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Cosmo Films to expand capacity

S. Muralidhar

NEW DELHI, April 9

COSMO Films Ltd, the flagship company of the Cosmo group, is planning to expand capacity at its facility manufacturing bi-axially- oriented polypropylene (BOPP) from 14,000 tonnes per annum (tpa) to 23,000 tpa.

The new line for the manufacture of an additional 9,000 tpa is expected to be commissioned and operational by August or September this year. The company is investing about Rs 47 crore in the new line, which would be funded largely through internal accrua ls and through term loans from financial institutions.

Speaking to Business Line, Mr Ashok Jaipuria, Chairman, said that despite a slight over-capacity in the industry, the company was hopeful of leveraging its strengths in the exports market to productively utilise the additional capacity being set up.

Cosmo Films has also made forays into niche segments such as aesthetic and specialised laminations for applications such as packaging of processed foods and fast moving consumer goods.

These measures have helped the company export a most of its production and it accounted for 80 per cent of all BOPP exports out of the country, according to Mr Jaipuria.

Further, almost 80 per cent of the company's exports are to the advanced, demanding markets in Europe and the US, where it supplies partly to dealers and distributors. It also makes direct shipments to original equipment manufacturers (OEMs).

According to Mr Jaipuria, since BOPP is a high volumes business, companies with assured markets will be able to generate considerable profits.

The domestic market for BOPP is growing by 20 per cent

annually. However, due to excess capacity in the last eight years, there has been a slowdown in the industry. The current industry capacity is pegged at about 52,000 tpa.

Cosmo Films, which was battling cost-overruns and an erosion of its bottomline, has reworked its processes and costs in the last three years.

This had helped the company make a dramatic turnaround and has brought it back into the black, Mr Jaipuria said.

For the financial year 2000-01, the company is projecting exports of about Rs 45 crore and a total turnover of Rs 115 crore.