COSMO FIRST LIMITED — Q3 FY26

Cosmo First Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=iWl23sww6HE Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the investor call of Cosmos First Limited to discuss the QT and 9month FY26 results. 0:12 12 seconds Today we have from the management group CEO Mr. Pankage Podar and group CFO Mr. 0:18 18 seconds Anita Chen. Starting off with the statutory declaration, certain statements in the conference call may be forwardlooking. 0:27 27 seconds These statements are based on the management's current expectation and are subject to uncertainties and changes in the circumstances. 0:36 36 seconds These statements are not guarantees of future results. 0:40 40 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:50 50 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. 1:00 1 minute Please note that this conference is being recorded. 1:03 1 minute, 3 seconds Now may I request Mr. Nir Chen to take us through his opening remarks subsequent to which we can open the floor for the Q&A. Thank you and over to you Mr. N. 1:16 1 minute, 16 seconds Well, thank you. Uh very good afternoon ladies and gentlemen and thank you for joining OSMO's December 2025 results 1:24 1 minute, 24 seconds conference call. Our financial results for the December 25 quarter and investors presentation both are 1:32 1 minute, 32 seconds available on company's website. Hope you could go through the same. 1:37 1 minute, 37 seconds Well, we'll begin this call with a brief opening remarks from the management side which may be followed by the questions. 1:45 1 minute, 45 seconds Uh let me begin the call providing a holistic level perspective and then we'll discuss the financial results for the quarter. 1:56 1 minute, 56 seconds The capex cycle of the company is largely complete now. The focus will be on setting the strategic capex done in 2:04 2 minutes, 4 seconds recent years almost close to 1,100 cr rupees. 2:10 2 minutes, 10 seconds Focus will be on utilization of full capacity and continue to grow the specialty business. 2:17 2 minutes, 17 seconds There's a very clear road map to reduce the net debt over the next two to three years as no major capex is planned during this period. 2:27 2 minutes, 27 seconds Our new businesses are scaling. This will lead to incremental return on capital employed such as specialty 2:36 2 minutes, 36 seconds chemicals and cosmo consumer and of course the gly focus is going to be on intrinsic value 2:45 2 minutes, 45 seconds growth for the each of the business uh in the coming quarters and the years. 2:52 2 minutes, 52 seconds Now moving to financial results for the quarter. 2:55 2 minutes, 55 seconds The consolidated sale for the December 25 quarter is 899 crores which is higher 3:02 3 minutes, 2 seconds by 28% from December 24th quarter primarily due to higher volume by 29%. 3:11 3 minutes, 11 seconds Ebida for the quarter has increased to by 19% to 103 crores compared to 86 3:19 3 minutes, 19 seconds crores in December 24th quarter. The ibida was favorably impacted by three factors. 3:27 3 minutes, 27 seconds Higher sales volume by 29% mainly due to new capacities. 3:33 3 minutes, 33 seconds higher specialty margins due to better product mix and number three improved performance of specialty chemical subsidiary. 3:45 3 minutes, 45 seconds In fact, the IBITA could have been much better had it not impacted due to five 3:51 3 minutes, 51 seconds adverse factors. Let me explain all those five factors. 3:57 3 minutes, 57 seconds The margin decline in the BOP score from post increase in the imports in India during the mid quarter two. The carry on 4:06 4 minutes, 6 seconds impact continued on the margins although imports have been uh reducing very significantly 4:14 4 minutes, 14 seconds and now the imports level in India is very insignificant level. 4:20 4 minutes, 20 seconds Generally there's a seasonal impact as well in Q3 post Diwali period and due to Christmas holiday period 4:28 4 minutes, 28 seconds we see better demand scenario in the quarter 4 of current financial year. 4:35 4 minutes, 35 seconds Second factor was higher USA tariff. If you recall there's an increase in the USA tariff started impacting the margins 4:44 4 minutes, 44 seconds from the mid quarter two of the current financial year. 4:48 4 minutes, 48 seconds So obviously there's an additional impact in the quarter 3 as the full quarter impact is there in the Q3 which was not there in the Q2. 4:58 4 minutes, 58 seconds Third factor was volume loss of about 6% due to shutdown on one of our major BOP line which of course got rectified 5:08 5 minutes, 8 seconds towards the end of the quarter but the impact due to this factor was close to 4 cr rupees. 5:16 5 minutes, 16 seconds There's a known repetitive inventory loss of rupees 8.4 Kores due to drop in the raw material prices during this quarter. 5:25 5 minutes, 25 seconds And of course the fifth factor is the one-time increase in the past period employee benefit gratuitity liability by 5:32 5 minutes, 32 seconds about 4 cr rupees in line with the new labor codes announced by the government of India. 5:40 5 minutes, 40 seconds Beside these factors, other income includes a nonrepetitive foreign exchange gain of rupees 6 crores related 5:49 5 minutes, 49 seconds to capital reduction in a wholly owned subsidiary of the company. 5:54 5 minutes, 54 seconds So in in totality the adverse factor or the non-repetitive factors net impact is close to 20 cr rupees on the quarter 3 results. 6:06 6 minutes, 6 seconds The pat impact compared to quarter three of last financial is is muted due to increased depreciation in interest related to new capacities. 6:18 6 minutes, 18 seconds BOP film gross margin has been running during the quarter at 13 rupee per kg. 6:25 6 minutes, 25 seconds uh on a comparative basis it was 22 rupee per kg in September 25 quarter and 6:32 6 minutes, 32 seconds 21 rupee per kg in December 24th quarter. 6:37 6 minutes, 37 seconds Bet film gross mar sorry to interrupt sir your voice is not audible. 6:54 6 minutes, 54 seconds Hello ladies and gentlemen, please stay 7:02 7 minutes, 2 seconds connected while we connect the management. 8:02 8 minutes, 2 seconds Ladies and gentlemen, the line for the management has been connected. Over to you, sir. 8:08 8 minutes, 8 seconds Hello again to all of you. Uh we are so sorry the call got disconnected. 8:14 8 minutes, 14 seconds So please pardon me if I repeat some of the points. 8:18 8 minutes, 18 seconds So we already explained the net impact of close to 20 K rupee in the quarter three which are one of items in the quarter three. 8:33 8 minutes, 33 seconds The PAT impact uh in the quarter three compared to last year similar period is 8:40 8 minutes, 40 seconds muted largely because of increased depreciation and increased interest related to new capacities. 8:49 8 minutes, 49 seconds BOP fund gross margin has been running during December 25th quarter at 13 rupees per kg compared to 22 rupee per 8:58 8 minutes, 58 seconds kg in September 25 quarter and 21 rupee per kg in December 24th quarter. 9:06 9 minutes, 6 seconds The popet fund gross margin has been running at 12 rupees per kg during December 25 quarter. On a comparative 9:14 9 minutes, 14 seconds basis, it was 6 rupee per kg in September 25th quarter and 21 rupee per kg in December 24th quarter. 9:24 9 minutes, 24 seconds Now moving to the outlook for the coming quarter. 9:28 9 minutes, 28 seconds The company expects near to doubledigit growth in the coming quarters in the top line largely because of the enhanced 9:36 9 minutes, 36 seconds utilization of the recently added capacity. 9:40 9 minutes, 40 seconds Recently an announced reduction in the USA tariffs will lead to improved profitability from the USA operation 9:49 9 minutes, 49 seconds starting from the quarter 1 of the next financial year. 9:54 9 minutes, 54 seconds Once the existing inventory in the US which is already uh due paid is exhausted. 10:02 10 minutes, 2 seconds Of course you do not expect nonrepetitive items of the quarter 3 to repeat in the quarter 4. 10:09 10 minutes, 9 seconds Now coming to business vertical wise performance first on the specialty chemicals the specialty chemical subsidiary has 10:18 10 minutes, 18 seconds continued to achieve the fractions and positive sales of 52 cr rupees with 25% 10:25 10 minutes, 25 seconds eidita in December 25 quarter the specialty chemical subsidiary has developed three new products recently 10:33 10 minutes, 33 seconds which should be commercialized over the coming quarters post approval at the customer signs. 10:40 10 minutes, 40 seconds We expect this growth trend to continue for the specialty chemical business with new innovative products in pipeline. 10:49 10 minutes, 49 seconds Moving to rigid packaging vertical, the Cosmo plastic which is the rigid packaging vertical of the company has 10:58 10 minutes, 58 seconds reached break even in December 25 month. 11:03 11 minutes, 3 seconds The business has reached close to 70% of the capacity utilization in quarter 3. 11:09 11 minutes, 9 seconds Now the focus for the vertical shall be on achieving higher profitability through higher capacity utilization and improving efficiencies. 11:19 11 minutes, 19 seconds Moving to consumer businesses. 11:22 11 minutes, 22 seconds Cosmo has two consumer businesses. Zibli which is the pet care venture and Cosmo consumer which include the window films, 11:31 11 minutes, 31 seconds paint protection films and ceramic coatings. 11:35 11 minutes, 35 seconds Both the consumer businesses continue to scale up. Ziggly in fact has posted over 11:41 11 minutes, 41 seconds 50% topline growth in December 25 quarter on a yearonyear basis. 11:49 11 minutes, 49 seconds The business model is moving more towards services and house rent which is a high margin business. 11:59 11 minutes, 59 seconds Moving to debt position, the company's net debt at December 25 is 1,215 12:05 12 minutes, 5 seconds crores which is lower by 20 K rupee compared to previous quarter. 12:12 12 minutes, 12 seconds We net that to stand at 2.8 eight times and net that to equity stand at 0.8 times. 12:21 12 minutes, 21 seconds As said earlier, the company is running a peak level of the bet as most of the debt related to the new capacities 12:29 12 minutes, 29 seconds already built in the balance sheet but fully year effective returns are yet to kick in for the new capex. There's a 12:37 12 minutes, 37 seconds significant net debt reduction plan for the next two to three years. 12:42 12 minutes, 42 seconds On that note, we conclude our opening remarks and would be glad to discuss any questions, comments or suggestion that 12:51 12 minutes, 51 seconds you may have. I would like to ask the moderator to open the line for the questions please. Thank you. 13:00 13 minutes Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 13:08 13 minutes, 8 seconds star and one on your Touchstone telephone. If you wish to remove yourself from the question queue, you 13:15 13 minutes, 15 seconds may press star and two. Participants are requested to use handsets while asking a question. 13:23 13 minutes, 23 seconds Ladies and gentlemen, we will wait for a moment while the question assembles. 13:39 13 minutes, 39 seconds We have the first question from the line of N of Jimodia from Anvil Wealth. Please go ahead. 13:45 13 minutes, 45 seconds Yeah sir, thanks for the opportunity and good afternoon to everyone. Uh sir, I have a few questions. So sir, first you touched upon in your opening remarks 13:53 13 minutes, 53 seconds about the uh USA tariff uh for third quarter. I think it started in mid of second quarter. So first if you can just 14:02 14 minutes, 2 seconds quantify what was the impact of US tariff in third quarter of FI26 14:09 14 minutes, 9 seconds it's near to full impact. So as we said uh depending on the month between four to 5 cr rupee is the net impact because 14:17 14 minutes, 17 seconds of the USA tariff. Uh out of this 6 cr rupee impact was already baked in in the 14:24 14 minutes, 24 seconds quarter 2 results. So there's additional impact of close to 8 cr rupees. It's very difficult to we will appreciate to exactly quantify but we expect this 14:33 14 minutes, 33 seconds close to 8 criter yeah see on a full year basis it was 14:40 14 minutes, 40 seconds expected to give a 50 cr rupee impact to our P&L more than that all our new growth had curtailed because of this 14:48 14 minutes, 48 seconds anti-dumping duty uh now customers are coming back uh and want to discuss business again so this will have two 14:55 14 minutes, 55 seconds positive impacts one is uh uh the profit immediate profitability improvement and the second is the growth in the business 15:02 15 minutes, 2 seconds uh which should also be a profitable business for us. 15:05 15 minutes, 5 seconds Correct. So that's what I was coming through sir. One you mentioned about the USA but I think now EU FDA also is in in 15:12 15 minutes, 12 seconds place. So do you see any opportunities not today but let's say starting next year when the EU FDAs would be in place. 15:20 15 minutes, 20 seconds So do you see a business case opening up for us in Europe and last time you also touched upon uh Japan as a market where 15:27 15 minutes, 27 seconds we have been trying to develop and try to improve our sales. So just wanted to have your thoughts on both these geographies how this could help us in improving our specialty volumes. 15:37 15 minutes, 37 seconds Yes. If you really see Americas and Europe are the biggest uh export region for us and now India entering into FDA with both of them uh this should be quite positive in the quarters to come. 15:49 15 minutes, 49 seconds Uh coming back to the third question, we have also entered into a joint venture with Filmmax in Korea. So that is 15:57 15 minutes, 57 seconds another region that we intend to grow over uh next uh couple of years. And similarly for Japan, Japan will be 16:04 16 minutes, 4 seconds actually the slowest amongst all these because Japan is easy to enter sorry difficult to enter and difficult to 16:11 16 minutes, 11 seconds exit. So u you know customers take their uh quite a bit of time. But then if you can make the quality for Japan, you can 16:19 16 minutes, 19 seconds uh be successful anywhere and everywhere. So we are taking that uh phased manner approach for Japan. Japan will not bring immediate results. Uh but 16:27 16 minutes, 27 seconds we should get very good results from both US, Europe and uh Korea as well. 16:32 16 minutes, 32 seconds Sir is it possible to quantify the amount of business which we are currently doing from uh Europe? 16:40 16 minutes, 40 seconds I won't have it immediately but it's quite sizable out of our total exports. 16:44 16 minutes, 44 seconds Perfect. Uh so second question is on uh the newer line of 81,000 tons which we have commissioned. So uh how much this 16:52 16 minutes, 52 seconds new line has operated in third quarter and also like uh with one of the lines now being corrected in terms of whatever 17:00 17 minutes shutdowns it had. How do you see Q4 versus Q3 in terms of the volume growth? 17:07 17 minutes, 7 seconds You see uh we uh as far as the new line is concerned in quarter three on an average uh we 17:17 17 minutes, 17 seconds could run it at 70% of potential capacity not as much because of orders but there 17:23 17 minutes, 23 seconds is a phase wise uh improvement or speed increase that the supplier does uh post February we should be able to run this 17:32 17 minutes, 32 seconds line at uh full output uh in January already there has seen uh some u or uh I 17:40 17 minutes, 40 seconds mean some more output increase from this line we have uh reached now close to uh 80% of the potential and we expect that 17:49 17 minutes, 49 seconds from March onwards we should be able to get 100% out of this line correct and sir uh with reference to the 17:58 17 minutes, 58 seconds contribution margins in the uh b I think because of all those factors which you mentioned seasonality and the holidays 18:06 18 minutes, 6 seconds there was some dampening effect on the demand in Q3 possibly because of which the margins were also lesser but uh 18:13 18 minutes, 13 seconds let's say in Q4 or let's say going into the season into Q1 how do you see this margins so have they started improving 18:20 18 minutes, 20 seconds again what was seem visible but I was just looking from a BOP angle that whether the margins have improved on the 18:28 18 minutes, 28 seconds BOP side as well yeah BOP margins have also improved they started improving from December and u 18:36 18 minutes, 36 seconds right now January margins are even better than uh December margins. So yes, they're also on an improvement side. 18:43 18 minutes, 43 seconds All right. Um sir, next question is on the window in like you mentioned that uh 18:49 18 minutes, 49 seconds uh uh the line is already working at close to around 30 crores of annualized sales. Uh so just wanted to understand 18:58 18 minutes, 58 seconds from you that uh at what level of sales this window films would start breaking even. uh we we have talked about 50% uh 19:07 19 minutes, 7 seconds CAGGR growth in that uh window film business but let's say from a loss point of view at what level of sales we can 19:14 19 minutes, 14 seconds see start seeing breaking even you see there are two factors playing in this business one is that month after 19:22 19 minutes, 22 seconds month our contribution margin is going up because we are able to uh one is produce more volumes and second is we 19:31 19 minutes, 31 seconds are able to cut down different types of costs cost in this business. 19:36 19 minutes, 36 seconds The second critical factor is the amount of marketing that we are going to do in this business. Uh what we have projected 19:43 19 minutes, 43 seconds right now is uh close to 15 cr of uh marketing cost next year and we expect that this business uh based on the 19:51 19 minutes, 51 seconds current margins should be roughly 80 85 crores at which it should uh start to break even. 20:01 20 minutes, 1 second Thank you. We have the next question from the line of Gorov from Capital Farming Consultants. Please go ahead. 20:10 20 minutes, 10 seconds Yeah. Hi. Uh thanks for opportunity. Um uh so my first question is on uh uh the strategy that we have said that uh uh in 20:19 20 minutes, 19 seconds coming years uh at least 3 four years now down the line we will be focusing not so much on the capex side and we 20:27 20 minutes, 27 seconds would like to maximize uh our uh already commissioned facilities right so so so I would like 20:35 20 minutes, 35 seconds to understand from the management side that to what extent that we can expect uh maybe uh by FI27 and FI2 28 right uh 20:45 20 minutes, 45 seconds that what percentage of capacity utilization we can uh expect uh from the commission facilities and how much uh 20:53 20 minutes, 53 seconds additional aida margin right uh improvement in margin we can expect from it. 21:02 21 minutes, 2 seconds Uh see there are two parts to it. First is from a revenue perspective 21:10 21 minutes, 10 seconds from what we did in quarter three we can easily get around 25 to 30% more output 21:20 21 minutes, 20 seconds from our assets. So if you are able to fully sweat out the assets there's a potential of 25 to 30%. Uh the biggest 21:30 21 minutes, 30 seconds potential is available in the BOP line and the CPP line. uh the OP line we feel that it will be you know fairly easy for 21:38 21 minutes, 38 seconds us to reach to the full capacity utilization. CPP is growing at a good speed but it may take some more time to 21:46 21 minutes, 46 seconds reach to full utilization because CPP is relatively a newer business to us uh than the BOP as such. Uh coming to your 21:54 21 minutes, 54 seconds second thing uh our focus now remains on because we've added very significant capacities in the recent years. So for 22:02 22 minutes, 2 seconds next uh uh 3 years for sure we are not going to invest on any uh uh significant capex or any uh significant bop asset. 22:13 22 minutes, 13 seconds Our focus will be entirely to shift to specialtity uh business. U because of our new line our specialtity as a 22:21 22 minutes, 21 seconds percentage to our total sales has come down from 70% to 50%. Our target will be to take this number to 75%. And the 22:29 22 minutes, 29 seconds other beauty now about Cosmo is that earlier we were dependent only on one business. Now first is within the film business we have diversified into specialtity polyester and CPP business. 22:40 22 minutes, 40 seconds Uh and then we have added newer businesses which have a very high margin potential. So you will see that 22:47 22 minutes, 47 seconds increasingly our new business as a percentage to total business will continue to go up and they have a better uh potential or better rosy uh and much more stable rosy in the years to come. 22:59 22 minutes, 59 seconds Yeah. Uh so before I ask my second question u a follow up within this if you allow uh see from a potential point of view yeah we all are optimistic uh 23:09 23 minutes, 9 seconds considering uh more than 1,000 cr plus you have invested in the capex for the last three four years right but 23:16 23 minutes, 16 seconds considering the realistic situation that we now face in the uh flexible packaging specifically in bob where some of the 23:24 23 minutes, 24 seconds lines by our peers have been commissioned in recent times and some of them are already in pipeline over a period of next 1 to two years right so 23:33 23 minutes, 33 seconds so what could be the realistic volume per se I'm not talking out in in terms of the revenue per se amount per se 23:40 23 minutes, 40 seconds because uh amount can be up and down depending on the raw material prices and all those things but quantity per se 23:48 23 minutes, 48 seconds what is a realistic assumption that we can build in our models for let's say next two to three years year-on-year basis 23:56 23 minutes, 56 seconds see on a very realistic basis is we see no reason why we should not be able to fully utilize our BOP and BOPET 24:04 24 minutes, 4 seconds capacity. We should reach to our full potential. The only area where it is going to take us 12 more months to reach to full potential will be CPP. 24:14 24 minutes, 14 seconds That's great. That's great. So, second question is on uh now considering u uh uh consolidated uh uh capex, right? So, 24:23 24 minutes, 23 seconds not so much of capex and free cash flow generation from the business, right? uh since our abita might improve, right? 24:30 24 minutes, 30 seconds Our efficiencies might might improve, asset utilization might improve. So, so what level of debt currently we are as 24:38 24 minutes, 38 seconds on 31st of December 2025 and what that we expect that uh year-on-year basis we 24:45 24 minutes, 45 seconds would be able to reduce uh because of free cash flow generation from the business because of all these positive factors that we are talking about. 24:54 24 minutes, 54 seconds So you see we are at close to 1,200 K rupee of the mentat at the end of the December 25 and as we said at the 25:03 25 minutes, 3 seconds beginning of the call uh there's no major capex plan so a large part of the free cash flow will be utilized to 25:10 25 minutes, 10 seconds reduce the net debt position of the company depending on the iita level how much u ibita gets generated over the 25:18 25 minutes, 18 seconds years but we expect between 200 250 k each year reduction which translates to 15 to 18% of the 25:27 25 minutes, 27 seconds reduction in the net debt position each year. 25:31 25 minutes, 31 seconds Uh great great if if you allow uh u uh what is our weighted average cost of debt uh ongoing as of now and have we 25:39 25 minutes, 39 seconds seen any reduction because of the rapor rate reduction by the Reserve Bank of India in our weighted average cost of code uh versus what was 31st of March 2025. 25:50 25 minutes, 50 seconds Now rated average moves between 6.5% to 6.8% depending on the mix between the foreign currency loans and the India 25:57 25 minutes, 57 seconds denominated loans but yes we witness the reduction in the interest rates and full impact is yet to kick in 26:06 26 minutes, 6 seconds very competitive rates. Uh congratulations to your finance team. 26:09 26 minutes, 9 seconds Thanks a lot. I will uh come up in the queue. Thank you. Thank you. 26:17 26 minutes, 17 seconds We have the next question from the line of Jatin Damana from Swan Investments. Please go ahead. 26:24 26 minutes, 24 seconds Uh thank you sir for the opportunity and uh thank you for a very detailed presentation as well. Uh am I audible first of all? 26:32 26 minutes, 32 seconds Yes. 26:34 26 minutes, 34 seconds Yeah. So sir I have I had a few questions. I have few questions. So first of all uh as there was some news 26:41 26 minutes, 41 seconds uh last month about being implemented again on the import from China. So how far are we on that? Like if you have any incremental news. 26:51 26 minutes, 51 seconds Uh on BOP there is no ADD neither on polyropene nor on the BOP. Uh and India 26:59 26 minutes, 59 seconds is quite competitive versus China when it comes to BP films. 27:04 27 minutes, 4 seconds Yeah, I was talking about Bet PET films. 27:09 27 minutes, 9 seconds on the pet uh uh the association has filed an application for u uh 27:16 27 minutes, 16 seconds anti-dumping duty because China has lot of surplus capacity and from time to time they do dump goods into the country 27:25 27 minutes, 25 seconds u therefore the association has put this anti-dumping duty application and it may take some time because what we have seen 27:33 27 minutes, 33 seconds that it normally takes 12 to 18 months uh for uh the courts to decide on these matters. 27:40 27 minutes, 40 seconds Okay. So for at least another year, we are not getting any incremental news on that. 27:45 27 minutes, 45 seconds Yes, you are right. But the the book margins are reasonably fair right now. 27:52 27 minutes, 52 seconds They can certainly be better. Um uh but then the challenges we had 12 months back, I think China also has to some extent curtailed the exports into India. 28:03 28 minutes, 3 seconds Okay. Sir, how how down have we gone to uh with the imports like in Q in Q2 you 28:11 28 minutes, 11 seconds were saying the imports have declined a bit and in this quarter it is at a very insignificant level if you can quantify that. 28:18 28 minutes, 18 seconds Yeah. So u BOP uh there are 3 to 4,000 tons of imports happening that is also 28:26 28 minutes, 26 seconds largely to do with B-grade C-grade material uh and some of the material which India does not make but most of it 28:34 28 minutes, 34 seconds is B-grade C-grade and Bit also does not have any significant imports into the country. 28:41 28 minutes, 41 seconds Okay sir. Next nextly if you can help us with the Bet Films gross margin. I guess you said in your opening remark but there was some disturbance. 28:52 28 minutes, 52 seconds Uh sorry what is your exact question? 28:54 28 minutes, 54 seconds Uh what are the Bopet films gross margin? As you said that there has been an improvement in the Bopet films margins. So if uh if you can tell us with the numbers. 29:04 29 minutes, 4 seconds The bare quarter 3 gross margin was running at 12 rupees per kg as compared to 6 rupees per kg in the previous quarter. 29:15 29 minutes, 15 seconds Okay. So it has nearly doubled from the last quarter and this is majorly because of the low imports. 29:28 29 minutes, 28 seconds Uh yes you can you are right that uh imports have come down because China in between was dumping into the country. Um 29:36 29 minutes, 36 seconds that has now I think China has uh significantly reduced its imports and that gave an opportunity for the local players to somewhat improve the pricing. 29:45 29 minutes, 45 seconds They are still not where we would love it to be but they are certainly better. 29:50 29 minutes, 50 seconds Sir and as you said okay as you said that from 13 rupees per kg uh base films 29:58 29 minutes, 58 seconds gross margin it has started improving uh it it has started improving post that so where have we reached right now? 30:08 30 minutes, 8 seconds So maybe two three rupee higher uh compared to average of the previous quarter because generally I mean you'll notice that there's a seasonal impact 30:16 30 minutes, 16 seconds also as we said earlier quarter three generally has been a lower quarter in terms of the demand because of the holiday period and P divi period and 30:25 30 minutes, 25 seconds quarter four generally is a strong quarter. 30:30 30 minutes, 30 seconds Okay. Uh so sir the next question is that uh we we we we mentioned that uh our specialty business has come down to 30:37 30 minutes, 37 seconds 60% uh which was usually uh at 70% earlier and we aim it aim to take it to 30:44 30 minutes, 44 seconds 75% like if we can uh if we can give a timeline to this and how how we can do that 30:52 30 minutes, 52 seconds specialty I mean u the fair point will be to see at the CAGR growth which in any case specialty we are growing by 31:01 31 minutes, 1 second type of 10% uh CAGR growth over the last six years or so. Uh and there's a very strong pipeline of the new products uh 31:10 31 minutes, 10 seconds uh for the specialty. So we definitely see uh there is scope for further improvement in the growth rate for the 31:17 31 minutes, 17 seconds specialty at an overall basis. Uh when you come up with a new capacity largely you start first with the uh uh base film 31:26 31 minutes, 26 seconds more or core film more. uh then over a period of time we move slowly to the specialty and semi-p specialty products. 31:34 31 minutes, 34 seconds So that's what what's this is what which is happening over a period of time we we definitely see this improving. So and I 31:42 31 minutes, 42 seconds mean to conclude we see no reason why uh it will be lower than the 10% or double digit growth on the speciality side. 31:54 31 minutes, 54 seconds Thank you. We have the next question from the line of mother from counter cyclical investments. Please go ahead. 32:02 32 minutes, 2 seconds Sir, thank you for the opportunity. So, so considering uh both our segments uh and the capacity utilization improvement 32:09 32 minutes, 9 seconds that we are expecting. So, on the 47 4,800 K revenue that we expect in next year, what kind of margins can we expect 32:16 32 minutes, 16 seconds considering the mix of specialtity and uh the uh commodities that uh where we see heading? 32:26 32 minutes, 26 seconds uh see in our industry it is uh quite difficult to project that because on the core margins I mean on the core films is 32:34 32 minutes, 34 seconds very difficult to know what will be the margins as such our we have we are trying to do two things one is to continuously increase our specialtity 32:42 32 minutes, 42 seconds numbers and second thing is to in uh increase our export numbers uh both our specialtity and export are close to 50% 32:51 32 minutes, 51 seconds and uh we will target to uh take them to a higher percentage by the end of next year. The second improvement will certainly come from the improved 33:00 33 minutes utilization not just in film but also in other businesses. So all those will certainly add to the margins but then uh 33:08 33 minutes, 8 seconds it's very difficult to predict the core fil margins right uh so when do we expect 33:19 33 minutes, 19 seconds sorry between madur sorry uh is it better right now 33:26 33 minutes, 26 seconds yes please proceed so when do we expect to reach the 75% level of specialtity 33:34 33 minutes, 34 seconds Uh see historic if we go historically it should take uh around 4 years. 33:43 33 minutes, 43 seconds Uh okay. U so so when we say that uh sir so from our investor presentation I'm 33:51 33 minutes, 51 seconds understanding that the production uh the demand and supply is kind of in equilibrium in the BB industry in India 33:58 33 minutes, 58 seconds as well as there are no imports that are coming from China. So can we expect at least to reach a 25 rupees gross margin 34:05 34 minutes, 5 seconds uh with better uh utilization for next year? Is that a conservative estimate that we can consider 34:15 34 minutes, 15 seconds the full utilization? Certainly yes. uh 25 rupees as I said uh I wish I can 34:22 34 minutes, 22 seconds forecast that but in general the margins are expect I I can uh basically tell you about next two quarters which are expected to remain reasonably strong. 34:35 34 minutes, 35 seconds Thank you. We have the next question from the line of Sasha Jalan from augment. Please go ahead. 34:42 34 minutes, 42 seconds Hi sir, thank you for the opportunity. 34:45 34 minutes, 45 seconds Uh my first question is regarding the USA margin impact. Uh as we are seeing a reduction in the tariff uh do we see any 34:52 34 minutes, 52 seconds incremental uh margin increase from our base uh and if you can quantify that for next year. 34:59 34 minutes, 59 seconds Yeah. So for the full year next year we should have two impacts. One is the margin improvement by close to 50 crores 35:07 35 minutes, 7 seconds and second is growth in our revenue and uh incremental margins coming out of that. um you know the entire growth had 35:15 35 minutes, 15 seconds virtually stopped in last few months. So we should be able to get back that growth rates u you know and uh we have 35:22 35 minutes, 22 seconds uh significantly aggressive plans for US market. 35:26 35 minutes, 26 seconds Uh but this would this would be pretty much uh in the low double digit or or maybe uh near 35:35 35 minutes, 35 seconds from a volume growth perspective uh the growth perspective we have much higher targets for the next year. 35:43 35 minutes, 43 seconds Okay. And so uh just to clarify I think from a previous participant's question uh regarding capacity utilization I think you mentioned currently we are at 35:51 35 minutes, 51 seconds 70% and we are driving it up to uh 90% for uh next fiscal is that understanding 35:59 35 minutes, 59 seconds correct for the new capacity or yeah you're right this is this is 90% of the name plate capacity or 36:07 36 minutes, 7 seconds uh how we looking at this is the possible utilization uh you know so let's Say capacity as an example 36:15 36 minutes, 15 seconds if it's 50,000 tons and we feel we can reach to maximum 40 45,000 ton based on microns. So we are saying what is the 36:23 36 minutes, 23 seconds probable utilization when we can reach and what is the uh uh utilization we can do from that probable uh capacity. uh so 36:32 36 minutes, 32 seconds uh right now as I said earlier that VOP and polyester we should be able to use the full capacity only the CPP line may 36:39 36 minutes, 39 seconds take uh some more quarters just to add to it I mean all this discussion is for the new capacities 36:46 36 minutes, 46 seconds means the BOP line CPP line and the pocket line on the old capacity we are running already full capacity 36:53 36 minutes, 53 seconds utilization understood sir and so uh uh if you can just share the update regarding the uh 37:00 37 minutes power uh cost uh reduction the project for the sun solar uh plant that we had 37:08 37 minutes, 8 seconds uh can we expect that for FI27 or will that run into FI 20th? 37:13 37 minutes, 13 seconds We are already getting some gains uh from renewables and some more gains are largely expected to come in FI28. 37:21 37 minutes, 21 seconds All right. And so just just last question if I can squeeze squeeze in uh like right now uh the margin uh scenario 37:28 37 minutes, 28 seconds particularly if I talk about uh BOP uh like you mentioned uh 13 rupees uh for the last quarter and right now it's 37:36 37 minutes, 36 seconds slightly uh higher maybe two to three rupees and given next year we are expecting some new capacity to come in. 37:43 37 minutes, 43 seconds So is it fair to assume that this is sort of going to keep the uh reasonable uh stature uh for the next uh few 37:52 37 minutes, 52 seconds quarters u especially uh now now that we have a higher share of commodity films in our uh basket. 38:01 38 minutes, 1 second What is your question? We did not get that. 38:04 38 minutes, 4 seconds Uh uh are we are we expecting a margin profile uh on the BOP to uh expect to remain in the similar uh band for the 38:13 38 minutes, 13 seconds next few quarters given this new capacity also that is uh coming online from some of the peer set. We can talk about quarter 4 and quarter 1 where it 38:22 38 minutes, 22 seconds is expected to remain in a rangebound manner. Beyond that it is difficult to comment about it. 38:31 38 minutes, 31 seconds Thank you. We have the next question from the line of Webel Kumar Sha from Sumangal Investments. Please go ahead. 38:39 38 minutes, 39 seconds Hi sir. So what percentage of our revenue comes from US now sir? 38:46 38 minutes, 46 seconds US is close to 400 cr business for us 400 crores. So I heard you correct that. 38:54 38 minutes, 54 seconds So we will get 50 cr benefit only out of reduction in tariff in US or have I misunderstood your remarks. 39:02 39 minutes, 2 seconds Yeah. Yeah. You are right because there was a 50% tariff which was levied uh and we had to absorb quite a significant part of it. So you're right 39:12 39 minutes, 12 seconds and sir the journey of reaching 75% of specialtity and semispeciality from 55% 39:19 39 minutes, 19 seconds right now. So each year we will add uh uh how many percentages? So if you can give some road map it will be useful. 39:29 39 minutes, 29 seconds We had been growing at 10% caggr and we have no reason to believe that u you know at least why we don't grow in 39:36 39 minutes, 36 seconds double digits. Obviously our attempt is to grow uh even more because we have more capacity to spread our wings. 39:44 39 minutes, 44 seconds So 26 20 uh uh 2 uh 27 28 we can have a 39:51 39 minutes, 51 seconds uh 65% uh specialtity and semi specialtity mix. Yeah, that is what we intend to target. 39:59 39 minutes, 59 seconds Uh right now we are sitting at close to 51 52%. And our target will be to definitely cross uh 60% over the next two years. 40:09 40 minutes, 9 seconds Last question. uh this 81,000 BP film and recent Bopet line. So what is their 40:16 40 minutes, 16 seconds uh specialtity and commodity mix if you can give any idea? 40:22 40 minutes, 22 seconds corporate uh we have been able to right now convert close to 20% into specialtity uh but many because it was a new 40:30 40 minutes, 30 seconds business for us so it took us more time than uh it would have taken for the bop film but now we have developed a good 40:37 40 minutes, 37 seconds range of films and uh we should be able to scale up faster in the times to come and uh regarding this 81,000 pop line 40:47 40 minutes, 47 seconds what percentage of that line is specialtity And uh what percentage is commodity right now? 40:55 40 minutes, 55 seconds See we do not break it line wise as much. Uh we normally uh discuss about the overall numbers. 41:02 41 minutes, 2 seconds Okay sir. Thank you very much. 41:07 41 minutes, 7 seconds Thank you. We have the next question from the line of Amar Kumar from AIK securities. Please go ahead. 41:15 41 minutes, 15 seconds Yeah. Good evening. 41:18 41 minutes, 18 seconds Sir I have a few questions. uh the significant new capacities coming up in BOP segment. How do you see the demand 41:26 41 minutes, 26 seconds society valence evolving over the next 2 three years? Your voice is not clear. 41:33 41 minutes, 33 seconds Yeah. Uh are you hearing my name? Is I'm clear? Yeah. Go ahead. Audible. Yeah. 41:40 41 minutes, 40 seconds Yeah. Which with significant new capacities coming up in the BOP segment, how do you see the demand supply balance evolving over the next two three years? 41:50 41 minutes, 50 seconds As far as world is concerned, uh we feel BOP will be fairly balanced. Uh when it comes to India, FYI 27 should be largely 41:59 41 minutes, 59 seconds balanced but FY28 supply could be more than demand. 42:05 42 minutes, 5 seconds So by that time our value at this event will be much higher and export will be much higher. So we will not fail. Sorry interrupted between Aman. Your voice is breaking. 42:15 42 minutes, 15 seconds Yeah. Yeah. You are right. You're right. Hello. You are right what you said. Yeah. 42:24 42 minutes, 24 seconds So by two three next two three years I think our facility business will be much higher and uh since uh we export most of 42:33 42 minutes, 33 seconds this facility business so we will be the fit because of this over capacity. You are right. My understanding is right. Yeah. Okay. 42:41 42 minutes, 41 seconds Yes. 42:42 42 minutes, 42 seconds So how do we see the company's consumer business setting up over the next 2 three years and it's basically what is the growth potential in Europe for Sunil film? 42:53 42 minutes, 53 seconds Uh so this is a uh you know fast growing business for us. Uh we are pretty happy with the progress that we have made uh 43:01 43 minutes, 1 second whether it is on the product side getting the right people with us uh start to build a brand in the market. So we are going directionally very well and 43:10 43 minutes, 10 seconds uh we have some very aggressive targets for this business. Uh this is a very high gross margin business uh for us and it's more of a consumer product. Uh once 43:20 43 minutes, 20 seconds we are able to scale it up uh this should result in good profitability for the group. Okay. 43:27 43 minutes, 27 seconds So what is the business scope and long-term potential of the tier with this Korean partner? 43:34 43 minutes, 34 seconds Which one? Korean partner. We have a joint venture. 43:40 43 minutes, 40 seconds Koreans and Japanese I mean Japanese take a lot of time to uh develop something new. Korea takes somewhat 43:48 43 minutes, 48 seconds lesser. So immediate results may not happen but you will start to see a lot of results coming uh from 12 months from now. 43:58 43 minutes, 58 seconds Okay sir. 43:59 43 minutes, 59 seconds And each year there will be incremental results. Yeah sir. one thing one thing you have done 44:06 44 minutes, 6 seconds right that Jiggly since it's a very high potential business but it does not match with our uh core business so you are 44:14 44 minutes, 14 seconds demerging this business from Cosmo so what is the timeline sir when we can expect this 44:21 44 minutes, 21 seconds uh we have always stated FY27 and we maintain that okay and uh what is the current 44:29 44 minutes, 29 seconds situation of this business if you see other uh players in petare 44:36 44 minutes, 36 seconds industry they're all getting very high valuations uh close to five to six multiple of the 44:42 44 minutes, 42 seconds revenue u and uh you know ziggly has already created a very good brand name uh especially in the north India market 44:50 44 minutes, 50 seconds and we are trying to spread our wings in the west uh we have grown 50% on year-to- date basis which is a quite a decent growth 44:59 44 minutes, 59 seconds uh the good thing about our business is that we are the only players in the market who have a complete ecosystem where we are providing uh veterary care 45:07 45 minutes, 7 seconds service, grooming services and uh host of products including many house labels. 45:12 45 minutes, 12 seconds Uh so directionally we are going well and we are happy on the progress till now. 45:17 45 minutes, 17 seconds Okay sir and su there's business uh this trade agreement 45:24 45 minutes, 24 seconds with us. So right now we are doing around 400 cr of business in uh US. So uh what type of growth we see over the 45:32 45 minutes, 32 seconds next 2 three years since uh it's a great market for Cosmo. 45:37 45 minutes, 37 seconds Yeah. So uh I would say in last few months the growth was uh uh largely curtailed because of the anti-dumping. 45:44 45 minutes, 44 seconds Uh customers are really welcoming and so is us welcoming this change from the American government and uh we would look 45:51 45 minutes, 51 seconds for some aggressive growth uh u and we will share the progress in every quarter. 45:57 45 minutes, 57 seconds Hey sir, one last question is that I have gone through the con transcript of this SRF. So in that uh conall they have 46:05 46 minutes, 5 seconds mentioned that in China the government has asked the uh BET players to reduce or curtail their production by 20%. So 46:15 46 minutes, 15 seconds how correct is that news and uh how it will impact the BET business uh in India? 46:23 46 minutes, 23 seconds You see across uh certain sectors where companies are carrying older assets and across sectors 46:32 46 minutes, 32 seconds where China is not making money, government has been pursuing the uh private entities to uh curtail the 46:39 46 minutes, 39 seconds sales. Uh now obviously government has given certain directions and we have seen that China stick to uh the broad 46:46 46 minutes, 46 seconds guidelines that it set for itself. So we have to see the progress but you are largely right in terms of what you have heard from SRS. We do not have complete 46:55 46 minutes, 55 seconds uh tracking of that. Uh but you are right that in general uh Chinese government is pursuing to shut down the older capacities and we could certainly 47:04 47 minutes, 4 seconds see that in last few months uh there is much lesser import from China. 47:09 47 minutes, 9 seconds And sir uh lastly uh I consulate the management for three announcements. 47:16 47 minutes, 16 seconds First uh no major capex number two uh all the capex in the value added business and I think uh the merger of 47:24 47 minutes, 24 seconds this sigil business. So all the best to the management for the coming quarters and the year ahead. Thank you. 47:31 47 minutes, 31 seconds Thank you. 47:35 47 minutes, 35 seconds Thank you very much ladies and gentlemen. That was the last question for today's conference. I now hand the conference back to the management for 47:43 47 minutes, 43 seconds closing comments. Thank you and over to you sir. 47:48 47 minutes, 48 seconds Sure. So to summarize company's focus will be on setting the best use of the strategic capex which we did over the 47:56 47 minutes, 56 seconds last three years or so which means we reach the close to full capacity utilization and enhance the specialty business. 48:07 48 minutes, 7 seconds Each of our business vertical will focus on high margin and stable royalty. 48:14 48 minutes, 14 seconds The key focus shall be on intrinsic value growth for each business and unlock value at appropriate time. 48:24 48 minutes, 24 seconds Future capital allocation in the business based on incremental rosy and valued in the intrinsic value. 48:33 48 minutes, 33 seconds further strengthen the financial resilience by reducing corporate net debt substantially over the next two to three years. Many thanks for joining. 48:45 48 minutes, 45 seconds Thank you. 48:48 48 minutes, 48 seconds Thank you members of the management. On behalf of Cosmo Post Limited, that concludes this conference. Thank you for all for joining us and you may now disconnect your lines. Thank you.