Mr. Ashok Jaipuria, Chairman of Cosmo Films, Discusses Key Offerings, India Growth Strategy, and Future Plans in Exclusive Interview
Keynotes:
- The demand post-pandemic shifts towards hygienic packaging and packaged food items.
- Packaging industry brings in a lot of perspective in terms of sustainability with efficiency.
- Cosmo Films speciality packaging films including barrier films and heat resistant films protect the food inside the package and provide a higher shelf life.
Cosmo Films was established in 1981 with a vision to create a future for BOPP films in India and across the world. At that time, plastic was just the third most used packaging material after glass and metal. Over the years, the company has grown to be the market leader in specialty BOPP films globally, and exports to more than 100 countries worldwide, with a total production capacity of 200,000 TPA.
“Now with our entry into the textile chemicals vertical under our subsidiary Cosmo Speciality Chemicals, we see a huge potential for growth in India and countries like Malaysia, Bangladesh, and Sri Lanka, where textile production is high,” says Ashok Jaipuria, Founder, Chairman & Managing Director, Cosmo Films.
With two new lines in the pipeline, Cosmo Films will be entering into the specialty BOPET films segment and increase the production and sales for their specialty films. In the next few years, they plan to become a major speciality player in the market.
Coming out of one of the worst pandemics, the industry is slowly rising to catch up with lost and forced back business and opportunities. “Talking about the packaging industry specifically, it has brought in a lot of perspective in terms of sustainability with efficiency,” opines Ashok. “We have seen a trend where people are now opting for packaged food items, which are arising mostly due to the increased consciousness on safety and hygiene,” he says.
Covid-19 has been very hard for all in the industry with a lot of people losing their lives, and a lot of families losing their loved ones and sole bread earners. The past two years have taught us and everyone around the globe about the importance of life and living.
Even during the pandemic, since Cosmo Films are part of essential services, their factories were operational and films were being supplied for packaged food manufacturers & soap and sanitizer manufacturers. Of course, they too ensured all Covid-19 protocols and operations and sales staff went to a work from home model.
“The Covid-19 pandemic has definitely shifted the dynamics. The demand post-pandemic has shifted towards hygienic packaging and packaged food items. We have also seen a rise in online food delivery where you sit at home, and the food comes to you instead of you going to a restaurant. We have seen a rise in our speciality packaging films including barrier films and heat resistant films which protect the food inside the package and provide a higher shelf life,” observes Ashok while speaking about changed market demands.
Besides, the changes in demand, prices too have been quite volatile. In terms of packaging, there was initially an increase in the raw material prices, freight costs, and more, which Cosmo Films incurred collaboratively with their customers. “The graph is however slowly coming back to normal, and in the years to come, we will keep working on increasing sales for our speciality packaging films, where raw material fluctuations do not impact our manufacturing cost too much,” notes Ashok.
“With the markets opening slowly, I presume, here will be a rise in demand for hygienic packaging and labeling solutions. I believe sustainability is a major factor and creating easily recyclable films, hence not affecting the environment is something that will drive the market. At the same time, packaged food demand has increased and will continue to increase in the years to come due to hygiene concerns,” he elaborates.
“The impact of the COVID-19 pandemic and the related lockdown is being felt by all businesses across the world,” says Ashok. For Cosmo Films, the business is impacted positively for some product lines such as self-adhesive labels and food packaging while negatively for wrap-around labels, textile, and lamination films. They have been adjusting to these challenges by re-allocating our capacities based on the customer requirements. “During the pandemic, we saw a trend where all costs including transportation and raw material costs went up. But shifting to better sales for our speciality films helped us a lot,” shares Ashok.
“The margins for speciality films in comparison to commodities are higher, and the raw material cost fluctuations have a lesser impact. As for the high freight costs, most of it were managed by sharing the cost with our customers,” he adds.
Future growth areas
In terms of the Films business, with two new lines in the pipeline, Cosmo Films will be entering into the specialty BOPET films segment and increase the production and sales for their specialty films. In the next few years, they plan to become a major speciality player in the market, according to Ashok. They have already entered the speciality chemicals segment with 56 odd products already launched for the textile industry. “We plan on launching several new products in the years to come and enter the industrial adhesives industry with adhesives for the packaging, lamination, and labeling industry,” reveals Ashok.
The biggest growth areas he sees in the near future is their pet care business, ‘Zigly’, where they plan on opening close to 150 stores in the coming 5 years.
The latest Cosmo Films offerings
In the films business, Cosmo Films has announced the commissioning of a new BOPET Line by the second quarter of 2022, and the world’s largest BOPP line by the year 2025. “These will help us increase our speciality film sales across the globe in the coming years,” states Ashok.
Under their subsidiary Cosmo Speciality Chemicals, they have launched close to 56 eco-friendly chemicals for pre-treatment, dyeing, and finishing processes in the textile industry. As part of backward integration to their films business, they have also launched masterbatches with different qualities under the same subsidiary.
In the B2C space, the company recently ventured into the pet care category, with its brand ‘Zigly’. It is the first Omni-channel, one-stop-shop for pets and pet parents for anything their fur buddies need. Be it a vast range of products or services like grooming, veterinary care, behavior training, and pathology, one can easily find everything at Zigly. The company recently launched its first experience center in East of Kailash, New Delhi in September 2021.
“What makes us different and gives us a competitive advantage is that the company for the last 40 years has laid a lot of focus on its research, and has a highly qualified research and development team with Ph.D.’s and Post doctorates with expertise in Labels, Polymers, Printing, Flexible packaging, Synthesis, and Master-batches, who work tirelessly to create product solutions, which are not just innovative and unique, but also environmentally viable,” avows Ashok.
Recently, the company has dedicated an entire building at one of their new sites at Waluj, Aurangabad to R&D. The facility includes a product application center, a pilot line, synthesis facilities, and all kinds of analytical equipments. Their R&D team holds nine patents for different products – six of them being in India and three are in the US. There are also several more in the pipeline, says Ashok.
About their expansion plans in India, he says, “In the films’ business, the company is already the global leader in most places. We have two new expansions planned – One is a specialty BOPET line which will be commissioned by this year, and the worlds’ biggest BOPP line, to be commissioned by 2025. These will greatly help increase our specialty films sales in the coming future. As for other expansions, we recently did a backward integration to our films business and entered into specialty polymers and chemicals under our subsidiary Cosmo Speciality Chemicals.”
The company has launched around 56 new eco-friendly chemicals for the textile industry for pre-treatment, dyeing, and finishing processes. The company is also planning on expanding into Industrial Adhesives and masterbatches in 2022.
Speaking on the hype around plastics and their environmental impact, Ashok recommends, “We believe sustainability as a concept should be calculated as a whole, and not just by its visibility.”
“Plastics have the least amount of Carbon Footprint during manufacturing and transportation when compared to their counterparts i.e. Glass and Paper. If collected, segregated, and recycled in an orderly fashion, it is truly a wonder material that has reduced all-around food wastage due to its barrier properties,” he stresses.
We know Cosmo Films as a leading industry player with the best sustainable and environmentally friendly practices at its various locations. The company has several sustainability practices already in place like truckload optimization, rainwater harvesting at their plant locations, shifting to renewable solar and wind energy at the plants, and more in place, which help them to minimize their carbon footprint.
Recyclability and sustainability is no longer a concept, but a reality; with several manufacturers focusing on easily recyclable packaging and labeling materials, and shifting towards easily recyclable mono-material flexible packaging structures. Cosmo Films, with its years of research, now has a range of barrier and heat-resistant films which can be used in completely BOPP-based structures and can be easily recycled.
Cosmo Films’ customers are among the most satisfied in the industry. The company’s dedicated team works around the clock to serve a global customer base. “We have a dedicated team which takes care of quality and training for our customers. During the time of the pandemic, we organized several webinars with our customers and our R&D experts and Sales heads, who are also industry thought leaders in their respective verticals. Cosmo Films as a company is always dedicated to fulfilling the requirements of our customers, and we keep innovating and producing films that best suit them,” explains Ashok.
Besides there are newer avenues that Cosmo Films technology keeps opening up for the industry. The recently launched Cosmo Synthetic paper is meant for use in various application segments such as Commercial Printing, Tags & Labels, Retail & Packaging, Identification & Credentials, and Outdoors. “Synthetic Paper is a replacement for paper in applications where durability and longevity are desired. It is a co-extruded, white opaque, polypropylene-based film that resembles paper in appearance. It is non-tearable, has moisture & chemical resistance, and has excellent lay flatness,” says Ashok.
In terms of financial growth, the company’s PE multiple is improving from 4 a few years back to 10, though it is still a significant undervaluation, and the company’s Crisil rating has seen a major improvement and has reached AA-, which shows the stability the company has in the market. Backed by strong financial performance, the company has also declared two interim dividends of INR 25 (0.34 USD) and INR 10 per share during the two quarters of 2021-2022.
“We are on the way to becoming a global conglomerate in the coming years, with our recently launched pet care brand ‘Zigly’ and soon to be launched industrial adhesives,” says Ashok.
“As a company, we lay a lot of emphasis on our customers and our shareholders, and keep their interests as a prime focus; the company plans to innovate new products suitable for the customers’ requirements and generate revenues that will help our shareholders grow with us,” he concludes.
