Moser Baer defers Chennai facility

Moser Baer Photo Voltaic (MBPV), a subsidiary of optical storage device maker, Moser Baer India, has deferred plans for the construction of its Chennai plant due to liquidity constraints and production mismatch.

The company was earlier planning to commence construction from October with power production from fiscal 2011. It was negotiating on equipment prices from different vendors, and agreement on the same was expected in April.

Moser Baer officials were not immediately available to comment on the development.

However, company sources said that it is looking to move "cautiously ahead" for its additional capacity expansion plans "at least in the short term" to counter any supply and demand mismatch, but its long-term optimism in the solar power business remains intact.

The New Delhi-based company had outlined plans to invest up to $1.5 billion in the Chennai plant over the next three years to ramp up capacity to make solar photovoltaic cells and modules to generate electricity of 1 gigawatt (1,000 mw) by the end of the calendar year 2010.

However, liquidity crunch in the European markets, which is the hub for solar power energy consumption, and huge oversupply of solar modules and cells leading to more-than-expected inventory, the company has decided to reassess and re-evaluate the ramping up strategy.

The clear timeline on when the Chennai plant would be "back on the table" could not be ascertained immediately.

The company was planning to develop the plant in three phases with investment of $500 million in each phase. However, several private equity investors and even banks are now unwilling to invest in the solar panel, cells manufacturing and thin film capacity due to its longer period of gestation which requires early equipment ordering.

Currently, the worldwide demand for solar power related equipment, raw materials and panels is at an all-time low leading to huge oversupply in the market.

Recently, the company also temporarily closed certain production processes in its solar photovoltaic plant at Greater Noida as it wanted to clear out the huge stocks of inventory before reviving production at full capacity.

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