Cosmo First — a global manufacturer of specialty films used for packaging, lamination and labeling applications — will invest ₹500 crore in capex over the next two years. A chunk of this investment will be allocated towards the company’s films business, Zigly, and the expansion of its film vertical, Pankaj Poddar, Group CEO, told businessline.
The company operates three business verticals — the packaging business; the chemicals business (Cosmo Speciality Chemicals); and the D2C start-up Zigly. In addition to adding capacities, the company will enter the rigid packaging space as part of its film business expansion by the next quarter of this year, said Poddar.
The company will also manufacture rigid packaging for the FMCG industry with the help of two different technologies — thermoforming and injection moulding — largely with polypropylene.
“We are making different types of containers for these brands, for example, printed and labelled. There will be complete backward integration from masterbatch to films to sheets,” he said.
‘Strong balance sheet’
Currently, the company runs four manufacturing facilities: three in India (two in Aurangabad and one in Vadodara) and one in Korea, which mainly caters to Korea and Japan. “Most of our expansions are actually coming in and around Aurangabad and Vadodara,” said Poddar.
On the funding of the capex, the company said it will be a mix of internal accruals and debt. “All the debt has already been organised and signed up for. We have a strong balance sheet,” the Group CEO said.
In FY22, the company generated an impressive annual turnover of ₹3,229.7 crore. Despite facing challenges in the last two quarters due to global market pressure that led to the lowering of net profits, Poddar said the company has performed better than its competitors, thanks to the specialty business operations.
“Having said that, yes, we were also partially impacted and see typically what happens in this industry. Especially when it comes to BOPP films, it has to go through certain cycles,” he added.
Poddar also noted that the markets may continue to remain soft for a quarter or two. However, since the company has been actively engaged in building businesses, it has stayed away from cycles and has been as specialty-oriented as possible. “One is a consumer business, and the other is a chemical business; both are not so dependent on cycles.”
At a group level, Cosmo targets to reach a turnover of ₹5,000-6,000 crore in three years from now. It expects the growth to come from a mix of new and old businesses.
“A major part of this growth will actually come from the films business. Even the new businesses will start scaling up.... Moreover, as we keep moving year after year, we feel that they will become sizable businesses in the years to come,” the CEO said.
Overall, the company has a headcount of 1,200, of which 30 are part are at the R&D centre. Cosmo expects to add another 100-125 people this year.