Kesoram arm expects to cross Rs 400 cr revenue by FY20

 Betting big on food wrapping solutions with the launch of biodegradable cellulose transparent films, Cygnet Industries, a wholly-owned subsidiary of Kesoram Industries, is expecting to cross Rs 400 crore revenue by the next fiscal (FY 2019-20)."We are looking at food wrapping solutions in a big way. The product -- Kesophane nature wrap -- is re-launched as a food packaging solution in a nine-metre roll so that retail consumers can use it.

Household sector for food wrapping is being catered by plastics and aluminium foil. We are also targeting this segment," the company's Financial Controller H.K. Kandoi said here late on Wednesday.The size of the food wrapping industry for household usage, taking aluminium foil and plastic films together, could be 1,200 metric tonne per month in terms of volume, the official said.

"This is a niche product and the demand will gradually pick up. If we capture about 10 per cent of (food wrapping) market with the newly-introduced biodegradable cellulose transparent papers, this will give us at least Rs 40 crore revenue in the next fiscal," he told reporters.

However, the price of the "environment friendly" food wrapper is higher compared to the available aluminium foil being used for food packaging, but the product is expected to gain traction with environment awareness, Kandoi said.The B.K. Birla Group is the only entity in India manufacturing transparent papers since 1961, he said, adding that this kind of product is also being manufactured by China, the US, the UK and Japan.

Cygnet Industries is involved in the manufacturing of rayon, transparent papers and chemicals.

"The company expects to clock about Rs 350 crore of revenue in the current fiscal and rayon business contributes about 60 per cent to our annual turnover while transparent paper has a share of 30 per cent and the rest comes from chemical. 

"Currently, our EBITDA level is positive. We are expecting to cross a revenue of Rs 400 crore by the next fiscal," Kandoi said.

At its Kuntighat plant in West Bengal, the company has a manufacturing capacity of 3,600 tonne of transparent paper annually for industrial, institutional and household use.

It has been exporting transparent papers to overseas markets for mostly industrial and institutional usage and the exports of this product contribute about five per cent to its annual revenue.

As a food packing solution for households, its focus would be on the domestic market, Kandoi said.

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"We are getting multiple inquiries from various FMCG players and we are also expecting demand from institutions like hospitals and hotels.

Tea packers who export to Europe and other overseas markets are also looking for biodegradable cellulose transparent papers with value additions," an official added.