MANAGEMENT DISCUSSION AND ANALYSIS
The per capita
1. Macroeconomic Overview
According to the recently published International
Monetary Fund’s (IMF) World Economic Outlook,
the present global economic situation is an
opportune time for policymakers to boost growth.
The report predicts that while advanced economies,
as a whole are expected to grow at the rate of 2.5%
during 2018, up from 2.3% during 2017, the
emerging markets and developing economies are
expected to grow strongly during the coming two
years. The growth rate for these economies is
projected around 4.9% during 2018, slightly higher
than 4.8% during 2017.
For the Indian economy, FY 2017-18 was marked
by a number of key structural initiatives to build
strength across macro-economic parameters for
sustainable growth in the future
India is projected to regain its status of the world’s
fastest growing large economy with an expected
impressive rate of 7.4% in 2018, which is set to
increase further to 7.8% in 2019, up from 6.7% in
2017. According to the IMF, prospects for the Indian
economy are bright, propelled by strong
consumption growth and structural reforms. Further,
the transitory effects of reforms such as the Goods
and Services Tax (GST) and demonetization are
fading out.
2. Industry Scenario
The prospects for packaging sector depend on
growth of industries such as food processing,
pharmaceuticals, retail and e-commerce. The growth
of the Indian packaging industry will be heavily
influenced by changing demographics such as
growing urbanization and the rising proportion of
middle class consumers. These changes drive the
need for new packaging formats, such as different
sizes, materials, and strength.
The packaging industry has experienced rapid
growth globally as a result of greater innovation and
customer preferences for global brands. Packaging
sales in the emerging markets are expected to
continue to show strong momentum as both
increased consumption and demand for consumer
goods drives the need for more sophisticated
packaging.
The Indian packaging industry is expected to grow
to $32bn by CY2020 as per the Indian Institute of
Packaging (IIP). The industry constitutes about 4%
of the global packaging industry.
packaging consumption in India is quite low at 8.7kg
compared to countries like Germany (42kg) and
Taiwan (19kg), as per data from the Indian Institute
of Packaging.
A number of significant trends are driving rapid
change across the industry such as the increased
presence of global multinational companies,
consumer brand awareness and products with
‘clean-label’ messaging that enhance brand
transparency and builds purchasing confidence. The
demand for smaller and flexible packaging is also
increasing due to increase in per capita income,
urbanization and growing numbers of working
women. Furthermore, the e-commerce industry in
India has substantially expanded and is changing
the packaging needs, driving requirements for
versatile and visually appealing packaging solutions.
3. About Us
Cosmo Films Limited (‘Cosmo’ or the ‘Company’)
was incorporated in 1981 and since then the
Company has transformed itself into one of the
largest manufacturers of Biaxially Oriented
Polypropylene (BOPP) Films in the world. The
Company is the leading manufacturer of BOPP films
and provides a complete solution in the form of
specialized and laminations films to the food and
beverage industries. Cosmo has successfully
entered the flexible packaging sectors from its
traditional base in BOPP. Flexible packaging is one
of the most dynamic applications in the packaging
industry and has become the preferred choice of
packaging material due to its print quality, moisture
retention properties and environment friendly nature.
Company has five state of the art manufacturing
facilities spread across India (3), US (1) and Korea
(1), with a total installed capacity of 196,000 MT
per annum of BOPP films, 40,000 MT per annum of
Thermal Lamination Films, 22,200 MT per annum
of Metalized Films,10,000 MT per annum of Coated
Films and 10,000 MT per annum of CPP Films. The
Company has recently added a new line for
production of CPP Films and metalized films at
Karjan Gujarat. The line is having capacity of 7500
MT per annum. This CPP line is five layered and is
designed to produce specialty films for various
packaging applications. The new metallizer is
equipped with advanced control monitoring system
and closed loop auto deposition control system.
Cosmo offers a comprehensive range of BOPP Films
for flexible packaging, lamination, labelling and
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 industrial applications, including specialty films such • Industrial Films 1. Synthetic Paper
as high barrier films, velvet thermal lamination films 2. Tape & Textile Films
and direct thermal printable films. In addition to being
a market leader in the BOPP sector, Cosmo has The Company’s continuous efforts towards research
emerged as a complete film solutions provider with and development helps in improving its product
more offerings and value added services. portfolio. The R&D labs of the Company (in India
and US) has sophisticated equipments. Company
• Packaging Films 1. Print & Pouching Films has recently refurbished the Indian R&D lab to
2. Barrier Films complement R&D team efforts.
3. Overwrap Films
Company keeps a watchful eye over its quality.
• Lamination Films 1. Dry (Thermal) Cosmo keeps monitoring its quality standards time
Lamination Films to time with the help of parameters such as no. of
2. Wet (Print) Lamination complaints/100MT of sale, complaints per million
Films opportunity, complaints sigma level, defective
• Label Films 1. Pressure Sensitive material kgs/MT of sale and sales quality return as
Label Stock Films percentage of sales.
2. Direct Thermal Cosmo Films continue to innovate with development
Printable Films of new products to meet the industry growing need
3. In-mould Films for convenience and product safety. Some of the
4. Wrap around recently launched value added products of the
Label Films Company are-

PACKAGING FILMS LAMINATION FILMS

BOPP Conduction Sealing Film -
Suitable for sterilization process which increases
shelf life of products specially for Dairy industry
High Metal Bond CPP Film
High Metal Bonding resulting into good inter-layer
bond strength
BOPP Films for SOAP Wrapping
Enhances moisture barrier which help to
maintains consistent SOAP weight for longer time.
LABEL FILMS
Metalized Label Film
Mirror Finish Glossy film which can be printed
with high speed flexo printing machine.
Universal PET Lidding Film –
Universal lidding film which laminates with different
plastic and paper materials and has easy release
Black & Metalized Velvet Film
Enhancement of product appearance in Graphic
Industry and Velvet cloth like feel which also enriches
the colour depth on printed surface
INDUSTRIAL FILMS
Cosmo Synthetic Papers (CSP)
With enhanced features such as quick drying (Labels,
Tags, Maps, ID Card, Tickets for adventure parks etc.)
Tape Release Film
Pressure sensitive tapes
Release coated BOPP liners

4. Operational and Financial Performance Company’s continuous focus on improving

In financial year 2018, Net Sales increased by 22%
to ` 1936 crores from ` 1587 crores in financial year
2017. Sales volume grew by 25% with 20% growth
in Specialty films. BOPP film margins continued to
be volatile and wiped out gains of volume increase
and better product mix.
operational efficiencies helped in maintaining
EBIDTA level. Consolidated EBIDTA for the financial
year 2018 is ` 168 crores against ` 169 crores in
financial year 2017. PAT and EPS dropped from last
year primarily due to higher interest and depreciation
of the new BOPP line commissioned last year.
Consolidated PAT for financial year 2018 is ` 64

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 crores against ` 85 crores to that of last year.
Key focus areas for the financial year 2018 were –
• Creating Customer Centric Culture including
Robust Service Offer, New Offices Overseas,
CRM, Establishing tripar tite par tnership
between us, Converters and Brand Owners
• Improving Product Mix towards Value Add, in
line with objective to de-commoditize the
business model. Speciality Films sale grew 20%
over last year.
• Improving utilisation of new BOPP capacity
commissioned in 2017, which resulted in 25%
increase in volume.
• Continuous focus on improving Internal
Operational Efficiencies
In the coming year, management focus shall
continue to be on expanding speciality, close to full
utilisation of capacity and improving internal
efficiencies.
5. Liquidity
During the year ended March 31, 2018, the
consolidated Net Debt increased to ` 684 crores
from ` 597 crores last year mainly due to capital
expenditure. The Net Debt to Equity ratio is at 1.1
times.
6. Human Resource and Industrial Relations
Cosmo regards its human resources as the most
valuable asset of the Company and the foundation
of its success. Therefore, at Cosmo, people are
always encouraged to do their best in an employee
centric, collaborative and empowering work
environment.
Cosmo’s work culture helps employees hone their
skills and enables them to deliver superior
performance. Individuals are selected and treated
on the basis of their merits and abilities and are
given equal opportunities within the organization.
To ensure that the organization work climate is
engaging and motivating, Cosmo has
institutionalized a rewards and recognition
programme to honour employees at all levels for their
outstanding achievements. Through this programme,
we motivate our employees to innovate and improve
their perfor mance by providing immediate
recognition to their efforts beyond normal monetary
rewards. This is a part of the HR function and is a
critical pillar to suppor t the growth and its
sustainability in the long run.
In FY 17-18, industrial relations across the Company
were cordial with no labor unrests or strikes during
the year.
7. Internal Control Systems
The Company has an Internal Audit System
commensurate with its size and nature of business
operations. The Internal Auditors covers all the key
areas of the Company’s business and reports to the
Audit Committee of the Board. Cosmo has also
implemented adequate internal controls towards
achieving efficiency of operations, management of
resources, accuracy and promptness of financial
reporting and compliance with the applicable laws,
rules and regulations
8. Opportunities and Risks
Opportunities
1) Specialty Films: Specialty films have become
need of the hour. Cosmo is working on specialty
products for quite some time now and they
already form a good mix of our portfolio. Some
of the recent specialty products developed by
Cosmo include Direct Thermal Printable Films,
Universal printable Synthetic Paper and Ultra
High Barrier Films.
The major growth drivers for specialty films
market are increasing demand from
pharmaceuticals and food packaging.
Packaging also play a pivotal role in recently
increasing trend of e-commerce, online
shopping.
2) Fast Growing Asian-Pacific Market: Asia-
Pacific region is the fastest growing market for
the global packaging industr y. Growing
packaging industry, increasing automotive
production, massive electronics production
industry in China and India, and the growing
construction industry in various countries in
Asia-Pacific region is expected to drive the
market during the period 2018-2023
Risks
1) Volatility in Raw Material Prices:
Polypropylene is the key raw material of the
Company. Changes in the cost of raw materials
such as these are generally a pass through.
Time lag, if any, in doing so may impact the
margins of the Company.
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 2) Foreign Currency Fluctuations:The
Company, as a result of operating in several
countries, is faced with foreign currency risk.
Foreign currency loans also expose Cosmo to
further risk from changes in the foreign currency
rates. The Company has a foreign exchange
risk management policy and implements
hedges in accordance with the policy to mitigate
the risk.
3) Emergence of Competition in Specialty
Films: The Company is a leading manufacturer
of Specialty Films in India. Emergence of
competition in this segment may impact the
growth plan of such films in the medium to long
term.
The Risk Management Committee of Board
meets regularly to evaluate the effectiveness
of risk mitigation measures and suggests
course correction wherever required.
9. Future Outlook and Strategy
The Company has progressed well in implementing
its long term manufacturing strategy with efficient
capacity creation. During the Financial Year 2018
the Company has commissioned its second Cast
Polypropylene (CPP) Line and fourth metalizer.
Cosmo is focusing on value added films which has
higher margins and has a strong pipeline of
innovative films to meet the ever changing
requirement of the customers. The Company’s
successful approach towards research and
development allows it to continuously innovate
customer centric products. Cosmo is well positioned
to become the global preferred manufacturer of
specialty films with a clearly defined mission:
a) For Customers:
To deliver the finest product and service
experience, backed by innovation, people and
processes
b) For Employees:
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To nurture a working environment that fosters
personal and professional growth
c) For Shareholders:
To generate sustainable long term returns on
investment with focus on transparency and
accountability
d) For Vendors:
To create symbiotic relationships that drives
mutual growth
e) For Community:
Contribute to community growth through
education, skills development and sustainable
green practices
10. Cautionary Statement
This repor t may contain “Forward Looking
Statements” including, but without limitation,
statements relating to the implementation of
strategic initiatives, and other statements relating
to Cosmo Films’ future business developments and
economic performance. While these Forward
Looking Statements indicate the Company’s
assessment and future expectations concerning the
development of the Company’s business, a number
of risks, uncertainties and other unknown factors
could cause actual developments and results to
differ materially from the expectations. These factors
include, but are not limited to, general market,
macro-economic, governmental and regulatory
trends, movements in currency exchange and
interest rates, competitive pressures, technological
developments, changes in the financial conditions
of third parties dealing with the Company, legislative
developments, and other key factors that could affect
the Company’s business and financial performance.
Cosmo Films undertakes no obligation to publicly
revise any forward looking statements to reflect
future / likely events or circumstances.