Cosmo Films Ltd, India’s second largest BOPP manufacturer (Bi-axially oriented poly propylene film) plans to invest Rs. 2.2 billion by March 2010 to expand capacity aiming to double revenue by 2011/12.
The company plans to increase its capacity of bi-axially oriented polypropylene (BOPP), or plastic-based flexible packaging to 138,000 metric tonnes from 58,000 metric tonne by March 2010. It will also raise thermal films capacity to 22,000 tonnes from 18,000 tonnes by March 2009.
The company’s expansion plans are based on sound financials. Cosmo’s Return on Net Worth stands at 24.1% and interest coverage ratio at 5.7 for FY08 which is higher than its single largest competitor. This capacity expansion will help Cosmo double its revenue in 2011/12 for the year ended March 2008, when it posted revenue of 5.91 billion rupees.
Speaking about the company’s investment plans Mr. Upal Roy Chief Strategy Officer said "The migration of manufacturing of BOPP from mature markets to emerging markets is creating opportunities for export. Today, there is an inherent demand in India because of growth in the retail segment, In terms of revenues Cosmo gets 60 percent of its revenue from sales to Europe, U.S., Africa and Middle East, In addition the company gets 60 percent of its revenue from value-added BOPP, which also gives Cosmo an edge over its competition, Roy said.
Cosmo Films Ltd has set up a US subsidiary with a dedicated sales team, some manufacturing and warehousing facilities in order to cater to the fast growing US market. The company plans to replicate the model in other regions too.
Upal Roy, Chief strategy Officer for Cosmo Films Ltd further stated “The Company’s strategy includes a market facing approach and hence the deployment of front end sales team and warehousing facilities will fuel growth in the targeted regions. The company plans to explore organic and inorganic growth routes in these regions.”
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This strategy will help the company focus on customer requirements and be seen as a local supplier. It will help the company expand its penetration in Western Europe which is incidentally the single largest consumer of BOPP films.
Simultaneously the market for BOPP film, used by food, cosmetics and toiletries and stationary makers, is expanding in India due to the rise of modern format retailing and higher preference for hygienically packed materials. Growth in Indian demand for BOPP film over the next few years is seen at 20 percent compared to 7.5 percent globally.
Cosmo, which counts Hindustan Lever, Nestle India, ITC, Britannia and Godfrey Philips among its customers, plans to raise funds for expansion via debt and convertible warrants issued to the promoters.
About Cosmo Films Ltd:
Cosmo Films Ltd (CFL) promoted by Ashok Jaipuria, is a market leader in the manufacturing of Bi-axially Oriented Polypropylene (BOPP) and is also the largest BOPP film exporter from the Country. In addition the company is also one of the largest manufacturers of thermal lamination films which are exported to Europe and US.
The company’s product range includes: Co-extruded Plain Film (Transparent, Matte, Silky Matte, Opaque, Pearlised, Metallisable & Metallised), Co-extruded Heat Sealable Film (Transparent, Opaque, Pearlised, Metallisable & Metallised), Synthetic Paper, Extrusion Coated Film (based on BOPP, BOPET & BOPA) and Water and Solvent based coated films
Cosmo Films presently has a total of 2 plants and 6 lines in Aurangabad (Maharashtra) and Vadodara (Gujarat). . CFL is associated with leading FMCG Brands for providing cost-effective innovative packaging solutions to enhance their value. Apart from being ISO 9000 certified, CFL has also got accredited with American Institute of Baking (AIB) and British Retail Consortium (BRC) Certification for Safety and Hygiene of Food related products.
Major end-uses of BOPP films are: Food–Snacks, Confectionary, Cosmetics-Toiletries, Label Films, Stationary, and Cigarettes over wraps, Self Adhesive Tapes, Lamination. In a survey by "FORBES" in 2003 Cosmo has been recognized one of the best 200 companies out of 19000 listed companies with revenue of less than 1 Billion US$ outside US.