Cosmo Films Limited In 1981, Cosmo set-up Indias first BOPP (Biaxially Oriented Polypropylene) plant with an 800 tpa capacity, and is now India''s largest BOPP producer.  BOPP film is primarily used for food and confectionary packaging, lamination, adhesive tapes, pharmaceutical packs, and capacitor film.  In FY97-99,  to emerge from a domestic BOPP overcapacity situation, Cosmo capitalised on a diversification into exports of niche products to achieve full capacity utilization and a strong recovery of profitability in FY00.  In September 2001, because of the continuing growth in domestic demand, facing capacity constraints, Cosmo commissioned a 9,000 tpa production line (Line IV), and,  in October 2001, it acquired GP.  GP was one of Cosmo''s leading domestic competitors with a production capacity of 13,500 tpa, but, in FY99, it had lost profitability, due to high leverage with expensive debt, which Cosmo now proposes to restructure.  Together with the financial restructuring of the recently acquired GP, the proposed project also aims at adding a new   10,000 tonnes per annum (tpa) production line (Line V)   . Line V will increase Cosmo''s BOPP capacity from 23,100 tpa to 33,100 tpa.  The line, together with the merger with GP, will take Cosmo''s BOPP capacity to 46,600 tpa.     The proposed investment will enable Cosmo to consolidate its position in the rapidly growing domestic BOPP market, while serving export markets for niche high-end BOPP applications. The capacity expansion will be at Cosmos existing facilities at Aurangabad, Maharashtra, where surplus land, support infrastructure and trained manpower are already available.  Cosmo has ISO9001 and ISO9002 certifications, and holds the patent for synthetic paper.  The company has a credit rating of ''A'' from Fitch India as of FY01.     From being a second-tier company in the domestic BOPP industry, Cosmo is now graduating to become the dominant domestic player, also serving international niche markets.  IFC would play a strong role in supporting Cosmo''s strategy by providing long-term foreign currency financing, which is not readily available, to medium sized companies like Cosmo for maturities beyond three years.  This financial support will enable the company to better withstand the natural cyclicality of the industry.  IFC would also play a key role in assessing and providing advisory support to Cosmo on its merger with the recently acquired GP operations.  The acquisition of GP is the first such endeavor undertaken by Cosmo, and the company expects a strong value-addition from the presence of IFC in developing a sound implementation plan for merging GP''s operations and its financial restructuring.    The Indian BOPP industry is gradually maturing, and the project will support the dominant player to lead the restructuring process in that industry.  Most Indian BOPP manufacturers are diversified companies that entered the market when the demand and price scenarios in the industry were favorable, and the incentives to set up internationally competitive and benchmarked operations of economic size were limited.  This situation is quickly evolving with margins coming under pressure as a result of domestic competition, economies of scale, and periods of excess supply as lumpy production capacities come on stream.  Similar to other countries, the industry is gradually consolidating to fewer, larger and more efficient players as the less efficient and competitive exit the industry.  Companies that take the initiative to proactively benchmark themselves with global standards can create strong value in the economy through demonstration, leadership and creation of viable revenue generating assets.  Cosmo has the capability to lead the way in upgrading the entire industry in terms of quality, R&D, productivity and focused customer support.