The company posted an EBITDA of Rs 93-crore during Q1 FY21 on the back of higher specialty sales (up by 20%) and improved operating margins. Pent-up demand from the previous quarter and supplies opening up in a phased manner led to a favourable demand-supply scenario and improved margins.
The Covid-19 pandemic had a marginal impact during the quarter. The company expects that Covid-19 impact may remain only marginal in the following quarters too barring unforeseen conditions.
Pankaj Poddar, CEO, Cosmo Films, said, “The company will continue to invest in R&D and grow its specialty film portfolio thereby improving margins. The company is also investing in several new initiatives including artificial intelligence, data mining, cloud computing, etc which should help to achieve automated paperless processes, lower the operating costs and provide superior service to the customers and other stakeholders. The company’s 100% subsidiary is poised to start speciality masterbatches production in Q2FY21 and chemicals in Q4FY21.”
He added that as a part of its sustainability drive, Cosmo Films has taken a target to be water-positive at all its plant locations, increase in-house consumption of process waste (continuously being reduced) and also improve air quality by planting thousands of fruit-bearing trees. The company is taking several other measures on the sustainability front to help customers and society at large and reduce costs.
“The company’s net debt now stands below two times of the EBIDTA and investment in new capacities is being evaluated to further strengthen the company’s share of specialty films,” he said.
On Cosmo Films’ foray into pet care business, Poddar said the company is going ahead with the pilot launch in Delhi-NCR investing about Rs 15-crore over the next 18 months to ascertain the viability of the pet care business to launch it at a larger scale.
The overall investment is expected to remain marginal vis-à-vis the size of the existing business.
Pet care business has been growing in India at 22% CAGR. With smaller families, rising income levels and limited social lives (especially post-Covid), pet adoption has increased and expected to grow manifolds. The business scenario is highly fragmented and there are no organised players in India offering end-to-end comprehensive solution to the customers. Cosmo expects to fill up this void.
Pet care is a low capex business while brand building will require some investments in the initial years. The company believes the business will deliver high returns, high valuation and add significant value to shareholders.