Cosmo First Ltd (NSE: COSMOFIRST) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Neeraj Jain — Chief Financial Officer
Pankaj Poddar — Chief Executive Officer
Analysts:
Rahul Jain — Analyst
Gaurav Jakhotia — Analyst
Nirav Jimudia — Analyst
Jatin Damania — Analyst
Aman Kumar Sonthalia — Analyst
Unidentified Participant
Divesh Sharma — Analyst
Vipul Kumar Shah — Analyst
Saket Kapoor — Analyst
Aditya Vora — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Investor Call of Cosmo Force Limited to discuss the Q3 and nine months FY ’25 results. Today, we have with us from the management, Group CFO, Mr Pankash Poddar; and Group CFO, Mr Nira Jain. Starting off with the statutory declaration, certain statements in the conference call may be forward-looking. These statements are based on management’s current expectation and are subject to uncertainties and changes in circumstances. These statements are not the guarantees of future results. [Operator Instructions] Now may I request Mr Nira 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.
Neeraj Jain — Chief Financial Officer
Well, thank you. Very good afternoon, ladies and gentlemen. I’m Nira Jain, Group CFO at Cosmo First, along with my colleague, Mr Pankash Podar, Group CEO at First. Our financial results for December ’24 quarter and investors presentations are available on the company’s website. We’d like to discuss a brief on the performance of the company for the quarter, which may be followed by the questions. Beginning with the financial results, consolidated sales for the December ’24 quarter is INR701 crore, which is higher by close to 12% from December ’23 quarter, primarily due to higher-volume by 7.5%, higher specialty sales, which has increased by almost 14% and better margins. The EBITDA for the quarter is INR86 crores compared to INR56 crores during December ’23 quarter. The improvement in EBITDA from the December ’23 is backed by higher specialty sales, enhanced volumes by 7.5% and better BOPP and BOPET both margins.
The company has raised specialty sales of 73% of total volume in December ’24 quarter and 71% on December ’24 YTD basis, which was close to 64% in FY ’24. You will notice step-by-step company is improving on specialty sales. On December ’24 YTD basis, we are running 14% higher specialty sales volume. BOPP fund margin has been running close to INR21 rupee per kg during December ’24 quarter, which was INR25 per kg in September ’24 quarter and INR9 per kg in September ’23 quarter. If we compare with September ’24 quarter, the net revenue and margins are lower due to temporary breakdown in one of our production lines, which caused production loss of close to 5%.
The POPP film margin has also witnessed pressure for a few weeks in December ’23-’24 quarter with some capacity commissioning in the domestic industry, though it recovers fairly fast due to strong demand. Quarter two FY ’25 also had one-time income of close to INR9 crore due to sale of one of our office systems, which was IB and state government tax incentives. The BOPEC vertical, which holds close to 15% of the sales for the company has witnessed better margins and posted EBITDA in mid-teens during December ’24 quarter. And moving to outlook.
Though the DOPP base film margins are expected to remain little subdued in FY ’26 due to expected capacity addition in the domestic industry. However, we are optimist and excited about four factors. First, improved sales of specialty films. So there are several new products in pipeline, which are expected to get launched in the coming quarters to further improve the specialty sales. Number two, cost rationalization, we expect incremental cost rationalization of close to INR25 crore in FY ’26. Number three, the new capacity kickoff for the BOPP, CPP and Sun Control firm which will add to top-line and bottom-line from FY ’26.
Just to indicate, even if we initially partly shift the production of some old used line to the new BOPP line, the gross margin of the new BOPP line should be in double-digit due to lower-cost of production, though we do not expect much need for it and the same, it may be required at the maximum for a few months at the beginning. Both BOPP and CPP lines will be world’s largest production capacity lines and will increase company’s production capability by close to 45% to 50%. The fourth factor, among the new business vertical specialty chemical is already making high-yield EBITDA.
All other new business verticals related to packaging should be EBITDA-positive in FY ’26, except B2C business, which may take some time. Even among B2C business, we expect Sun Control to be EBITDA-positive from FY ’27 moving to specialty Chemicals. The specialty chemicals subsidiaries advancing well to achieve high-teens EBITDA and more than 30% return on capital employed in FY ’25. Rigid packaging. We started rigid packaging vertical under brand-name Plastic in the second-half of FY ’24, which is related to packaging industry.
The business vertical is growing well with the addition of injection molding and pet ship line in FY ’25. The vertical is moving in-line with the plan and we expect more than INR120 crore of top-line with positive EBITDA in FY ’26 from Ridget Packaging. Moving to direct-to-consumer vertical pet care. Zigli we have launched multiple private brands and enhanced our wet care services which favorably impacted top-line and margins for the December ’24 quarter. Our business model is moving more towards services and private labels, which is a high-margin business.
Moving to growth and net-debt position. The company’s capex for FY ’25 is estimated to be close to INR430 crores to INR450 crore, majority of which is already done at December ’24 level. The capex is mainly on the BOPP line, CPP line and some projects to enhance specialty sales. The financials remain strong. The company’s net-debt position is close to INR900 crore, which is 2.6 times to EBITDA and 0.6 times to equity. Of course, during the recent Board of Directors meeting, Mrs Yamni Japuria has been appointed as Whole-Time Director of Corporative Strategy, ESG and CSR for a period of five years. The appointment will take effect from the date of allotment of deal by Ministry of Corporate Affairs. With this, I will take a pause and would like to open the call for questions, please.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Rahul Jain from Tredence Wealth. Please go-ahead hello.
Rahul Jain
Hello. Am I audible? Am I?
Neeraj Jain
Yes, you are.
Rahul Jain
Thanks. Thanks for the opportunity, sir. Sir, just to understand with regards to the specialty chemicals, our target is to be around 70% 71% for the current year and move to 80% for FY ’26. So if you could break this further into the specialty and the semi-specialty and also if you could share margins in term of EBITDA percentage for specialty and semi-specialty. That is my first question.
Pankaj Poddar
You see, I think you are referring the specialty films actually. Yes. So with respect to bifurcation into specialty and new specialty, broadly it’s 50-50. From the period-to-period, quarter-to-quarter, there may be some minor changes in this ratio. Yeah. While 71% is the YTT figure for the December ’24, we are targeting in medium-term to reach to 80%, but this obviously will be excluding new capacity for the BOPP and CPP, which will take little time actually to expand the specialty further only new lines.
Rahul Jain
And sir, so at 80% also this specialty and specialty will be roughly 50-50?
Pankaj Poddar
Yes, it’s broadly 50%.
Rahul Jain
Sure. And as we move to the 80% volume, you have mentioned in your presentations that each one person shift could add about INR4 crore to INR5 crores to EBITDA. So assuming that from INR70 we are at 80 for FY ’26, can we expect this incremental EBITDA to be in the range of around INR35 crore INR40 crores because of the shift?
Pankaj Poddar
Should be.
Rahul Jain
Sir, in terms of your outlook in your presentation, you have mentioned about growing your top-line 20% CAGR for next three years. Okay. So this is with the base of FY ’25, which should be around INR2,800 crores.
Pankaj Poddar
Yeah, or maybe a little more actually because we are going to commission the world’s largest BOPP line and we expect this to get commissioned in either first-quarter or second-quarter of FY ’26. So this should add close to 40% to the existing capacity. So the yes answer is yes. Our top-line may grow a little even faster.
Rahul Jain
Sure. Last question, sir, with regards to margins. So your presentation and your initial commentary, you mentioned about margins. But when I exclude the other income, our margins are somewhere around 9% for the current quarter versus 11.5% for the previous quarter. That’s fine. What I’m looking for is not the quarterly comments. What I need to understand is given the shift to specialty, number-one and also the cost including the renewable power where you expect around INR25 crores incremental EBITDA coming in due to that? And also the further rigid packing becoming profitable, specialty chemicals giving you larger profits. So from 9% EBITDA margins excluding the other income, where do we see this margins moving up, say, next year and a year afterwards?
Pankaj Poddar
Well, frankly, in-principle, we do not provide any future guidance, but all the factors which you mentioned, either cost or specialty chemical and the enhanced volume are going to favorably impact the current EBITDA level. So all the reasons which you mentioned are valid.
Operator
Thank you. The next question is from the line of Gaurav from Invesco Enterprise. Please go-ahead.
Gaurav Jakhotia
Thank you for the opportunity. I hope my voice is audible.
Operator
Yes, it is.
Pankaj Poddar
Yes, you are. Go-ahead.
Gaurav Jakhotia
Thanks a lot. Thanks a lot. So sir, a couple of clarifications. I will not ask any of the future projections or outlook, but some of the clarifications that has either happened in the past or in the recent quarter, which has just concluded. So there was a news that management was involved in certain gene at a site. So — but in press release or presentation, there is no talks on that. So if you can just help us understand whether it is an existing plant or some new plant that you’re building up and for which product-line if it is a new plant that new product-line is going to be established in that plant and what would be the size and some color on basically this new expansion on new site? That is the first one.
Pankaj Poddar
It’s a 62 acre land which has been purchased by us. This would include growth for all our different business verticals. Obviously, it would not happen in a one year, two-year, it will happen over a period of time and to begin with, we will be putting one quoting line over there, which should get commissioned in the next financial year.
Gaurav Jakhotia
Right. That’s great. And also in press release, we mentioned that there was a breakdown in one of the line and considering the impact, though 5% seems to have a small impact, but considering that the breakdown was just in a one single-line out of almost 35 different lines across different products that we have. So if you can help us understand what was the product-line in which this breakdown was, what was the date when this breakdown happened and what was the duration of this breakdown, if it is possible to provide this clarification there? Thank.
Pankaj Poddar
So this happened on one of our film lines. And I mean it basically happened I think if I remember in December and obviously, we have filed the insurance claim for this loss of profit, which right now is not accounted for because we account for insurance claim on cash basis. So we expect that some of this loss should get recovered from the insurance company. Our initial survey has happened and in the normal-course, we get these insurance claims from within three to six months.
Gaurav Jakhotia
That’s great. We also mentioned that both field margins were impacted in the quarter gone by due to certain commissioning of capacity in the domestic industry. Since you track the industry much more vis-a-vis — we as an investor track the industry, would it be possible for you to let us understand what was the quantity of this domestic capacity which has been made live and who was the player who commissioned it? And your views on upcoming couple of lines also because I think one of the Kolkata based player, I think Group, they have also announced that they are going to make two bulk capacity life I think in the region of Jammu and Kashmir maybe in a year or two. So your assessment of the impact. So I just combined two questions into this — two clarifications into this one single one.
Pankaj Poddar
So one VOPP line came in the last quarter, which was KG Flex. The capacity for that is anywhere between 25,000 to 30,000 tonnes. And as we mentioned that the demand has been growing well and there was a temporary blip in margins, but it recovered fairly fast because the demand has been growing. In the next financial year, there are five new lines, including ours expected to commission, out of which two — three lines actually are bigger lines and two are relatively smaller lines and then as you rightly pointed out, is planning in FY ’27 and FY ’28 as per the news that is available with us. So yes, right now next year, there is a bit of bunching of these lines, which can impact commodity margins, but my colleague Niraj has already talked about a lot of actions that your company is taking to ensure that we remain strong.
Gaurav Jakhotia
Sure, sir. So within this, when we are saying that our line of line, which is going to be commissioned either in Q1 or Q2 of next financial year, having a nameplate capacity of I think almost 67,000 tonne per annum, right, and we say that we will be the lowest-cost producer. So if my understanding — maybe you can correct me, I think most of these lines are manufactured by one of the German player only. So when we say that we will be the lowest-cost producer, which will give us an advantage in terms of competing in this highly competitive market, which is — which is assumed to happen either in one year or two year down the line at least, right? So what gives us that confidence that first, we will be able to fulfill our capacity or improve our capacity utilization and also sustain margins to have it a profitable venture.
Pankaj Poddar
Yeah. So see, our line is the widest and the fastest with the highest output amongst all the five lines that are going to be installed. Our lines will have a lower operating cost or lower variable-cost from anywhere between INR2 to INR4 kg vis-a-vis other lines that are getting installed. So that is one thing. As far as you know the sale of products from this line, we are quite confident because we are growing very nicely in the export market. This year, we have grown close to, I mean, a bit lower than 20% in this year. And second thing is that right now our market-share in the domestic market is very less. We have to kind of keep refusing to many, many customers on an ongoing basis in the domestic market. And given our reputation, customers like to buy from us for the domestic needs and their export needs. So we feel that we will get presence in the market and our lines should get filled up. You know both with domestic and export. You know it’s happening — going to happen in the next year.
Operator
Thank you. The next question is from the line of from Annual Wealth. Please go-ahead.
Nirav Jimudia
Yes, sir. Thanks for the opportunity. So just forwarding the earlier participants’ answers and the questions. So if you can just elaborate more on the recoupment of the operating profits from possibly any loss in the margins from the incremental BOPP lines which are coming on. You touched upon on cost restination measures, which could give us incremental INR25 crores to INR30 crores in FY ’26 plus the variable-cost savings on the BOPP line by close to around INR2 to INR5. But let’s say, if all the lines are getting commissioned in FY ’26 and that could possibly put some of the pressure on the commodity field margins. How — how confident are we in terms of recruitment of this lost margins from this newer lines getting commissioned? If you can touch upon the other verticals also like in terms of specialty chemicals and the rigid packaging, like what sort of EBITDA or the sales we can do in FY ’26 so that the impact of these lines could be lesser or possibly if we can negate those impact of commodity BOPP lines.
Pankaj Poddar
Yeah. So see, at this stage, what we expect is that the next year EBITDA in-spite of the fact that margins will be under pressure should be better because this is one is a very significant capacity addition and we stay strong because of a very large specialty portfolio and other cost-reduction measures as well as the new line is far more cost-efficient. We have to also remember that Cosmo because being the pioneer is also having some very old lines and it is always possible for us to temporarily shut-down those old lines. And if we compare the cost versus those old lines to the new lines, the cost delta is INR15 plus.
So even if we have to lost some old volumes to you know, we put the new volumes, we’ll be very significantly plus on the cost side. Other than that, Cosmo specialty chemicals is doing quite well as Niraj mentioned earlier, we should be closing the year close to INR190 crores at a very healthy close to 20% kind of an EBITDA numbers. Other than that, we also mentioned that plastic which was a new business and was making losses will be — we are close to breakeven now and we expect to make profitable growth next year. Okay.
So that is also on the plus side. Third thing is, if you have seen Zigli this quarter, our sales has gone up in last eight months, we have, you know, significantly ramped-up our sales and reduced our losses. So this journey will continue even in the next year when it comes to Zigli business. And we will also be starting our window film business, which investors know that is again a very profitable business. Obviously, we do not expect to make money within the first year, but it is a business which is a pretty high-margin business. So we are seeing a lot of good things happening in the business.
And the other thing is that our US business and some of the other America business that we have been doing, which is more profitable. Similarly Japan, these are very difficult geographies where over the years, we have built very strong markets and these markets are expected to grow for us. So within USA and Japan itself, we expect a very, very significant growth based on the businesses that we have won recently and many of them are in the pipeline.
Nirav Jimudia
Correct. So sir, last quarter you mentioned that like the run-rate of sales from US and Japan could possibly like we were at a run-rate of $40 million and that could possibly go up to $60 million in FY ’26 or possibly from Q4 of FY ’25 because you were — we were in the last call and you were mentioning that comment. So is this — is this incremental $20 million at a slightly higher margins than what we have been currently doing for the $40 million. I just wanted to understand from you in terms of what are the levers for our growth for FY ’26 apart from what you already mentioned on.
Pankaj Poddar
Yeah. So our current run-rate has already now started touching $5 million in January, okay, for both these countries put together. And we expect that this should start touching $6 million within next three to six months. And as you rightly pointed out, these markets are highly demanding markets and we largely sell only specialty films in these countries and therefore, the margin profiles are much better in these geographies versus the other geographies. It’s very, very difficult to enter either America or Japan. But in both these countries, we are now a very well-established brand-name and therefore, more-and-more customers are looking to buy from Gosmo.
Nirav Jimudia
Correct. Sir, just two clarifications. So one, the INR2 to INR5 of savings in the variable-cost, which you mentioned is as compared to the similar lines getting commissioned along with us, but INR15 is as compared to the older lines what we have been currently.
Pankaj Poddar
Older lines of FORSMON 15 to INR20 per kg.
Nirav Jimudia
Oh, it’s a big number, correct. And the second clarification on the Sun Control fins, which you mentioned that there also we have been confident in terms of growing the business. So let’s presume that this business starts picking-up for us at what level of sales that business could give us breakeven?
Pankaj Poddar
We anticipate that once we cross between window films and paint protection film, once we cross the sale of INR30 crores to INR35 crores, we will start making money. And just to — I mean without sharing too much details, we are also in the process of adding more product lines because we have created a very decent distribution channels. We have created a very strong sales team. So we will not be limiting ourselves to just two product lines. We would like to launch more product lines and our speed of innovation is quite decent and therefore, we will be bringing more product lines to sell-in the domestic market.
Operator
Yeah. Thank you. The next question is from the line of Damania from Swan Investments. Please go-ahead.
Jatin Damania
Yeah, thank you, sir for the opportunity. Sir, I have a couple of questions. So what is the current spread for BOPP? Like you mentioned INR21 per kg in December. So what is the current spread that is ongoing for Q4?
Pankaj Poddar
It has marginally improved as we speak.
Jatin Damania
Okay, sir. That’s great. And sir, for the — and the same question is for Booped, what is the current spread.
Pankaj Poddar
There also this margin improve from the last quarter.
Jatin Damania
Sir in the earlier participant’s question, you indicated that the specialty chemicals will be almost around INR190 crores of revenue and 20% of the EBITDA margin. So that’s for the FY ’25, but how do we see a ramp-up happening from the specialty chemical front over the next two to three years.
Pankaj Poddar
See, it’s a research-driven business completely. As we know that the capex invested in this business is very less. All I can say is that we have made a very good product that we expect to scale-up quite well in the next two years. Second is, there are two more other products which are expected to be commercialized in next three to six months. Once these are done, we will share more details. But with all these things, it’s very difficult to put a number, but we are expecting to see a good growth both in revenue numbers as well as profitability.
Neeraj Jain
And just to add to it, actually the organic growth of our specialty film segment, the growth of the specialty chemicals will get all benefit with the growth of the specialty films.
Pankaj Poddar
Yeah. And the beauty is that for all our internal sales, we are also somehow making sure that it will make very difficult for the competition just to copy things from us, which used to be a bit easily earlier to that extent, we are adding you know more processes around it.
Jatin Damania
Got it. And second thing, now assuming that if current performance, you indicated that BOPP and spreads are marginally better than what it was in the December quarters. So assuming that we do a quarter two numbers of INR87 crores of EBITDA, excluding other income. So for FY ’26, you are saying that we will get an incremental benefit of INR25 crores from a power saving and there could be some operating efficiency, which we can get because of a commissioning of a new line which is in the range of two to five. Is it fair to assume that?
Pankaj Poddar
That’s right.
Jatin Damania
And how do we see a ramp-up in the packaging? Definitely, we have seen the loss and the margin has been narrowed on the lower-end. But if you look in FY ’26, ’27, what’s all one assume on the Rigit Packaging front?
Pankaj Poddar
Yes. So Rigid packaging next year we definitely expect this business vertical to exceed INR80 crores of sales. And as we said earlier that we do expect to make EBITDA-positive. Obviously, it’s a journey in itself and once we start getting more confidence on this business, we will be then subsequently looking-forward to scale this up, invest more on this business because right now we have scaled-up with many reputated brands of the country. And in the times to come, we are also looking to export these products outside India. So within India, we have been successful with so many brands and you know in the times to come, we will be exporting these products.
Jatin Damania
Understood. And last question, can you help us understand what was the EBITDA loss in Rigit and the Zigli for nine months.
Pankaj Poddar
Well, for Zigli, you can also it in the others in the segmental reporting. So it should be close to — at EBIT level should be close to INR27 CR or so. For the rigid, it could be about four to five CR.
Jatin Damania
Sure, sir. Thank you. That’s all from my side and all the best.
Operator
Thank you. The next question is from the line of Aman Kumar Santalia from EK Securities. Please go-ahead.
Aman Kumar Sonthalia
Hi, good afternoon, sir. Sir, a lot of companies are exporting BOPP and from to European countries and US. So right now US is putting import duties on lot of products. So it is, is it advisable to set a plant there instead of setting plant in India.
Pankaj Poddar
See first of all US not many companies are able to export. It’s a difficult market to export from India. As of now, the custom duty in America for Indian made products is a little less than 5%. Hopefully there not be any significant duties that US will levy on India. But if these duties exceed 30% 40%, then there could be a business case. But we have to see a lot of things, what duties are levied on Mexico, what are levied on India, if at all and so on and so forth. And again, duties should never be a rationale for starting up a plant because if next US resign, they remove these duties, then all these investments can have a very detrimental impact. So these short-term decisions should not influence our long-term thinking. And I don’t think so based on this, we would take our decision to set-up a plant there because the capital cost involved in America is far higher than capital cost involved in India.
Aman Kumar Sonthalia
Okay. So sir, a lot of company like Polyplex, U-Flex and then this SRF are putting a plant in Europe and other countries. So is it more profitable to sitting run the plant there or it is better to export from India.
Pankaj Poddar
See, obviously, these are — these keep changing from time-to-time. When last year, for almost 1.5 years, the power cost went up in Europe, those plants became highly negative. However, in the past, the same plans were very positive. So these things keep changing. BOPP has lot of local demand in any country. And so this has to be seen as a standalone business case. And it is very difficult to say that which markets one should look at putting up the plant. I’m sure whosever is putting up must be doing a thorough exercise and accordingly taking a decision at — as we speak, Cosmo does not have a plan to put up a plant outside India.
Aman Kumar Sonthalia
Okay, sir. And sir, how is the margin outlook for for the next two, three, one, two years?
Pankaj Poddar
Yeah. I wish anybody can predict that, but right now the demand is looking quite good.
Aman Kumar Sonthalia
And no capacity is coming in the market in the market.
Pankaj Poddar
Yeah, right now, only one capacity has been announced, which is expected to come in FY ’28, which I believe was polyplex, if I’m not wrong. So right now, there’s only one capacity which has been announced as such.
Aman Kumar Sonthalia
Okay, sir. Thanks, sir. Yeah.
Operator
Thank you. The next question is from the line of Kamal from Capital. Please go-ahead.
Unidentified Participant
Hello. Thank you for giving the opportunity. I want to know that how much of our exports goes to the US, what is that as a percentage of the total turnover?
Pankaj Poddar
Right now it is close to 12% 13% 12%.
Unidentified Participant
Okay. And when are we planning to start production for the sun control frames and the paint protection frames? Early next year.
Pankaj Poddar
Paint production has already started. Window film will start early next year. Okay, okay. And when I have plans to demerge the business as we are mentioned in the presentation. We are continuously evaluating this. You know, as we said earlier, it will take us a last-time we said three to four years and obviously since then sometime have relapsed. So I would say that now we should be looking at anywhere between two to three years before we demerge, but these things can always change because that really depends on how quick we are — we continue to grow in. So it’s very difficult, but we clearly have an intent to demerge it at some point in time and it is not very far off.
Unidentified Participant
Okay. Fine. Thank you so much.
Operator
Thank you. The next question is from the line of Divesh Sharman, Individual Investor. Please go-ahead.
Divesh Sharma
Hello. Hello, am I audible?
Operator
Yes, sir, you are. Please go-ahead.
Divesh Sharma
Yeah. So I have two questions. So firstly, at the outset, I would like to congratulate the management and leadership of the company to have this long-term vision of decommoditizing the business. So my first question is regarding our Cosmo Sunshield vertical. So in a previous con-call, Mr Podar, you had indicated that our capacity for SCF is around 250 million square feet and PPF would be procured through an outsourced facility. Now previously, our revenue potential — previously our revenue potential and margins you have highlighted very clearly for our other business verticals like Cosmo, specialty chemicals and rigid plastic. So I just want to understand like what kind of revenues and what margins can we expect with such capacities? Since we have a peer company which even you had highlighted without taking any names in the previous con-call. So what should be our expectations for FY ’26, FY ’27 when it comes to revenues and margins for this vertical.
Pankaj Poddar
See, it will clearly take time because the peer company has been there in this business for several years. And we are a new player. Good thing is that we have made very strong products, you know, which are in test phasing right now. And wherever we are putting those products, the results are excellent. So good thing is that at least from the research perspective and the machine perspective, we are in the right direction. We have already established connects with lot of distribution channels who are pretty happy to work with us in India. But see, it is not just India. We need to scale-up globally. And therefore, lot of work is going to be required for this. We expect that next year we could be doing anywhere between INR20 crores to INR30 crores of business if all goes well for us. And year thereafter, we should exceed INR50 crores at least. And you said earlier that we expect that close to INR30 crores this business will start becoming breakeven and then start to make money for us.
Divesh Sharma
Okay. And this Cosmo sunshield is basically all BOPET, right? It’s not BOPP.
Pankaj Poddar
It’s not. You are absolutely right. Paint protection is a polyurethane and window film is polyester.
Divesh Sharma
Okay. And we have PPF being done through an outsourced facility, right? That’s right.
Pankaj Poddar
That is right.
Divesh Sharma
So there was an announcement in December probably by the company. So have you — have we started any sales with PPS? Have we earned anything out of it till now?
Pankaj Poddar
Yes.
Divesh Sharma
We have — would it be possible to share some figure out there?
Pankaj Poddar
We will share in the next quarter.
Divesh Sharma
Okay, okay, right. So — and my second question, you know, just continuing what the previous participants had highlighted, all of the invested communities a little concerned about the commodity down-cycle that is going to play-out in FY ’26. Now this year we have had the commodity cycle play-out in our favor. So if we look at our Cosmos specialty Chemicals business, it has started generating 17% 18% margins for us. But overall, if you see compared to the size of the company, it’s pretty small. And when we see specialty film sales as well, we say if we are targeting 80% of specialty volumes by the end of FY ’26 and 50% of this is going to be semi-specialty. We would probably expect at least some kind of effect from the commodity down-cycle.
Pankaj Poddar
So when do you expect our value-added businesses to be large-enough to mitigate the effects of commodity cycles? We already — I think every year we are displaying that we had in-between couple of bad years where Cosmo still did quite well. And so yes, we have done it. Obviously, now the additional factor is that some of the diversifications we have done have resulted in initial learnings, you know, losses and so on. But those are also going-in the right direction and expected to make money. Some have already started making money like chemical, plastic is expected to make money next year. Window film is expected to make a year thereafter. And also, we do expect that within next three years, we should start making money. So obviously, right now, film business in itself is doing quite well. It is just that it to some extent, there is an impact of the losses from the new business and once those new business also start making money, you will see even a stronger company in the times to come.
Operator
Thank you. The next question is from the line of Vipul Kumar Shah from Sumangar Investments. Please go-ahead. Go-ahead.
Vipul Kumar Shah
Hi, thanks for the opportunity. So sir, this plastic business is a packaging board, which paper companies like JK Paper, is that same product or is this something different?
Pankaj Poddar
No, no, there are different things. We are doing three things there. First is we are making many types of thicker sheets. You know, films are anything which are lesser than 250 micron. Once you go above 250 micron up to one — let’s say 1,000 or 1 MM, say 1,000 micron, it is called a sheet. So one is we make PP sheets, polystyrene sheets and polyester sheets. And within that also we make ESD sheets which goes into electronic or automobile industry. We make barrier sheets for better shelf-life, we make colored sheets, so on and so forth. The second thing that we do here is these sheets are then converted into thermoformed containers, containers for curds, for ice cream, for multiple things. We also make thin wall containers through the process of injection molding. So this is basically the business model in plastic. And majority of the sales happen to the end brands directly.
Vipul Kumar Shah
So margins for that — the plastic business is higher or lower than the specialty things?
Pankaj Poddar
See, we should not be comparing against specialty films business. The important thing is here, the margins remain consistent because it’s the cost-plus pricing. So as we continue to scale-up, you work with the brand. So obviously many investors also look for the stability of margins and plastic certainly provides the stability of the margins and the business gels very well with our film business because it actually helps film business also because we are now directly dealing with the brands in every case. In case of film, in some cases, we deal with brand, in some cases, we deal with the printers and converters, while in case of plastics, we only deal with the brands. We mostly deal with the brands.
Vipul Kumar Shah
Okay. Sorry for repeating, but so this is not a part of the film business, right?
Pankaj Poddar
No, no, no, we are treating it separately. There is a separate team which is running this business.
Vipul Kumar Shah
So what will be the raw for this business, sir?
Pankaj Poddar
Yeah, all the five business are run by separate teams. You know, common functions remain common while the business teams are separate for each one of them.
Neeraj Jain
So that is a very complementary kind of the business. From business and digit strategy.
Vipul Kumar Shah
No, no. My question was what are the raw materials for the — this plastic business?
Pankaj Poddar
Polypropylene, polyester and polystyrene.
Vipul Kumar Shah
Okay, sir. And polypropylene. And lastly, regarding demerger of this Pet Care vertical, so it is dragging down the performance of the company. So I have repeatedly in last past calls also mentioned, don’t you think that we should demerge this unit because it is dragging down the overall profitability and valuations of the company, sir?
Pankaj Poddar
At the right time, we will do it. I’m sure the same investors will love it when it starts making money because the valuations of our omnichannel business is far higher.
Vipul Kumar Shah
And last question, sir, can we expect substantially lower losses for Zigli business next year? Thank you.
Pankaj Poddar
Already, if you see the last quarter our losses have rationalized quite a lot. So we are making a quarter-on-quarter improvement.
Vipul Kumar Shah
No, I’m asking only directionally. I’m not asking for figures, sir.
Pankaj Poddar
Yeah, yeah. Even directionally, we as a percentage to sales, our losses keep coming down. In the last quarter, even in the absolute terms, it has come down. Next year, you know, when we are looking-forward to a quite a decent growth in Italy, our percentages losses will keep coming down quarter-on-quarter.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go-ahead.
Saket Kapoor
You can hear me. Hello.
Operator
Yes. Yes, sir. Yes, sir.
Saket Kapoor
Sir, firstly, contribution was on — was 9% to our total sales mix. What is the current contribution from BOPET? And out of that, sir, how much is value-added and if you could give the breakup?
Pankaj Poddar
So as we said at the beginning of the call, BOPET was close to 15% of the sales in the December ’24 quarter.
Saket Kapoor
Okay. And out of that sir, value-added.
Pankaj Poddar
So value-added is also 20% to 25%.
Saket Kapoor
Okay. So whatever we are selling under the book, it is.
Pankaj Poddar
No, it currently has a mix of between the value-add and non-value add of 2080.
Saket Kapoor
Yes, sir, I just missed the number. Sir, on — we have been hearing from the government on this plastic waste management circular that will be applicable from April. So if you could just highlight the significance of the same for the business and film players like us? And the second question would be, sir, taking into account the capex that we have done, what is the — what are the capexes that will get commercialized for this year, I mean to say what would be the additional volume in tonnager terms that we will expect for the next financial year.
Pankaj Poddar
See, as far as the EPR is concerned, good thing is that we use lot of recycled both in flexibles and digit. And in any case, we are continuously in touch with the government to explain them what is realistic and what is not realistic. But the good thing is that Cosmo as a standalone entity does use lot of recycled product. Coming to your second question, our VOPT film capacity is going to grow by close to 40% in the coming year.
Saket Kapoor
Okay. And in that aspect, you also mentioned it will be the world largest. If you could just elaborate what are — where are we coming from in terms of the largest flim.
Pankaj Poddar
Yeah so this will have the you know five days with the highest-speed with the highest output.
Saket Kapoor
So what is the tonnage there sir and what is the current such highest kit capacity and who will be replacing — will be replacing home, sir? See, Hamle is the last line like I see in 2017 POPP, that time we were the highest. Then after that one or two lines got added, which had a similar width, but higher-speed. Now we are coming up with the line which width-wise is similar to the last line, but speed is even higher and therefore and even the tonnage per hour is also much higher and therefore this line will have the highest output in the world.
Pankaj Poddar
[Foreign Speech] See, we expect to produce — see the nameplate capacity is close to 70,000 tonnes. But from an actual production perspective, we expect around 60,000 tonnes additional production from this line.
Operator
Thank you. The next question is from the line of Aditya Vora from Share India Securities. Please go-ahead.
Aditya Vora
Thank you for the opportunity. A couple of questions. One is, if you could help me understand what could be our mix in the specialty chemical business in terms of master batches, adhesives and coating chemical business? And how do we plan to ramp-up the coating chemicals business considering it’s a high-margin business in the in the specialty chemical business?
Pankaj Poddar
We can’t share so many details on a call.
Aditya Vora
Right, but strategically how do you see that going ahead?
Pankaj Poddar
No, again, we cannot share this. This is a bit confidential to the company. Well, these informations cannot be put in the public domain.
Operator
Okay, sir. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Neeraj Jain
Well, to summarize, the company’s specialty sales has increased by close to 14% this year so-far. And similar trend is expected to continue in FY ’26, which will strengthen the business model. Among new business verticals, specialty chemical is already making high-teens EBITDA. Other new verticals related to packaging, whether it’s capacitor metalizer, packaging should earn positive EBITDA in FY ’26. While may take some time to become profitable, however, it should be a significant wealth creator. At the end-of-the call, we would like to repeat the statutory declaration. Certain statements in this con-call may be forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are no guarantees of future results. We thank you to all of you for joining the call.
Operator
[Operator Closing Remarks]