Moser Baer India, the New Delhi-based optical storage device maker, expects its core optical media formats business to do better due to a host of reasons
NEW DELHI:Moser Baer India, the New Delhi-based optical storage device maker, expects its core optical media formats business to do better due to a host of reasons, including a recent reduction in input costs.
Ratul Puri, executive director, told DNA Money that in the last 6-8 weeks, there has been a huge correction on the petrochemicals side. “Virtually all commodities have corrected, but petrochemicals have corrected significantly. This trigger is very optimistic in near to medium term for our business,” he said. The fall has led to input costs going down by 30-50% for the optical media business as it uses raw materials derived from petrochemicals.
The company has invested about $1 billion to create capacity for its optical media division, and will use the same capacity for Blu-ray expansion. “Most of the capital expenditure is going into minor balancing, testing equipment etc as the capacity is fungible,” Puri said.
Moser Baer has benefited from a recent consolidation in the optical media sector with small-sized competitors going out of the market, leading to lesser supply. Moser Baer has about 20% market share globally in the optical media business.
The company sees demand for compact discs (CDs) contracting from next year onwards. “I am not sure if our total optical media formats production would go down immediately. But in the CDs segment, the consolidation in the market has dipped supply. We may produce the same amount of CDs next year, but eventually, in the next 3-5 years, we will produce fewer CDs than we are now,” Puri said.
Moser Baer guided FY09 with $80 million of free cash from the optical media business, and in the next two years, expects this to be in the range of $100-200 million.
The company sees Blu-ray, the next-generation optical disc storage media format that can store 50 gigabytes of data, almost six times the capacity of a dual-layer DVD, driving its growth ahead. ‘We are sitting at the inflection point for Blu-ray partly because HD DVD has gone away, but mostly because the price of hardware is hovering around $300 and may even go below this. By this Christmas, you might see $200, and this will create an explosion,” Puri said.
Though Moser Baer has posted losses in its last two quarterly results, it expects figures to improve in the coming quarters. “We are expecting substantial improvement in blank optical media business in the coming quarters from both the topline and bottomline perspectives. The market is much better than in the last quarters,” Puri said.
vivek_s@dnaindia.net
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