Cosmo First Limited has initiated legal proceedings against the Gujarat state government, filing a writ petition before the Gujarat High Court to challenge what it considers inadequate incentive payments under the Gujarat Industrial Policy 2015. The company disclosed this material litigation through a regulatory filing dated January 22, 2026, in compliance with SEBI listing regulations.

Legal Challenge Details

The writ petition has been filed under Article 226 of the Constitution of India before the Hon'ble Gujarat High Court. The respondents in the case include the State of Gujarat, Industries and Mines Department, Gandhinagar and Industries Commissionerate, Gandhinagar. The core dispute centers on the company's claim that it has received lower incentives than entitled under the state's industrial policy framework.

Financial Claims and Implications

The financial stakes in this litigation are substantial for Cosmo First Limited. The company has provided detailed disclosure of the monetary aspects of its legal challenge:

The company is seeking a refund of balance tax incentive amounting to ₹58.34 crores up to March 2025, while the expected financial implications include additional incentive accrual of ₹33.53 crores. These figures represent the quantum of claims being pursued through the legal proceedings.

Regulatory Compliance

Cosmo First Limited has fulfilled its disclosure obligations under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which mandates companies to inform stock exchanges about material litigation. The disclosure was made in accordance with SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024.

Policy Context

The Gujarat Industrial Policy 2015 was designed to promote industrial development in the state through various incentives and benefits. The current dispute suggests disagreement between the company and state authorities regarding the interpretation or application of incentive provisions under this policy framework. The outcome of this litigation could have implications for how industrial incentives are calculated and disbursed under the state policy.

Cosmo First Limited, a leading manufacturer of specialty films, reported a robust 21% year-over-year increase in consolidated sales for Q2 FY26, reaching Rs 919 crores. The company's EBITDA also saw a significant rise of 19%, climbing to Rs 128 crores from Rs 107 crores in the same quarter last year. This growth was primarily driven by higher volumes from new capacity additions.

Financial Highlights

*Calculated based on 21% YoY growth **Compared to Q1 FY26 (June'25 quarter)

Key Factors Influencing Performance

The company's performance was influenced by both favorable and unfavorable factors:

Favorable Factors:

1. Higher sales volume (25% increase)
2. Improved specialty margins
3. Enhanced performance of the Specialty Chemical Subsidiary

Unfavorable Factors:

1. Margin decline in BOPP and BOPET commodity films due to imports
2. Increased US tariffs (from 5% to 55%)
3. Stabilization costs related to new line commissioning

Segment Performance

The Specialty Chemical Subsidiary showed strong growth, posting a record EBITDA of Rs 13 crores on a top line of Rs 49 crores in Q2 FY26. The subsidiary also developed three new coating products, which are expected to be commercialized over the next two quarters.

Future Outlook

Cosmo First Limited provided guidance for FY26:

• Expected revenue: Rs 3,500-3,800 crores
• Specialty portfolio contribution: Rs 2,200-2,500 crores

The company is focusing on leveraging new investments, growing specialty films, and further reducing costs. A cost rationalization impact of approximately Rs 25 crores is expected on an annualized basis in the next 12 to 15 months.

Challenges and Strategies

The company faces challenges from increased US tariffs and import competition. To address these issues, Cosmo First is:

1. Considering further price increases for US customers if tariffs don't decrease by December
2. Expanding into new markets, with growth seen in Americas, Europe, Middle East, and Africa
3. Focusing on specialty and semi-specialty films to improve margins

Debt and Capital Expenditure

The company's net debt position as of September 2025 is approximately Rs 1,230 crores, which is 2.97x EBITDA and 0.8x GDP. While this represents a peak debt level, Cosmo First expects debt reduction in the coming years as most of the growth-related debt is already on the balance sheet.

For FY26, the company has planned a capex of Rs 250 crores, with no significant capex planned for the following year, allowing for potential debt reduction.

Cosmo First Limited continues to navigate challenges in the global market while focusing on growth in specialty films and new business verticals. The company's strategic investments and focus on cost optimization are expected to drive long-term value creation for stakeholders.