The Rs 2,000 crore plus optical disc major, Moser Baer, has been registering losses for the past two quarters.
However, Executive Director, Ratul Puri, is optimistic that this is a cyclical aberration. Analysts, on their part, had attributed the poor show to declining realisations of optical media and higher depreciation charges.
"We registered losses mainly on the account of the blank optical media business, which is cyclical in nature. Besides, last quarter, we incurred losses on account of Foreign Currency Convertible Bonds (FCCBs) issued by us," says Puri. On an average, the optical media business gets 20 per cent returns on the capital employed.
This year, Moser Baer got Rs 400 crore from the business. For the last two quarters, it has seen a downfall but is growing 10-20 per cent year-on-year.
In the blank optical range, Puri sees a 15-20 per cent CAGR for next three years. Blu Ray’s share will rise in the next 12-24 months — it's currently around 6 per cent of the total revenues — as the prices of blu-ray disk fall.
Puri also expects the PhotoVoltaic (PV) business to grow rapidly. "We have increased the capacity from 40 MW to 250 MW — a 6x increase," he asserts.
"We have also entered into three sourcing and purchase contracts on the solar business front. The sales deal with Colexon Energy for the delivery of 130 megawatts of solar modules is expected to yield Euro 200-250 million (Rs 1,258-1,607 crore) over a period of 4-5 years. In entertainment, an overall growth of 15 per cent is projected over the next five years. But the current rental market denomination is projected to reduce to 25 per cent in 2012 — from 80 per cent in 2007 — in favour of the sell-through market.
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However, Puri is quick to clarify that the company has no desire to own solar farms, "now or in the near future".
"Ours is not a power-generation company. We only facilitate companies who are in this business. Domestically, we are in talks with 10-15 states for similar PV projects like the one in Chennai. Internationally, the size of the solar PV market is estimated to be around $80-100 billion in the next five years. Till now, we have spent around Rs 2,200 crore and by 2010, we plan to invest around Rs 14,000 crore to raise our capacity to 1Giga Watt. It currently stands at 250 MW. For the Chennai SEZ, we have invested Rs 600 crore on infrastructure.
We expect solar PV revenues of Rs 840 crore and Rs 190 crore in FY09 and FY10 as MBPV ramps up production of its expanded capacities despite the incremental capacities operating at minimum levels, say PINC analysts. The company has orders on hand of around Rs 850 crore for delivery over the next 2 years.
Meanwhile, the company did well on the entertainment front. "On the entertainment front, our aim is to become one among the top three players in the next three years. We release 300-500 titles per quarter — of the 10,000 acquired titles— as this is the limit of the supply chain management and market absorption. We will also aggregate and produce international content in the Indian market,” explains Puri. (It already has tie-ups with production houses such as American Cinema International, Lake Shore Production, that has films like 'A million dollar baby’, 'Angel’ and 'Last Samurai’ and Amity Entertainment.).
The market for English films is still not very mature in India and therefore we will tread carefully on this. We plan to produce 15-20 movies in the next few years both in Hindi and Tamil," explains Puri.
The entertainment segment’s performance was better than expectations with revenues of $10 million in Q4FY08 and $40mn in FY08. The business is ramping up with more recent movie releases being incorporated into its library as was evident from its acquisition of distribution rights for Jab We Met.