Cosmo First Limited (COSMOFIRST) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Investor Call of Cosmo First Limited to discuss the Q3 and 9-month FY '26 results. Today, we have from the management, Group CEO, Mr. Pankaj Poddar; and Group CFO, Mr. Neeraj Jain. Starting off with the statutory declaration, certain statements in the conference call may be forward-looking. These statements are based on the management's current expectations and are subject to uncertainties and changes in the circumstances. These statements are not guarantees of future results. [Operator Instructions] Please note that this conference is being recorded. Now may I request Mr. Neeraj Jain 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. Neerajji.

Well, thank you. Very good afternoon, ladies and gentlemen, and thank you for joining Cosmo's December 2025 Results Conference Call. Our financial results for the December '25 quarter and investors' presentation, both are available on company's website. Hope you could go through the same. We'll begin this call with a brief opening remarks from the management side, which may be followed by the questions. Let me begin the call providing a holistic level perspective, and then we'll discuss the financial results for the quarter. The CapEx cycle of the company is largely complete now. The focus will be on setting the strategic CapEx done in recent years, almost close to INR 1,100 crores. Focus will be on utilization of full capacity and continue to grow the specialty business. There's a very clear road map to reduce the net debt over the next 2 to 3 years as no major CapEx is planned during this period. Our new businesses are scaling. This will lead to incremental return on capital employed, such as Specialty Chemicals and Cosmo Consumer and of course, Zigly. Focus is going to be on intrinsic value growth for each of the business in the coming quarters and years. Now, moving to financial results for the quarter. The consolidated sales for the December '25 quarter is INR 899 crores, which is higher by 28% from December '24 quarter, primarily due to higher volume by 29%. EBITDA for the quarter has increased by 19% to INR 103 crores compared to INR 86 crores in December '24 quarter. The EBITDA was favorably impacted by 3 factors: higher sales volume by 29%, mainly due to new capacities, higher specialty margins due to better product mix; and number three, improved performance of Specialty Chemicals subsidiary. In fact, the EBITDA could have been much better had it not impacted due to 5 adverse factors. Let me explain all those 5 factors. The margin declined in the BOPP core film post increase in the imports in India during the mid-quarter 2. The carry-on impact continued on the margins, although imports have been reducing very significantly. And now the imports level in India is very insignificant level. Generally, there is a seasonal impact as well in Q3 post-Diwali period and due to Christmas holiday period. We see better demand scenario in the quarter 4 of current financial year. Second factor was higher U.S.A. tariffs. If you recall, there is an increase in the U.S.A. tariffs that started impacting the margins from the mid-quarter 2 of the current financial year. 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. Third factor was volume loss of about 6% due to shutdown on one of our major BOPP line, which, of course, got rectified towards the end of the quarter, but the impact due to this factor was close to INR 4 crores. There's a known repetitive inventory loss of INR 8.4 crores due to drop in the raw material prices during this quarter. And of course, the fifth factor is the one-time increase in the past period employee benefit gratuity liability by about INR 4 crores in line with the new labor codes announced by the Government of India. Besides these factors, other income includes a known repetitive foreign exchange gain of INR 6 crores related to capital reduction in a wholly owned subsidiary of the company. So in totality, the adverse factors or the non-repetitive factors, net impact is close to INR 20 crores on the quarter 3 results. The PAT impact compared to quarter 3 of last financial year is muted due to increased depreciation and interest related to new capacities. BOPP film gross margin has been running during the quarter at INR 13 per kg. On a comparative basis, it was INR 22 per kg in September '25 quarter and INR 21 per kg in December '24 quarter. BOPET film gross margin [Technical Difficulty]

Sorry to interrupt, sir. You voice is not audible. Hello? Ladies and gentlemen, please stay connected while we connect the management. Ladies and gentlemen, the line for the management has been connected. Over to you, sir.

Hello again to all of you. We are so sorry the call got disconnected. So, please pardon me if I repeat some of the points. So, we already explained the net impact of close to INR 20 crores in the quarter 3, which are one-off items in the quarter 3. The PAT impact in the quarter 3 compared to last year similar period is muted, largely because of increased depreciation and increased interest related to new capacities. BOPP film gross margin has been running during December '25 quarter at INR 13 per kg compared to INR 22 per kg in September '25 quarter and INR 21 per kg in December '24 quarter. The BOPET film gross margin has been running at INR 12 per kg during December '25 quarter. On a comparative basis, it was INR 6 per kg in September '25 quarter and INR 21 per kg in December '24 quarter. Now, moving to the outlook for the coming quarter. The company expects near to double-digit growth in the coming quarters in the top line, largely because of the enhanced utilization of the recently added capacity. Recently announced reduction in the U.S.A. tariffs will lead to improved profitability from the U.S.A. operation starting from the quarter 1 of the next financial year once the existing inventory in the U.S., which is already duty paid is exhausted. Of course, we do not expect non-repetitive items of the quarter 3 to repeat in the quarter 4. Now coming to business vertical-wise performance. First on the Specialty Chemicals. The Specialty Chemicals subsidiary has continued to achieve the traction and posted sales of INR 52 crores with 25% EBITDA in December '25 quarter. The Specialty Chemical subsidiary has developed 3 new products recently, which should be commercialized over the coming quarters post approval at the customers ends. We expect this growth trend to continue for the Specialty Chemical business with new innovative products in pipeline. Moving to rigid packaging vertical. The Cosmo Plastech, which is the rigid packaging vertical of the company has reached EBITDA breakeven in December '25 month. The business has reached close to 70% of the capacity utilization in quarter 3. Now the focus for the vertical shall be on achieving higher profitability through higher capacity utilization and improving efficiency. Moving to consumer businesses. Cosmo has 2 consumer businesses, Zigly, which is the petcare venture and Cosmo Consumer, which includes the window films, paint protection films and ceramic coatings. Both the consumer businesses continue to scale up. Zigly, in fact, has posted over 50% top line growth in December '25 quarter on a year-on-year basis. The business model is moving more towards services and house brands, which is a high-margin business. Moving to debt position. The company net debt at December '25 is INR 1,215 crores, which is lower by INR 20 crores compared to previous quarter. The net debt to EBITDA stands at 2.8x and net debt to equity stands at 0.8x. As said earlier, the company is running at peak level of the debt as most of the debt related to the new capacity is already built in the balance sheet, but full-year effective returns are yet to kick in for the new CapEx, with a significant net debt reduction planned for the next 2 to 3 years. On that note, we conclude our opening remarks and would be glad to discuss any questions, comments or suggestions that you may have. I would like to ask the moderator to open the line for the questions, please. Thank you.

[Operator Instructions] We have the first question from the line of Nirav Jimudia from Anvil Wealth.

Sir, I have a few questions. So sir, first, you touched upon in your opening remarks about the U.S.A. tariff for third quarter. I think it started in mid of second quarter. So first, if you can just quantify what was the impact of U.S. tariff in third quarter of FY '26?

It's near to full impact. So as we said, depending on the [ mark ] between INR 4 crores to INR 5 crores is the net impact because of the U.S.A. tariff. Out of this INR 6 crores impact was already baked in, in the quarter 2 results. So, there is additional impact of close to INR 8 crores. It's very difficult, as you will appreciate, to exactly quantify, but we expect it's close to INR 8 crores additional [indiscernible] for the quarter 2.

Yes. See, on a full-year basis, it was expected to give a INR 50 crores impact to our P&L. More than that, all of our new growth had curtailed because of this anti-dumping duty. Now, customers are coming back and want to discuss business again. So, this will have 2 positive impacts. One is the immediate profitability improvement. And the second is the growth in the business, which would also be a profitable business for us.

Correct. So, that's what I was coming to. Sir, one, you mentioned about the U.S.A., but I think now EU FTA also is in place. So do you see any opportunities, not today, but let's say, starting next year when the EU FTAs would be in place? So, do you see a business case opening up for us in Europe? And last time, you also touched upon Japan as a market where 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?

Yes. If you really see, Americas and Europe are the biggest export regions for us. And now India entering into FTA with both of them, this should be quite positive in the quarters to come. Coming back to the third question, we have also entered into a joint venture with Filmax in Korea. So, that is another region that we intend to grow over next couple of years and similarly, for Japan. Japan will be actually the slowest amongst all these because Japan is easy to enter -- sorry, difficult to enter and difficult to exit. So, customers take their -- quite a bit of time. But then if you can make the quality for Japan, you can be successful anywhere and everywhere. So, we are taking that phased manner approach for Japan. Japan will not bring immediate results, but we should get very good results from both U.S., Europe and Korea as well.

Sir, is it possible to quantify the amount of business, which we are currently doing from Europe?

I won't have it immediately, but it's quite sizable out of our total exports.

Perfect. Sir, second question is on the newer line of 81,000 tonnes, which we have commissioned. So, how much this new line has operated in third quarter? And also like with one of the lines now being corrected in terms of whatever shutdowns it had, how do you see Q4 versus Q3 in terms of the volume growth?

So, see, as far as the new line is concerned, in quarter 3, on an average, we could run it at 70% of potential capacity, not as much because of orders, but there is a phase-wise improvement or speed increase that the supply does. Post February, we should be able to run this line at full output. In January already, there has been some -- I mean, some more output increase from this line. We have reached now close to 80% of the potential. And we expect that from March onwards, we should be able to get 100% out of this line.

Correct. And sir, with reference to the contribution margins in the BOPP, I think, because of all those factors which you mentioned, seasonality and the holidays, there was some dampening effect on the demand in Q3, possibly because of which the margins were also lesser. But let's say, in Q4 or, let's say, going into the season into Q1, how do you see these margins? So, have they started improving again? BOPET was seem visible, but I was just looking from a BOPP angle that whether the margins have improved on the BOPP side as well?

Yes. BOPP margins have also improved. They started improving from December. And right now, January margins are even better than December margins. So yes, they are also on an improvement side.

All right. Sir, next question is on the window films, like you mentioned that the line is already working at close to around INR 30 crores of annualized sales. So, just wanted to understand from you that at what level of sales these window films would start breaking even? We have talked about 50% CAGR growth in that window film business. But let's say, from a loss point of view, at what level of sales we can see -- start seeing breaking even?

So, see, there are 2 factors playing in this business. One is that month after month, our contribution margin is going up because we are able to -- one is produce more volumes. And second is we are able to cut down different types of costs in this business. The second critical factor is the amount of marketing that we are going to do in this business. What we have projected right now is close to INR 15 crores of marketing cost next year. And we expect that this business based on the current margins should be roughly INR 80 crores, INR 85 crores at which it should start to breakeven.

We have the next question from the line of [ Gaurav ] from [ Capital Farming Consultants ].

So, my first question is on the strategy that we have said that in coming years, at least 3, 4 years now down the line, we will be focusing not so much on the CapEx side and we would like to maximize our already commissioned facilities, right? So, I would like to understand from the management side that to what extent that we can expect maybe by FY '27 and FY '28, right, that what percentage of capacity utilization we can expect from the commissioned facilities? And how much additional EBITDA margin, right, improvement in margin we can expect from it?

See, there are 2 parts to it. First is from a revenue perspective, from what we did in quarter 3, we can easily get around 25% to 30% more output from our assets. So if you are able to fully sweat out the assets, there's a potential of 25% to 30%. The biggest potential is available in the BOPP line and the CPP line. BOPP line, we feel that it will be fairly easy for us to reach to the full capacity utilization. CPP is growing at a good speed, but it may take some more time to reach to full utilization because CPP is relatively a newer business to us than the BOPP as such. Coming to your second thing, our focus now remains on -- because we've added very significant capacities in the recent years. So for next 3 years, for sure, we are not going to invest on any significant CapEx or any significant BOPP asset. Our focus will be entirely to shift to specialty business. Because of our new line, our specialty as a percentage to our total sales has come down from 70% to 50%. Our target will be to take this number to 75%. And the 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 specialty polyester and CPP business. And then we have added newer businesses, which have a very high-margin potential. So, you will see that increasingly our new business as a percentage to total business will continue to go up and they have a better potential or better ROCE and much more stable ROCE in the years to come.

Yes. So before I ask my second question, a follow-up within this, if you allow. See, from a potential point of view, yes, we all are optimistic considering more than INR 1,000 crore plus you have invested in the CapEx for the last 3, 4 years, right? But considering the realistic situation that we now face in the flexible packaging, specifically in BOPP, where some of the 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 2 years, right? So, what could be the realistic volume per se? I'm not talking about in terms of the revenue per se, amount per se because amount can be up and down depending on the raw material prices and all those things. But quantity per se, what is a realistic assumption that we can build in our models for, let's say, next 2 to 3 years year-on-year basis?

See, on a very realistic basis, we see no reason why we should not be able to fully utilize our BOPP and BOPET 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.

That's great. That's great. So, second question is on -- now considering consolidated CapEx, right, so not so much of CapEx and free cash flow generation from the business, right, since our EBITDA might improve, right, our efficiencies might improve, asset utilization might improve. So, what level of debt currently we are as on 31st of December 2025? And what debt we expect that year-on-year basis, we would be able to reduce because of free cash flow generation from the business because of all these positive factors that we are talking about?

You see, we are at close to INR 1,200 crores of the net debt at the end of the December '25. And as we said at the beginning of the call, there is no major CapEx plan. So, a large part of the free cash flow will be utilized to reduce the net debt position of the company. Depending on the EBITDA level, how much EBITDA gets generated over the years, but we expect between INR 200 crores to INR 250 crores each year reduction, which translates to 15% to 18% of the reduction in the net debt position each year.

Great. Great. If you can allow, what is our weighted average cost of debt ongoing as of now? And have we seen any reduction because of the repo rate reduction by the Reserve Bank of India in our weighted average cost of debt versus what was 31st of March 2025?

Our weighted average moves between 6.5% to 6.8%, depending on the mix between the foreign currency loans and the India denominated loans. But yes, we witnessed the reduction in the interest rates and full impact is yet to kick in.

Very competitive rate, sir. Congratulations to your finance team.

We have the next question from the line of Jatin Damania from SVAN Investments.

Am I audible, first of all?

Yes.

Yes. So sir, I had a few questions. I have few questions. So first of all, as there was some news last month about ADD being implemented again on the imports from China, so how far are we on that, like, if you have any incremental news?

On BOPP, there is no ADD, neither on polypropylene, nor on the BOPP. And India is quite competitive versus China when it comes to BOPP films.

I was talking about BOPET pet films.

On the pet, the association has filed an application for anti-dumping duty because China has a lot of surplus capacity. And from time to time, they do dump goods into the country. Therefore, the association has put this anti-dumping duty application, and it may take some time because what we have seen that it normally takes 12 to 18 months for the courts to decide on these matters.

Okay. So for at least another year, we are not getting any incremental news on that.

Yes, you are right, but the BOPET margins are reasonably fair right now. They can certainly be better. But then the challenges we had 12 months back, I think China also has, to some extent, curtailed the exports into India.

Sir, how down have we gone with the imports like in Q2, you were saying the imports have declined a bit. And in this quarter, it is at a very insignificant level, if you can quantify that?

Yes. So BOPP, there are 3,000 to 4,000 tonnes of imports happening. That is also largely to do with the B-grade, C-grade material and some of the material, which India does not make, but most of it is B-grade, C grade. And BOPET also does not have any significant imports into the country.

Okay. Sir, nextly, if you can help us with the BOPET films gross margin. I guess you said in your opening remarks, but there was some disturbance.

Sorry, what is your exact question?

What are the BOPET films gross margin? As you said that there has been an improvement in the BOPET films margins, so if you can tell us with the numbers?

BOPET quarter 3 gross margin was running at INR 12 per kg as compared to INR 6 per kg in the previous quarter.

Okay. So it has nearly doubled from the last quarter. And this is majorly because of the low imports?

Yes, you can -- you are right that imports have come down because China in between was dumping into the country. That has now -- I think China has significantly reduced its imports, and that gave an opportunity for the local players to somewhat improve the pricing. They are still not where we would love it to be, but they are certainly better.

Sir, as you said -- as you said that from INR 13 per kg base BOPP films gross margin, it has started improving. It has started improving post that. So, where have we reached right now?

So maybe INR 2, INR 3 higher compared to average of the previous quarter. Because generally, I mean, you'll notice that there is a seasonal impact also, as we said earlier. Quarter 3 generally has been a lower quarter in terms of the demand because of the holiday period and post-Diwali period. And quarter 4 generally is a strong quarter.

Okay. So sir, the next question is that we mentioned that our specialty business has come down to 60%, which was usually at 70% earlier. And we aim to take it to 75% -- like if we can if you can give a time line to this and how we can do that?

So specialty, I mean, the fair point will be to see at the CAGR growth, which in any case, specialty, we are growing by 10% CAGR growth over the last 6 years or so. And there is a very strong pipeline of the new products for the specialty. So, we definitely see there is scope for further improvement in the growth rate for the specialty at an overall basis. When you come up with a new capacity, largely start first with the base film more or core film more. Then over a period of time, you move slowly to the specialty and semi-specialty products. So, that's what -- this is what which is happening. Over a period of time, we definitely see this improving. So -- and I mean, to conclude, we see no reason why it will be lower than the 10% or double-digit growth on the specialty side.

We have the next question from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, so considering both our segments and the capacity utilization improvement that we are expecting, sir, on the INR 4,700 crores, INR 4,800 crore revenue that we expect in next year, what kind of margins can we expect considering the mix of specialty and the commodity films that where we see heading?

See, in our industry, it is quite difficult to project that because on the core margins -- I mean, on the core films, it's very difficult to know what will be the margins as such. Our -- we have -- we are trying to do 2 things. One is to continuously increase the specialty numbers. And second thing is to increase our export numbers Both our specialty and export are close to 50%, and we will target to take them to a higher percentage by the end of next year. The second improvement will certainly come from the improved utilization, not just in film, but also in other businesses. So, all those will certainly add to the margins, but then it's very difficult to project the core film margins.

Right. Sir, so when do we expect [Technical Difficulty]. Sorry, is it better right now?

Yes. Please proceed.

Sir, when do we expect to reach the 75% level of specialty?

See, if we go historically, it should take around 4 years.

Okay. Sir, so when we say that -- sir, from our investor presentation, understanding that the production -- the demand and supply is kind of an equilibrium in the BOPP industry in India, as well as there are no imports that are coming from China. Sir, so can we expect at least to reach a INR 25 gross margin with better utilization for next year? Is that a conservative estimate that we can consider?

See, full utilization, certainly, yes. INR 25, as I said, I wish I can forecast that. But in general, the margins are expected -- I can basically tell you about next 2 quarters, which are expected to remain reasonably strong.

We have the next question from the line of Sashwat Jalan from Augmenta.

My first question is regarding the U.S.A. margin impact. We are seeing a reduction in the tariff. Do we see any incremental margin increase from our base, and if you can quantify that for next year?

Yes. So for the full year next year, we should have 2 impacts. One is the margin improvement by close to INR 50 crores. And second is growth in our revenue and incremental margins coming out of that. The entire growth had virtually stopped in last few months. So, we should be able to get back that growth rates, and we have significantly aggressive plans for U.S. market.

But this would be pretty much in the low double-digit maybe near teen from a volume growth perspective?

From the growth perspective, we have much higher targets for the next year.

Okay. And sir, just to clarify, I think from a previous participant's question regarding capacity utilization, I think you mentioned currently, we are at 70%, and we are driving it up to 90% for next fiscal. Is that understanding correct for the new capacity?

Right. Yes, you're right.

And this is 90% of the nameplate capacity or how are we looking at it?

The possible utilization -- so let's say, capacity, as an example, if it's 50,000 tonnes and we feel we can reach to maximum 40,000, 45,000 tonnes based on microns, so we are saying what is the probable utilization when we can reach and what is the utilization we can do from that probable capacity? So right now, as I said earlier, that BOPP and polyester, we should be able to use the full capacity. Only the CPP line may take some more quarters.

Just to add to it, I mean, all this discussion is for the new capacity, means the BOPP line, CPP line and the BOPET line. On the old capacity, we are running already full capacity utilization.

Understood, sir. And sir, if you can just share the update regarding the power cost reduction, the project for the solar plant that we had, can we expect that for FY '27? Or will that run into FY '28?

We are already getting some gains from renewables and some more gains are largely expected to come in FY '28.

All right. And sir, just last question, if I can squeeze in. Like right now, the margin scenario, particularly if I talk about BOPP, like you mentioned the INR 13 for the last quarter. And right now, it's slightly higher, maybe INR 2 to INR 3. And given next year, we are expecting some new capacity to come in. So is it fair to assume that this is sort of going to be the reasonable stature for the next few quarters, especially now that we have a higher share of commodity films in our market?

What is your question? We did not get that.

Are we expecting the margin profile on the BOPP to expect to remain in the similar band for the next few quarters, given this new capacity also that is coming online from some of the peers set?

See, we can talk about quarter 4 and quarter 1, where it is expected to remain in a range bound manner. Beyond that, it is difficult to comment about it.

We have the next question from the line of Vipul Kumar Shah from Sumangal Investments.

So, what percentage of our revenue comes from U.S. now, sir?

U.S. is close to INR 400 crores business for us.

INR 400 crores. So, I heard you correct. So, we will get INR 50 crore benefit only out of a reduction in tariff in U.S. or have I misunderstood your remarks.

Yes, yes, you are right because there was a 50% tariff, which was levied and we had to absorb quite a significant part of it. So, you are right.

And sir, the journey of reaching 75% of specialty and semi-specialty from 55% right now, so each year, we will add how many percentages? So if you can give some road map, it will be useful.

We have been growing at 10% CAGR, and we have no reason to believe that, at least why we don't grow in double digits. Obviously, our attempt is to grow even more because we have more capacity to spread our wings.

So '26 -- '27, '28, we can have a 65% specialty and semi-specialty mix?

Yes, that is what we intend to target. Right now, we are sitting at close to 51%, 52%. And our target will be to definitely cross 60% over the next 2 years.

Last question. This 81,000 BOPP film and recent BOPET line, so what is the specialty and commodity mix, if you can give any idea?

BOPET, we have been able to right now convert close to 20% into specialty. But many -- because it was a new business for us, so it took us more time than it would have taken for the BOPP film. But now we have developed a good range of films, and we should be able to scale up faster in the times to come.

And regarding this 81,000 BOPP line, what percentage of that line is specialty and what percentage is commodity right now?

See, we do not break it line-wise as much. We normally discuss about the overall numbers.

We have the next question from the line of [ Amar Kumar ] from [ AIK Securities ].

Sir, I have a few questions. With significant new capacities coming up in the BOPP segment, how do we see the demand-supply balance evolving over the next 2, 3 years?

Your voice is not clear.

Are you hearing my name? Am clear?

Yes, go ahead.

Am audible?

Yes.

With significant new capacities coming up in the BOPP segment, how do you see the demand-supply balance evolving over the next 2, 3 years?

See, as far as world is concerned, we feel BOPP will be fairly balanced. When it comes to India, FY '27 should be largely balanced, but FY '28 supply could be more than demand.

So by that time, our value-added segment will be much higher and export will be much higher. So, we will not...

Sorry to interrupt between, Amar. Your voice is breaking.

Yes, yes, you are right. You're right. You are right what you said.

So by 2, 3 years -- next 2, 3 years, I think our specialty business will be much higher. And since we export most of the specialty business, so we will be less hit because of this overcapacity.

You are right. My understanding is right. Yes.

So, how do we see the company's consumer business setting up over the next 2, 3 years? And specifically, what is the growth potential in Europe for Sunshield film?

So, this is a fast-growing business for us. We are pretty happy with the progress that we have made, whether it is on the product side, getting the right people with us, start to build a brand in the market. So, we are going directionally very well, and we have some very aggressive targets for this business. This is a very high gross margin business for us, and it's more of a consumer product. Once we are able to scale it up, this should result in good profitability for the group.

Okay. Sir, what is the business scope and long-term potential of the tie-up with this Korean partner?

Which one?

Korean partner. We have a joint venture.

Korean and Japanese -- I mean, Japanese take a lot of time to develop something new. Korea takes somewhat lesser. So, immediate results may not happen, but you will start to see a lot of results coming from 12 months from now. And these results will be incremental results. Yes.

Sir, one thing you have done right that Zigly, since it's a very high-potential business, but it does not match with our core business. So, you are demerging this business from Cosmo. So what is the time line, sir, when we can expect this?

We have always stated FY '27, and we maintain that.

Okay. And what is the current situation of this business?

See, if you see other players in pet care industry, they're all getting very high valuations, close to 5 to 6 multiple of the revenue. And Zigly has already created a very good brand name, especially in the North India market and we are trying to spread our wings in the West. We have grown 50% on year-to-date basis, which is quite a decent growth. 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 veterinary care service, grooming services and a host of products, including many house labels. So directionally, we are going well, and we are happy on the progress till now.

Okay, sir. And sir, since this trade agreement with the U.S, so right now, we are doing around INR 400 crores of business in U.S. So, what type of growth we see over the next 2, 3 years since it's a great market for Cosmo?

Yes. So, I would say in last few months, the growth was largely curtailed because of the antidumping. Customers are really welcoming and so is us welcoming this change from the American government. And we would look for some aggressive growth, and we will share the progress in every quarter.

And sir, one last question is that I have gone through the con call transcript of this SRF. So in that con call, they have mentioned that in China, the government has asked the BOPET players to reduce or curtail their production by 20%. So, how correct is that news? And how it will impact the BOPET business in India?

You see across certain sectors where companies are carrying older assets and across sectors where China is not making money, government has been pursuing the private entities to curtail the sales. Now, obviously, government has given certain directions, and we have seen that China stick to the broad guideline 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 SRF. We do not have complete tracking of that. But you are right that in general, Chinese government is pursuing to shut down the older capacities. And you could certainly see that in last few months, there is much lesser import from China.

And sir, lastly, I congratulate the management for 3 announcements. First, no major CapEx. Number two, all the CapEx in the value-added business and I think the demerger of the Zigly business. So, all the best to the management for the coming quarters and the year ahead.

Thank you.

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 closing comments. Thank you. And over to you, sir.

Sure. So to summarize, company's focus will be on shaping the best use of the strategic CapEx, which we did over the last 3 years or so, which means we reach the close to full capacity utilization and enhance the specialty business. Each of our business vertical will focus on high margin and stable ROCE. The key focus shall be on intrinsic value growth for each business and unlock value at appropriate time. Future capital allocation in the business based on incremental ROCE and value add in the intrinsic value, further strengthening financial resilience by reducing corporate net debt substantially over the next 2 to 3 years. Many thanks for joining. Thank you.

Thank you, members of the management. On behalf of Cosmo First Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.