COSMO FIRST LIMITED

Management

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Management

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Management

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Management

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Management

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Management

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Management

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Ravi Naredi

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Management

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Management

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Our learnings and lessons through these challenging times or the challenge is being faced by Company, and if you can explain this with respect to the new product launches as well as some of process improvements, what we have done over last 2-3 years that could be helpful Sir.

— NeeravJimudia

Thanks for the opportunity .I just wanted to understand the reason for decline in the EBITDA margins sequentially fromQ3 FY2022 to Q4 FY2022.There is slight dip in the margins.

— SauravDutta

See one of the difficult changes that we did to ourstrategy that these operations as a standalone were very small and as you understand that Japan, Korea, US are all high-cost countries and they were making losses.

— Management

See over the five years, although it is difficult at this stage to quantify exact number.

— Management

Q

Thank you and very good afternoon ladies and gentleman, we will start the call with a brief performance of the Company which may be followed by the question. First, talking about the March 2022 quarter results. The Company has posted the core consolidated quarterly EBITDA of Rs. 165 crores during the March 2022 quarter. With this quarter result, in fact the Company has posted uptick EBITDA performance continuously in a row from last thirteen quarters now. Consolidated sales for the quarter are Rs.821 crores which is higher by 22% from their two last year similar quarter. EBITDA has increased t

Management

Q

Thank you very much to give me the opportunity.Sir when you have just mentioned in the highlights, when you demerge Zigly, when it came from decent topline or bottomline or just now?

Management

I think that is on cards, as we announced earlier So, currently, we are at the stage of scaling up the operation for the Zigly, practically current year FY2023 will be our first year of operation in terms of the scaling. So, definitely, it will be medium term, it will not be long- term but that is on card. So, we may think in financial year 2025, we will be able to demerge this? Frankly, there is board of directors to decide but as I mentioned, it will be medium term, it will not be long-term. Okay and Sir, secondly what is the purpose Korean plant we have established there, can you tell how m

Q

With so much deep globalization taking place would it not be better idea to the expanding in location abroad where more modern plants are needed and also with ongoing shipping crisis, also import tariff that countries are putting up, can we see at a more multi-locational manufacturing activity from your end?

Management

We believe that India has significant demand within the country and our cost is still very competitive in the world. Therefore, when it comes to film business production, we continue to expand within the country. However, when it comes to some of our other businesses, we are going to evaluatein the future, whether we should expand overseas and more so for Zigly. And secondly, Sir, I missed the answer on the value addition that we are enjoying at this point of time, that is one and one more question is that, how you are not been able to adjust the organization’sculture towards now B2C which is

Q

Good afternoon team and congratulation for excellent set of numbers. Sir, I have only one question, so in the last two years have been very eventful for the entire industry like in terms of the demand growth what we have seen and similar improvement in the margin. But if you can just help us, explain in terms of, what were the challenges being faced by the Company over last two years. Our learnings and lessons through these challenging times or the challenge is being faced by Company, and if you can explain this with respect to the new product launches as well as some of process improvements,

Management

We love challenges that make the life more interesting. Obviously, we are all living in a VUCA world where in the morning you plan for something and in the afternoon, you do not know what events will happen which is going to make changes to your planning. Having said that, we believe that businesses success is a lot about people. I would say that close to 90% is about the team that you have is equal to people dealing and so on and that remains our focus, if we have the right set of people, you can meet any of the challenges.When it comes to specific challenges, we have started many new busines

Q

Good afternoon, everyone and thanks for the opportunity. Congratulations on a great set of numbers.I have a couple of questions. The first one is, we are looking about Rs.900 crores expansion over the next three years in the films business. What kind of asset turn should we expect on this Rs.900 crores?

Management

Different business will have different turn. If we talk about our film business, it has a turn of close to 2.If we talk about our chemical business,it will have turn off may be 10.If we talk about Zigly business it will again have an excellent turn as we continue to scale up in revenue from online and offline goes up, it will also easily have a turn of may be 5.So, and these turns will continue to improve as we scale up the newer businesses. I do not know if it answers completely. Yeah, just that your presentation gives the detail break-up of the film’s CAPEX but the chemical CAPEX is not very

Q

Thanks for the opportunity .I just wanted to understand the reason for decline in the EBITDA margins sequentially fromQ3 FY2022 to Q4 FY2022.There is slight dip in the margins.

Management

Well actually, this is an industry as we said in the past, as in terms of the percentages may not be the best way to look at, so while in terms of the absolute value the margin has increased as I indicated at the beginning of the call. BOPP overall margin was Rs.45 per kg compared to Rs.43 per kg previous quarter and last year of course the number was much lower. But since the value of the sales depends to a large extent to only raw material price, the percentage term it may be up or down depending on the raw materials because ultimately, we all have to shift the large part of the raw material

Q

Thank you for the opportunity and first of all congratulation Team Cosmo for the super set of number. Sir, my question was regarding the heat control film that you talked about, I just wanted to know a bit more like when are we planning, what is the timeline, what’s the market size and what kind of a revenue and margins that we can do out of this.

Management

Heat control is a very under developed market in the country and we feel there is a very large potential to educate the customer how heat control can reduce their air-conditioning load, be sustainable and make their houses look better. So, it will require a lot of education to the consumers in India and the margins in this business should generally be quite strong. There area lot of imports happening in the country when it comes to heat control films, lot of Chinese low-quality, poor quality material is coming which eventually has to be stopped and be replaced by the right product which can ac

Q

Good afternoon, gentleman, thanks for the opportunity and congrats on good set of numbers. Sir, my question was regarding our subsidiary after taking over US subsidiary long back the ACCO brand, we have been struggling even in Korea and US to generate some profit. But in last few quarters, we are doing decent over there especially this quarter. So, can you highlight upon how that business is panning out and how do you see future of these subsidiaries, do this profit will grow from here on or its still challenging?

Management

See one of the difficult changes that we did to ourstrategy that these operations as a standalone were very small and as you understand that Japan, Korea, US are all high-cost countries and they were making losses. The simple thing, we did was to make best use of our assets, we spread them out and we ensured that we increase our sales of all our products and not limit ourselves to lamination films. This strategy has played very well for us, our sales in US has grown from $30 million to $65 million and we do expect that the sales will continue to grow from here and will generate decent margins

Q

Thank you for the opportunity and congratulations on a good set of numbers. My question was pertaining to slide number3, where you mentioned each 1% shift in specialty adds to around Rs.4-5 crores to EBITDA. So, I just wanted to understand whether this still holds true in the current pricing scenario and if we are moving from 70-80% would that mean that it would add another Rs.40-50 crores to our EBITDA.

Management

You are right on both the questions. Okay, got it. Thank you. I will come back in the queue.

Q

Thanks for the opportunity. So, I was just taking a look at your balance sheet and while consolidated net debt to EBITDA or Equity continuously coming down that is not the case with gross debt and we continue to carry reasonable amounts of investments. So, is there a particular reason we are doing this, is there arbitrage in the cost of borrowing versus the yield on these investments is that behind this decision.

Management

There is arbitrage but we are not doing it for arbitrage but we want to have a very strong warchest as well money available for our future expansion plan. So, is it fair assumed that the entire composition of the treasury or the investments portfolio is liquid in nature? Yeah, it is liquid in different part, some is liquid at a very short notice, and some is liquid after some months or some quarter. So, depending on our needs, we have different guidelines for every investment. And the other thing is that we laid out a CAPEX plan of Rs. 800-900 crores, actually it will not happen in one particu

Q

Hi Sir, congratulations for a very good set of numbers. Sir, when you say 80% of sales, you acquire from specialty, so is it by value or is it by volume?

Management

It is by value. However, by volume also we intent to achieve. Okay, Sir on your CAPEX plan, you have not given CAPEX plan for your specialty chemical business and your pet care business. So, can you give the figures what you want to spend for these two business over next two years? I have already stated that chemical business did Rs. 90 crores last year in the kind of the first year for the business and we intend to more than double in this current year. No, I am talking about CAPEX. Yeah, both these businesses have very limited CAPEX, the chemical business is more about innovative products an

Q

Yeah again, I have one question, is there a long term 5-year kind of a target from Rs.3000 crores currently. Is there a ballpark aspirational target for the management over five years out?

Management

See over the five years, although it is difficult at this stage to quantify exact number. Broadly, we are looking for $1 billion. $1 billion of revenue. Yeah perfect. Thanks a lot.

Q

Thank you for the opportunity, I wanted to ask Sir can you please give production or sales volumes for the year or for the quarter.

Management

As we said, overall specialty chemical rate close to Rs. 90 crores of topline. Volume numbers, we are sorry we would not be able to share on the call. Okay, and Sir, is there any outlook for the cost increased like is it going to increase or is it going to stabilize? See, if you are referring the film business as you can see in the quarter 4 results, the margins are little better in absolute value. So far whatever raw material cost has increased that has been passed on to the customer. Okay, Sir, any price increase or realization which any price hike, you are going to take? That is something w

Q

Sir, how you see the recycling business coming up in the future because Uflex has also announced something similar and even Polyplex has done it. So, you feel that it could almost pick up like an extension of each and every film Company’s business. And second question is that do you see any opportunity in the Tetra Pak business because you want to be first in almost everywhere. So, the Tetra Pak is now being manufactured by others also and this could be a huge opportunity going forward and you feel that there are some other opportunity also in the recyclable space, where paper is replacing pla

Management

So, I understood your question has three parts, one is on the recycling, you see all our plants today also are equipped and have been doing recycling for the waste getting generated within the plant. And on the top of it in any case Company is looking for the recycling of post- consumer waste as well. So, I think, that is very much on the radar. We immediately have no plan to launch any kind of Tetra Pak kind of the product.But synthetic paper is an excellent product and which if you will touch it, it provides you a feel of a paper, although its plastic and the target is basically any durabili

Q

So, I would say Cosmo First Limited stands for four-decade young Indian business conglomerate. The ties on innovation to unlock values in diverse sectorsincluding films, consumer care, specialty chemical and direct-to-consumer pet care business under Zigly brand. So, to sum up for the investors, the Company is taking all required steps to transform into a specialty packaging and its specialty chemical company with B2B and B2C segment in years to come. The specialty polyester line, BOPP line, CPP line, which are expected to get commissioned between FY2023 to FY2025, plus focus on enhanced speci

Management