Moser Baer in $1 bn investment plan

Aims to make 1GW solar equipment by 2010

NEW DELHI: Moser Baer India Ltd, the optical storage media and solar photovoltaic cells manufacturer, plans to invest a total of $1 billion this fiscal and the next to upgrade to making newer formats of optical discs and expand the capacity to make solar cells, a top company executive said on Thursday.

“Broadly we have capital expenditure plan of about $550 million for the current fiscal across the group for all businesses,” company’s executive director Ratul Puri said, adding, “A majority of this capital expenditure at more than $450 million will go into the solar photovoltaic business.”

The company currently has an annual capacity to make solar photovoltaic cells and modules to generate about 125 mw of electricity, which it wants to ramp up to 1 gigawatt (1,000 mw ) by the end of the calendar year 2010.

“The photovoltaic business is likely to achieve  a ‘revenue run-rate’ of $2-3 billion anuualy by the end of 2010 (assuming cost of generating power falls to $2-3 per watt),” Puri said that the revenue run-rate at the end of the year will be significantly higher than that at the beginning of the year due to the rapid expansion in the capacity during the 12 months.

Moser Baer’s capacity to earn annual revenues from the photovoltaic business by the end of the current fiscal will be roughly same as that of its optical media business at about $550 million, Puri said.

The company earned 80% from the optical storage media business and 6%-7% from photovoltaic business out of the total income of about $450 million in the last fiscal, he said.

“Very limited expenditure is planned for the optical media business at about $20 million in the current fiscal,” Puri said, adding, “Most of the expenditure in optical media will go into conversion of CD/DVD making lines into Blu-Ray disc making lines.”

Blu-ray disc is a more advanced version of optical disc with storage capacity of up to 50 gigabytes against 4.7-9.4 gigabytes for a Digital Versatile Disc and 700 megabytes for a Compact Disc.

Puri expects the revenue from selling optical discs to increase significantly in the next five years even as the volumes of the discs sold will likely remain the same, due to declining volumes of CDs and growing volumes of DVDs and Blu-ray discs.

“We sell Blu-ray disc for $5 per disc compared with 10 cents per CD,” Puri said.

“Blu-ray disc business is at a very early part of its lifecycle and thus the margins are obviously very good, as is typical with any technology manufacturing business. The margins on Blu-ray disc will certainly fall down in the next 3-5 years,” he added.

Moser Baer is fully funded to meet its capital expenditure requirements for the current fiscal year, Puri said.

The company has tied up a credit line of $550-600 million for its photovoltaic business, spread broadly over the next 24 months or so.

It has about $225 million of cash on its books, and its optical media business is expected to generate cash of more than $100 million in the current financial year, Puri said.

Moser Baer has tied up the new debt over the last 6-12 months at the interest rate of 190-300 basis points over Libor, which is significantly higher than the rates earlier than that, and hence, has resulted in increasing the credit spreads for the company, Puri said.

a_shaleen@dnaindia.net