The Hindu Business Line : Cosmo Films plans Rs 240-cr expansion

Plans ahead
About Rs 120 crore is being spent to develop a new line (the seventh) at its Vadodara plant
After this project, it will add another line in the plant to get an additional capacity of about 40,000 tonnes by 2009-10
The company is now looking at new geographies, with focus on parts of Africa and Eastern Europe

Amit Mitra

Mumbai, Aug. 14 Cosmo Films, India’s second largest manufacturer of BOPP (Bi-axially Oriented Polypropylene) films used to make packing material for FMCG and other companies, has planned a capital expenditure of about Rs 240 crore.

The plan includes expanding its capacities from 56,000 tonnes of BOPP films and 24,000 tonnes of value-added projects to 1.36 tonnes and 33,500 tonnes by 2009-10.

The Indian BOPP market is estimated at 1.70 lakh tonnes and growing at 20 per cent a year, with Jindals being the biggest producer of this product. Cosmo, promoted by Mr Ashok Jaipuria, operates two plants with six lines of production in Aurangabad and Vadodara.

Mr Upal Roy, Cosmo’s Chief Strategy Officer, told Business Line that about Rs 120 crore was being spent to develop a new line (the seventh) at its Vadodara plant. “The capacity of the plant will increase to 96,000 tonnes from the present 56,000 tonnes with this brown-field expansion. The new line will be ready by February next year,” he said.

After the completion of this project, the company will add another line in the plant to get an additional capacity of about 40,000 tonnes by 2009-10, with an investment of about Rs 100 crore.

Mr Roy said the demand for BOPP packaging material was increasing in India due to the retail boom. The major end-users of this product are food, confectionery, cosmetic, toiletries, label films, and cigarettes makers.

In addition to BOPP films, Cosmo also produces about 21,000 tonnes of thermal lamination products, most of which are exported to Europe, US and West Asia. “More than 60 per cent of our revenues of Rs 590 crore come from exports,” he said.

It is adding a 3,000 tonne capacity new line for its thermal lamination products at its manufacturing unit.

The company is now looking at new geographies, with focus on parts of Africa and Eastern Europe. The global demand for BOPP products is estimated at 4.7 million tonnes and growing at 4-5 per cent annually.

The company’s expansion strategy also includes a new metalliser for its existing lines at Vadodara at a cost of Rs 15 crore, which will be operational by March 2009. The process involves vaporising aluminium and depositing it on BOPP films to make the value-added product.

Cosmo, like other companies in this space, has been facing a steep rise in its chief raw material, propylene resins, due to rising crude prices. In the first quarter of this fiscal, the cost of this raw material had increased 30 per cent. “We have been able to pass almost this entire increase through price hikes — in June alone we had taken three price increases,” said Mr Roy. He however said there would be no more price increases in the ensuing quarters with crude prices easing.

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