The New Delhi-based company is seeking shareholder approval for sale of the entertainment unit, which is being separated on a slump-sale basis.
Moser Baer created its entertainment unit in 2006 to focus on the home entertainment space. The company created a revolution by introducing DVDs and VCDs at Rs 34 and Rs 28.
Yogesh Mathur, group CFO, Moser Baer, said: "We are in the process of setting up the entertainment business as a 100 per cent, wholly-owned subsidiary of Moser Baer India."
We took this step as the entertainment business had reached its maturity levels in terms of reaching key milestones, planning and execution of strategies."
The company's entertainment business achieved net break even in less than 12 months and achieved a revenue of $10 million (about Rs 42 crore) in the fourth quarter of FY08. The company expects to grow the business' revenue to the tune of $200 million (Rs 840 crore) by 2010.
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Going ahead, the subsidiary will form alliances for film distribution, co-production, among others. The financing for these alliances will come by way of debt and equity subject to the nature of the plan.
Under the current structure, the entertainment division has released a few films like Shaurya. In addition, it has distributed Airbuddies, an animated English flick. The company has around five Tamil films in the production stage, in addition to three Hindi films.
Over the past couple of years, the company has aggressively pursued a diversification strategy to counter the global slowdown in the optical media business. Moser Baer started diversification by foraying into the photovoltaic (PV) industry in 2005.
Shares in the company today closed at Rs 121.90, down 0.60 per cent, on the Bombay Stock Exchange.