The scrip, which was trading at around Rs 140 in March, 1996, has fallen to the current level of Rs 13.50, resulting in a sharp erosion in investor value. Other than poor market sentiment, deteriorating performance of the company also contributed to this fall. Prices of BOPP (biaxially oriented polypropelene) films, the company's main product, have fallen by more than 30-35 per cent in the last one year.

Cosmo Films is the largest producer of BOPP films (sold under the brand name Cosmophane BOPP) in the country. The current capacity of 14,000 tonne per annum is spread overthree production lines. The plants are currently working at 80-85 per cent capacity.

The promoters are planning to add another 8,000-10,000 tonne to the capacity to cater largely to the export market. Cosmo Films exports its products to five continents. The largest exports are to the US (73 per cent of the total exports) where Cosmo Films holds a 30 per cent share of the thermo-lamination grade film market. The company has increased its exports three-fold in the last three years and exports currently account for 25 per cent of its total sales. The company plans to raise this to the 40-45 per cent level.

The capital outlay for the expansion plan is estimated to be over Rs 60 crore. The company is yet to tie-up funds but according to the chairman, ``it will be a mix of debt and equity.'' However, he points out that it would be difficult to raise equity especially as the stock has given very poor returns in the last one year. The new plant will be located at the current plant site as it will mean saving oninfrastructure and other common costs. The plant will go on stream next fiscal. Other than this expansion, the company is also planning to set up in-house power plant in order to meet delivery schedules for the export markets.

Cosmo is going ahead with its expansion even though its net profit in 1996-97 declined to Rs 7.07 crore from Rs 11.78 crore in 1995-96. Cosmo Films has been going through a rough patch for the last couple of years, with its net profit dipping to Rs 7 crore on a turnover of Rs 93.5 crore in 1996-97. For 1997-98, the company expects to just scrape through. Says Jaipuria: ``We will manage to break even in 1997-98.''

In the last one year the company has tried to cut costs, improve quality and become more responsive to customer needs. This has enabled it to not only sustain its old customers but also get new ones. ``For us, business is not a series of transactions adding to our bottomline alone, but it is about long-term relationships with our customers, our suppliers, our shareholdersand our employees,'' says Jaipuria. As for financial restructuring, Jaipuria says: ``We would be restructuring current assets and disposing some of the unproductive fixed assets to improve cash flows.''