 40%.

And can you give us some more color on the raw material mix territory for this quarter and the averages for the year? And what are the current prices?

So this current cycle of PTA and MEG, currently PTA is at out INR 71 -- sorry, INR 73. And -- rather INR 71, and MEG is at about INR 47 and the raw material costs, PTA and MEG per kg is close to INR 77. From April, there was some increase, but now there has been some reduction in the PTA, MEG prices. So PTA, MEG prices are more or less stable barring some fluctuation from month to month.

Right sir. And as you mentioned in your opening remarks that because of the bunching of capacity, there is a pressure on the margin. So how are the current margins in the -- in our Film segment, sir?

We also stated that -- and this has been also experienced by the industry. There has been revival in margins in the month of May over April. April's margins were as low as close to INR 20, which has now increased to about INR 28, INR 29 over PTA, MEG in Ester Industries. And as we speak now, it is in that range only. So there has been significant improvement in the margins from INR 26, let's say, INR 28, INR 29, close to 40%.

And so what was the average for Q3 and Q4 last year?

Q3 was close to INR 20. March was also INR 20, INR 21, INR 22.

H1, sir?

March was INR 21.

No, H1 sir, [Foreign Language] last year, first half [Foreign Language]

H1 should be, just hold on for a minute, Close to INR 37, INR 38.

Okay. Sir going ahead with the type of capacity ramp-up and the demand is the greenfield if you see? Is it a fair assumption that 2 quarters down the line, we will be closer to the INR 35, INR 38 band, rather than staying in this lower band of INR 20, INR 25?

[indiscernible] Girish is coming to this. I think what you're aware that there is a bunching of capacity which has added on stream. And there is a currently global economic situation, which is not looking good. Of course, the Indian demand situation is growing at a robust pace. And as we move along, there will be [indiscernible] demand supply gap that we have that can start to get better and then we do have results into the margin improvement.

Two more questions if I'm permitted to. Sir, if you could give me the net debt number? And also, sir, under the current asset, there is an investment of INR 154 crores. if you could explain what is that attributed to?

Okay. So first I'll share with you the net debt. So the net debt is nothing but the interest-bearing debt might not be liquid investment that we have. The Ester Industries it is INR 183 crores as on 31st March '23. The investment of INR 150 crores is nothing, but the sales profit that we got from the sale of Engineering Plastic Business that has been conserved and it has been invested into safe investment, a safe liquid investment which is giving us a return of close to 8% per annum. So that -- this liquidity is a very good sort of a safety cushion for Ester Industries for it to be able to service the debt on time. This is also the liquidity position, the comfortable liquidity position that we have. It is also one of the reasons why the rating agencies like CRISIL have maintained our credit rating -- external credit rating despite the drop in margins across all the companies in the same industry. So INR 150 crore is nothing but the investment made out of the liquidity generated from sale of Engineering Plastic Business.

Sir, can you give me the net debt number on a consolidated level.

Consolidated level, it is close to INR 600 and -- just a minute.

Net debt.

Net debt, because Ester Filmtech has INR 410 crores of the, let's say, term debt and there is some working capital. So net debt on a interest-bearing debt net of liquidity investment is INR 625 crores on a consolidated basis.

INR 625 crores and the cost of funds sir? Sir cost of funds, the blended cost of funds, the term loan, the working capital?

Yes, yes. In Ester Filmtech, the blended cost of debt is close to 6.5% to 7%.

And in the subsidiary?

In subsidiary, it is about 6.5% to 7%. And in the parent company, it is between 9% to 9.35%.

Correct. And still, sir, there is some left over of capital work in progress of INR 79 crores. So what is that attributable to, sir?

Pardon?

So if the capital work in progress, we find a balance of INR 79 crores.

So like, for example, we have mentioned that we are making investment in off-line quarter, so similarly, there were certain items which were required to be carried out CapEx items to be implemented in Khatima, so it is nothing but the amount of the offline quarter and various other CapExes that were initiated during last year, which are going to be capitalized or completed in this financial year were appearing at CWIP.

I request you to come back in the queue for follow-up questions. We have a next question from the line of [ Jalaj ] from Swan Investments.

Just wanted to understand one thing with regards to the polyester...

Sir, can you use your handset mode, please. We are not able to hear you clearly.

Yes. Am I audible now?

Yes.

Just wanted to understand one thing, by when do we see the polyester business or the polyester vertical picking up or reaching to a good margins per se. And what sort of margins do we see there finally in a good scenario there?

Sorry, we are not clear about your question. Your voice is not coming clearly.

Am I audible now?

It's better now.

I just wanted to understand by when do we expect polyester vertical division will start to contributing to the margins in the profitable manner? And what sort of margins do we see in scenario -- where the demand scenario gets in the right place, and you would want to see it.

I think [indiscernible] clarify your question first. Are you talking about the margin scenario in Film business or Specialty Polymers.

Sir, Film business.

Film business. I think we have already stated that because there's a bumping of capacity, which has created a demand supply situation and has put pressure on margins. As we go along, there will be -- the domestic growth is still going at a robust level, let's say, coming quarters, the demand -- as the demand supply gap narrows, then we would see the margin improvement coming quarter after quarter.

Understood. Sir, what sort of margins do we expect in a scenario when the demand and supply reached to a point when there is a optimum mix there. So what sort of margins do we expect then?

At this point in time, it is difficult to predict a number, but as the margins improve we should be entering into double-digit EBIT margins in double digits, let's say, in after 2 to 3 quarters.

Understood.

In Ester Industries. In Ester Filmtech, it may take longer because there we are making a film from chips and the chips are secured at a certain premium to PTA and MEG price. [indiscernible] the Ester Filmtech may take some more time to come to the double digit numbers, but Ester Industries would definitely be in double digits after 2 to 3 quarters.

Got it. And one last question, if I may. So just wanted to understand the demand scenario per se. Are we facing some headwinds there also? Or I understand that I'm saying right now, it did issue, that's why the margins are what we are seeing, but the demand scenario also, because there facing some scenario issues there or that is still fine there?

I think as we just clarified a while ago, the demand scenario in domestic is still robust. There are some issues in global markets because of recessionary fears and the demand situation in domestic market appears healthy.

We have a next question from the line of Pratap Makwana from Forbes Marshall. Please go ahead.

My first question is regarding, what should be the expected revenue by end of Q1 -- this quarter, by the end of June, as already 2 months has been passed. And as sir mentioned, so that there is an improvement seen from this quarter in terms of the demand side, so we expect some margin improvement also. Now the already 2 quarters had been passed in consolidation phase, so are we think the recovery as per last to last year, which we have seen the great year for Ester. And at the end of financial year '22, '23. So the result, which has been published, it is taken for one for the onetime profit from the plastic sale business. So from this quarter and also from the end of the -- this year. So is there any separate segment will be available of not maintaining this profit, onetime profit and just looking on the stand-alone and consolidated revenue and profit.

You have multiple questions. I think I'll try to answer. During the current quarter, the new investment that what we had done would add volumes to our total P&L on a consolidated basis. As we explained earlier that we have already seen a recovery in margins in this quarter. So those 3 would also contribute.

Great. That's first question. Second, I'm expecting answer for the remaining 2 questions also, sir.

Can you please repeat your question once again?

Yes. already 2 quarters has been on the consolidation phase. So are we seeing the recovery on the similar phase like we have on the last to last year, which was a great year for the Ester. And the last question was the revenue and the profit for the March '23 -- financial year '23 is discovering with the onetime plastic sales business. So what is -- how we can justify the standalone consolidated revenue, not looking at the onetime profit? And what is the expectation from -- expected value from that?

So I think if we are talking about consolidated results, so consolidated of the new entity or the new line which we have commissioned in January has only a few days of operation. So as we go along, new volume would start to, let's say, count in our top line and bottom line. And in terms of, let's say, the overall profitability compared to 2 years ago, the margins currently what we are going through are very different compared to what we had 2 years ago. So there will be a margin pressure if you compare our current results with the results 2 years ago.

Okay. So we see that INR 136 crores of net profit from -- I think in spite of having a lesser revenue around INR 1,150 compared to the INR 1,400 last year, there was a profit of same level, INR 136 crores. That is mainly due to the onetime sale available on the plastic business.

So out of INR 160 crores, INR 111 crores is out of the -- from the sale of the business. That's an extraordinary item. It cannot be repeated year after year. There is no other business to be sold. So we have to look at the profit from the operations, which was INR 49 crores in '22, '23.

Yes. So any guidance on that. So are we aiming for the same profit level of what we -- on top of any improvement on the profit level of INR 136 crores.

Where is INR 136 crores coming from?

Sir all [indiscernible]

Sir, [Foreign Language] business -- sale of business [Foreign Language] INR 111 crores [Foreign Language]

Yes, but this is for this year and also the last year also the net profit was INR 136 crores.

Last year, the Film business was very, very good. And the current oversupply situation will not allow the industry or will not help industry see those kind of margins again for at least this financial year. So to expect that those kind of margins will not get repeated very soon. It will take some quarters, I would say, few quarters close to 7, 8 quarters for us to be able to see those kind of margins again. '21, '22 was a very good year. Demand supply was balanced rather there were some amount of shortage of Film capacity. But now there is an oversupply situation and the growth rate -- as Girish has told, the growth in demand is robust at about 11% to 13% per annum in India. But despite that, it will take some time to be able to achieve those kind of margin levels again.

Okay. Any plan to increase the top level with keeping the margin similar to achieve that kind of profit margin?

We are focusing a lot on increasing the proportion of value-added in the Specialty Films. So the value-added and Specialty Films sets you better margin, and that should help us post the performance better than the previous quarters. But the ramp-up cannot happen drastically in a short span of time. It will be gradual from 23% to 30%, 33%. And -- but it will take about a year to reach that kind of level.

[Operator Instructions] We have a next question from the line of Saket Kapoor from Kapoor & Company.

Sir, if we go to the presentation page -- Slide #19. The headline speaks for green initiatives focus on sustainability. If you could explain towards the green initiative part where in we have mentioned about bio-based fuel consumption, bio-based raw material, if you could explain what this -- how this slide is relevant to us? And what are we trying to convey through it.

I think the slide conveys whatever the green initiative and the sustainability initiatives that we as a company are doing we use bio-waste or rice husk as our fuel which will help us reduce our carbon footprint. We use bio-based raw materials so that at least [indiscernible] move away from using less quantity of raw materials derived from fossil fuel. We promote, let's say, a reduction in usage of packing material so that there is a cost efficiency as well as optimum resource utilization. We -- on our product line, we work on a lot on sustainability, few are mentioned there. So let's say, in many packaging applications, aluminum foil is used, we offer a product, which is a Film, which can give similar, let's say, performance as aluminum foil, despite being very low on weight and cheaper. We offer Film for wherever currently, PVC films are currently used. We offer films made out of polyester, which can replace PVC films, where PVC is currently being used. Apart from that, we -- although it is not mentioned in the slide, we offer now the full range of product, which has got post-consumer recycled content. I'm not sure whether you are aware, the Pollution Control Board has already come with the guidelines on extended producer responsibility, which focuses on usage of -- on the collection and recycling and reuse of recycle plastic, and we are happy to report that we have already done a lot of work in that area. Most of our products have been converted in the variant where we can offer post-consumer recycled content ranging from 30% to going up to as high as 100%. So this is the work which we are doing on promoting sustainability and circular economy. There are products which use the post-consumer recycling material.

The last point, what you mentioned was from 30% to 100%, I missed your comment, if you could repeat that.

I will explain to you. Let's say, we -- as a company, we are -- we have prepared ourselves for these regulations coming in the coming quarters or in coming years. We have made our still or most entire range of products to come within the variance where recycled content is incorporated into the product ranging from 30% to going up to as high as 100%.

And the onus is on the producer itself as per the government norm. It has to be done.

Onus. Each plastic consumer has got an obligation for certain connections, recycling and reuse, so we being a value chain partner, we are happy to offer products which enable them to fulfill their obligation.

So what are the price differentiation in this case is when this is -- every player in the industry is working on the same way.

See, I think most of the players will be working on that. Every player has got their own strength. And since there are hundreds of products, I cannot give you one particular number, I can only say a range, the range could be anywhere between 15% to 30% higher price compared to a product which has no [ polyester ] recycle content.

Right sir and sir, on the fuel consumption part, what percentage of our fuel requirement is from this bio-based after the total fuel mix?

So if you're talking about fuels, I think our heating comes from bio-based fuels. And I think I don't have the right numbers in terms of you that we can safely assume more than 90% of our heating demand is met through bio-based fuels.

Heating and [indiscernible] both and power we are using from the state electricity board, which is mostly hydro power in Uttarakhand and so our convention of furnace oil and HSD is very small, less than 10% of our total consumption on power and fuel.

Okay. And what is the total power and fuel cost, sir for the year?

Total power and fuel cost is anything between INR 8 crores to INR 9 crores a month currently. Last year, it was about INR 116 crores.

And for the utilization levels that I missed your commentary, how have the utilization levels being for the Film business for Q4? And what are the trends for this quarter?

Utilization level?

Yes, sir.

So I'll give you the company by company, just hold on for a minute. Ester Filmtech, which is the -- and is the number for March quarter. We started in -- on 20th January, it is close to 60% and if you talk of Ester Industries, the Film was almost 100%. But June quarter onwards, this could be in the range of because of the demand supply in balance, this would be in the range of 75% to 80%.

So then in that case, the number will be lower what we did for Q4, you were telling that there is a trend...

What happened, the margins are likely to improve, so what you lose on the capacity side is made good by implementing the margin. Even higher margin will lead to higher selling price also.

Correct. So in our Specialty Polymer business line, where in we see the in your Slide #22, you mentioned about the carpet stain removal part, the problem and the solution being offered by us, sir here, we are not getting to domestic debt. This is only export -- the particular client we are selling for this?

See, I think this particular case study is largely relevant for export market because in India, there is very less of nylon carpet, which are used in volume as compared to export market.

Currently, I think the Welspun has come up with a new facility in the current state itself. So does those product profile argue well for our solutions?

I think carpet or any -- is a big subject. We are talking about a carpet made of nylon fiber. So there are many expansions happening in India, and many of these we are working on various of these opportunities. So whether it's Welspun or anybody else, we come up with an idea which where we can add value. Of course, there will be -- we will be doing something with them.

Currently, are there clients or customers in this segment? We are catering to them or?

No, I think as a company, we cannot take one particular company name in this conversation, there are many similar customers who are currently our clients.

On the dividend part, sir, I missed -- I think there's some notification was there for the dividend payout. So if you could...

We already have a dividend payout policy, which is really approved by the board and has been uploaded. So the dividend distribution is always a function of the profit that we make, but it is also dependent on the, let's say, the outlook for the industry, the repayment obligation, the CapEx requirement, the working capital requirement, future cash flow, et cetera. So capturing all this, the directors of the company decided to declare a dividend of INR 0.50 per share in the meeting held on 1st of June '23.

Correct. And sir, what has been the payout to the promoters, I think to the Managing Director as per percentage of...

The promoter family has close to 59% of the holding, so whatever is the total amount of dividend, dividend amount will be INR 4 crores 17 lakhs.

No, sir. I'm talking about the remuneration.

Out of that 9% [indiscernible]

Sorry, sir, I was just speaking about the remuneration as a percentage of net profit that is entitled to Mr. Singhania.

Other than the remuneration, no commission is being claimed by the director. No commission is getting paid to the CMD in the financial year '22, '23. Only the salaries that have already been approved by the AGM -- by the shareholders. About INR 3-point-some crores is the salary that withdraws.

That is what has been paid for this year.

Yes, no commission on the profit this year despite having a profit of about INR 150 crores no commission has been proposed or recommended by the NRCPV Board. And hence, there is no payout on commission to CMB during 2022.

Lastly, there was a breakdown in one of our units last year. So have we come up with the figures of what was the loss? And how are we working with the insurance company [indiscernible] with to clear that.

So there was a breakdown in our continuous polymerisation plant. And since the Steel plant is integrated with the CP plant, there were lots of production in Film plant as well. The loss of production work for 28 days. The assets were restored by end of October. Now they are running fine. We have launched the insurance claims, and this insurance claim is likely to be settled through, let's say, by end of July or mid-August. And the total amount of prem is going to be in the range of anything between INR 4.5 crores to INR 6 crores. We have two kinds of coverages. One is the property damage and the other is the loss of profit. So property damage is very simple. To the extent of the damage, the compensation will come from the insurance company. Loss of profit requires a lot of calculation at the surveyor's end and therefore, the right range of about INR 4 crores to INR 6 crores for the insurance claim.

Lastly that we have been noticing that not to put a thing in just to put it entirety, Mr. Singhania is not attending the calls for last 2 quarters. Any particular reason he has opted out or not seeking to investors [indiscernible] sir?

So he wants the second line to be fully developed to be able to answer the question on the shareholders. So it's a step in preparing the next line, we'll be able to do what he was doing earlier. I put across this point of you and it is possible, he would attend 1 or 2 calls going forward. And as of now, he has given his job to Girish and me?

Yes, sir, we have been adequately answered with all the questions to the utmost satisfaction. Thank you for the presentation also, sir, that it speaks of volume, and it gives us a correct picture of what the current situation is. So please continue with this in the same process.

As there are no further questions, I would like to hand the conference over to management for closing comments. Over to you.

Thank you, everyone, for participating in the earnings call. We look forward to meeting you all by end of July or, let's say, first fortnight of August when we are ready with our June quarter results. Thank you so much.

Thank you, sir. On behalf of Ester Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.