MOSER BEAR: Down, But Not Out

The last financial year for Moser Baer was the sad saga of escalating

polycarbonate prices and dipping revenues. One of the fastest growing IT

companies till FY 2003-04, Moser Baer faced tough times and saw a 10% decrease

in gross revenues and plummeting net profits from Rs 324 crore to Rs 63 crore in

FY 2004-05. Escalating operating costs were a result of globally mounting oil

prices-from around $25 a barrel to $59 a barrel in 2005-that led to a sharp

hike in polycarbonate prices, which make up 70% of optical media manufacturing

costs.

HIGHLIGHTS Exporting to 82 countries. US and UK exports account for 40% each, and 20% comes from the rest of the world Net profit dipped by 80% to Rs 63 cr Plans to increase optical media manufacturing capacity from 2 bn in 2004 to an anticipated 2.8 bn by 2006 2005-06 will be the year of the DVD Pricing pressure pulls down revenues and profits Polycarbonate prices remain a matter of great concern l Start-up Year: 1983 l Products and Services: Optical and magnetic storage media, audio cassettes/diskettes and packaging options l Technical Collaboration: IIT Delhi, MKM, Hitachi, Imation l Branches: 6 l Address: 43 B, Okhla Industrial Estate Phase III New Delhi -110020 l Tel: 51635201-10 l Fax: 51635211 l Website: www.moserbaer.com

The market, however, started stabilizing in the OND quarter with brisk

international business due to the festive season and a strong JFM quarter given

heavy corporate spending. Moser Baer saw high never-before shipment volumes in

the last two quarters. Rapidly depleting inventories and growing sales volumes

saw the average selling price firming up from November, notching up an increase

of nearly 20% by the end of the fiscal.

Moser Baer is aggressive about reaching its goal of 65% (15% through HP and

50% from Moser Baer's Pro Range) market share by Apr 2006. With the CD market

stabilizing, the company is betting hard on the DVD market, which has been

seeing three-digit growth and offers better margins. The manufacturing plant at

Noida is in the process of scaling up its capacity, keeping in step with the

company's plans to increase production from the current 2.4 bn discs to more

than 2.8 bn discs after a total investment of $105 mn during 2005-06. About 10%

of CD manufacturing lines have already been turned into DVD lines.

Last year, Moser Baer entered into an agreement with HP to manufacture

optical media using 'LightScribe' technology, the manufacturing for which

began in January 2005. It also entered into another agreement this year with IIT—Delhi

to work on technological innovations.

Given a slow year, Moser Baer's Germany plans did not materialize, but the

company is still considering options in East Europe to do niche development and

R&D work.