It was a double whammy for Cosmo Films' investors - one, exciting results and two, a 1:1 bonus issue.

So it was not surprising that the scrip jumped 5.16 per cent to Rs 150.85 by 11:01 IST. The scrip of the packaging material maker registered volumes of 18,925 shares on BSE till then.

For the third quarter ended 31 December 2002, Cosmo Films registered a massive jump in net profit to Rs 11.23 crore (Rs 112.3 million) compared to Rs 2.8 crore (Rs 28 million) in the corresponding period of the previous year.

Net sales spiraled 15.77 per cent to Rs 79.87 crore (Rs 798.7 million) from Rs 68.99 crore (Rs 689.9 million) in DQ 2001. These are consolidated figures [the merged entity - Cosmo Films (CFL) and Gujarat Propack (GPL)].

In September 2002, CFL effected the merger of GPL with itself. CFL saw the merger as a chance to enhance its total production capacity of BOPP film to 22,000 tonnes per annum, from 13,000 tonnes.

CFL acquired 76.51 per cent stake in GPL at Rs 29.25 per share. The swap ratio was at 1:2. i.e. 1 equity share of CFL for every 2 equity shares of GPL.

GPL was, before the merger, the second largest player in the Indian biaxially-oriented polypropylene film industry, with an over 27 per cent market share.

Analysts say the company will have to vindicate the last quarter's results as margins may come under pressure following the rise in raw material prices as well as on news that 2-3 new players are expected to enter the segment.

The company may contend that exports are expected to rise to Rs 85 crore (Rs 850 million) from Rs 49 crore (Rs 490 million) in the next financial year 2003-04.

The 1:1 bonus issued by the company's board at its meeting on 14 January 2003 has also served to enthuse investors.

CFL had recently announced that it had received a $4 million line of credit from Rabo Bank to fund the expansion of the company's capacity by 10,000 MT to 46,000 MT.

In addition, the company said that it received a loan of $2 million from Exim Bank.

Most of the funds raised will go into the funding of the expansion project, though some part will go into retiring old high-cost debts.

Earlier, CFL had said that it was supplying plastic materials for packaging of consumer products, including food, to Unilever in Bangladesh.

CFL was incorporated in 1976 and was promoted by Ashok Jaipuria. It went public in 1980. The company has two plants at Chikalthana and Waluj, both in Aurangabad district of Maharashtra.

CFL is the largest maker of BOPP films in the country, which is widely used for packaging of products like snacks, biscuits and confectionery, cigarettes, blades, textiles, etc.

The acceptance and use of BOPP film is on the rise not only because of its cost effectiveness in comparison with other packaging material, but also due to its moisture resistance, which increases the life of products by almost 2-3 times.