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Dr Amit [email protected]
DYK
According to the Challenge Forum, if digitized dataavailable to mankind could be expressed physically, itwould cover an area equivalent to
The island of Mauritius in 1920
Madagascar in 1940 The Congo in 1960
The African continent in 1980
All the continents by 2000
The whole earth now
And cover 1,700 planets every year by 2020!
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Dr Amit [email protected]
LKD
Typical CD data, if straightened, would be 5 km long Sony certified MB as Green Partner for product envt with
95%, highest for any company worldwide
The first company to produce 15 GB HD DVD-R
Worlds 2nd largest optical storage devices manufacturer
Top 12 global optical storage media brands source from MB
Global Tech-collaborations with Imation & Mitsubishi
In-house patented technology, among 4 Bluray makers
World's 5th-largest manufacturer of MFDs
Cost-effective international quality standards Only large Indian manufacturer of magnetic & optical media
data storage products, 90% production exported
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Dr Amit [email protected]
2007
Sales- Rs 19825 Mn
Net Profit-Rs 1098 Mn
Market Cap Rs 30000 Mn
Over 4,500 employees
4 Plants Production capacity over 3.2 billion discs
Revenue growth at a five-year CAGR of 42%
Consistent financial growth
Creditable, performance amid harsh environment Competition world over facing business upheavals
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Dr Amit [email protected]
Origin
Founded- 1983, New Delhi, by Technocrat Deepak Puri Started as a Time Recorder unit
Technical collaboration with Maruzen Corp, Japan &Moser Baer Sumiswald, Switzerland
Bought out Swiss stake, diversified, but the name stuck
1986- Moser Baer entered the data storage field
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Chronology
1983- Incorporation 1985- 2 crore investment in capacity of 600,000 floppy
disks of 8.0"/5.25" disks
1987- 3.5" disks commences, IPO
1999-2003- CD-R, CD-RW, DVD-R
2003- World's single-largest optical media productionfacility in Noida commissioned
Largest-ever Indian manufacturing deal with Imation, US
Moserbaer PRO ' brand launched in the Indian market
2004- H-P 'Lightscribe' license to make optical media
PE firm Warburg Pincus invests $149 million (Rs 675 cr)
HP SAARC rights- DVD+R, DVD+RW, CD-R & CD-RW
Contributing member of the Blu-Ray Disc Association
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Dr Amit [email protected]
Diversification
Horology industry to Data storage 1987- 5.25" Floppy Diskettes
1993- 3.5" Micro Floppy Diskettes (MFD)
1999- Recordable Optical Media
150-million unit plant to make Recordable Compact Disks(CD-R) & Recordable Digital Versatile Disks (DVD-R)
Optical media project strategy
Create facility to match global standards in size,technology, quality, product flexibility & processintegration
Same strategy applied successfully in the diskette business
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Dr Amit [email protected]
Globalisation
Global market - 0.5 mn in 1987 to 140 mn in 1995
Increasing global opportunities made global scale critical
R&D capability drove global foray
Liberalisation drove the need for globalization
Focus on optical and magnetic data storage media Exclusive preserve of Japanese & Taiwanese players
Key driver- opportunity to create a memory, second onlyto human brain using dyes, plastic & specialty chemicals
No Indian manufacturer globally competitive then
Indias image- country that only borrowed technology
Created world-class tech & manufacturing processes toput India on the global map
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Dr Amit [email protected]
Globalisation
Initial exports to Europe, 25-30% MS Antidumping investigations forced MB to diversify
revenue streams from a growth & risk perspective
2005- Europe- 35%, Americas-30%, Asia-35%
$ 10 mn German manufacturing facility to lucrative EU
markets- 5% volume but 20% value ($ 500 mn globally) Entered Hi-value add , Hi-margin products but tough to
service from offshore locations- a Japanese stronghold
2005- 85% exports, worlds 3rd largest CD maker (15-20% MS), capacity 2.4 bn units, focus on DVD
Top 2 Taiwanese firms- Ritek & CMC (70% MS) R&D JV worth $ 100 mn with Imation (US)
Indian market- 25cr (99) to 600cr (05) to 3000cr (2010)
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Dr Amit [email protected]
Became the second-largest manufacturer of CDs andDVDs within a decade of optical discs foray in 1999
There is no greater joy in life than dealing with hurdlesthat are thrown in front of you in your own business
Cyclical nature of the industry
Domination by East Asian firms We are the first company in the world to ship out
recordable HD-DVDs (next generation optical discs)
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Dr Amit [email protected]
Competencies & Advantages
Global benchmark Industry cost leadership
Industry technology leader
10%-15% less expensive than nearest rival
One of the most competitive manufacturers
18% share of the global optical media storage market
8000 employees at 4 manufacturing facilities
6 international offices
80% production exported to 82 countries, 6 continents
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Dr Amit [email protected]
Competences & Competitive advantages
Improved penetration Efficient & integrated, own world class processes
30% lower investment for similar scale capacities
Leveraged India-specific advantage of high-quality, best-
value human resources and lower per-unit capital cost Global cost leadership, 15-20% competitive cost advantage
Low OEM price points
Focus on single market
Volumes- 1/6
th
of global CDs sold The 3rd largest player in optical storage media segment
OEM supplier to 11/12 major global brands
Strong tie-ups with all major global technology brands
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Dr Amit [email protected]
Imation JV
Strategic JV with Imation Focus on customer service, long-term technology transfer
& R&D
Will dramatically improve MBs market share in US- theworlds largest and most lucrative market
JV will effectively & efficiently target new high growthmarkets- Africa, Middle East & South America
Substantially mitigates geographic risks
Balanced regional mix of revenue streams
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Dr Amit [email protected]
Blu-ray Disc
Moserbaer is a Contributing Member MB one of 4 global players
The basic specifications for a next generation largecapacity optical disc video recording format
Enables recording, rewriting and play back of up to 27 GB
of data on a single sided single layer 12cm CD/DVD sizedisc using a 405nm blue-violet laser
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Dr Amit [email protected]
International Focus
Endeavored to create own space in international market A pioneer among globalizing Indian firms
Carefully-planned and sustainable modellow costs, highmargins, high profits, reinvestment & capacity growth
Deep relationships with leading OEMs
Associated with most global majors World leader in the development and manufacture
One of India's leading technology companies
Presence in over 82 countries
Strong tie-ups with all major global technology brands 5-year CAGR of over 42 %
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Dr Amit [email protected]
Products
Optical Storage Media- CD-R/ RW, Pre-recordedCD/DVD, DVD-R/RW, LightScribe enabled media
Magnetic Data Storage Media- Compact Cassettes,Micro-Floppy Disks (MFD) and Digital Audio Tapes
The optical disc business is a commodity business, but in
the past few years we had managed to build up a brand inIndia, and we had managed to develop this really low-costmanufacturing process
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Dr Amit [email protected]
Investors
Electra Partners invested in Moser Baer in 1999 Our shareholding has come down from 18% to 6% today,
but we have made a nice profit on our initial investment
But every time we have ever thought of divesting, wehave always felt there will be a significant upside in the
near future
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Dr Amit [email protected]
Diversification/Expansion/Integration
Core optical discs business to solar energy & homeentertainment
In leveraging existing competencies, MB diversified intoanother high growth segment Photo Voltaics (PV)
If we can leverage our manufacturing strength in a
business we think about it. Solar was obvious because itinvolves layers of a substrate just like optical discs
$130 million investment in state-of-the-art photovoltaic(PV) cell plant at Greater Noida
Each of the machines has to come on 6 jumbo jets. Just
the leg of the machine is the size of our conference room The PV energy market will be worth $1 trillion in 15years & we do not want to be a bit player. I firmly believewe can take a 10% market share and be one of the top 2-3
players in this market worldwide
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Dr Amit [email protected]
Diversification/Expansion/Integration
Moser Baer Photo Voltaic (MBPV), wholly-ownedsubsidiary
Production in Greater Noida by April 2008
Initial capacity 40MW, rapidly scale up to 80MW
Also invested in crystalline silicon wafers & concentration
solar energy Only global company with manufacturing & expertise in all 3
methods to generate energy from solar power
Without any significant breakthroughs in technology, thecost of generating solar power from PV panels will drop 40%
just through manufacturing efficiencies. Such a steep decline,will make solar energy from thin film PV cells on par with ormaybe even slightly cheaper than thermal energy
Aggressive entry by manufacturing solar cells & modules
Initial project cost Rs 260 crore (60 mn)
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Dr Amit [email protected]
Promotion
Uncompromising adherence to Class 100 clean-roomconditions, climate control, superior machinery, the finestraw materials
Spirit of zero error manufacturing
100 people work 24 hours a day on process design
2% annual revenues on R&D, value engineering, productquality, yields & lowering production cost
Positioned globally as one of the largest data storage mediaproducers with stringent quality standards
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Dr Amit [email protected]
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Dr Amit [email protected]
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Dr Amit [email protected]
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Dr Amit Rangnekar
Diversification/Expansion/Integration
India still uses a lot less power than the global average.We can be a global leader in solar power
Per capita electricity consumption in India in 2006 was631 kiloWatt hours (KWhr). In Canada, worlds highest
per capita power consumer, a whopping 17,179 KWhr
International Energy Agency GOI- Per capita power consumption 1000 KWhr by 2012
India has to build renewable energy and solar energy asalternatives to conventional energy needs
Difficult to double power production through conventional
methods in the next 48 months Emerging technologies & price reduction in solar energyproducts could significantly expand this market
MB may just pull it off
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Dr Amit Rangnekar
Optical media strategy
Short term- Increase global market share to 20%, leverage"first to market" and IP position in Blue laser formats
Leverage R&D and technology capabilities in expanding
product portfolio in storage (flash)
Double contribution of value added products (specials).
Medium Consolidate global leadership position
Target "first to market" in near field / holographic tech
Long-term
Dominate media industry & be a technology leader
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Global optical media demand
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Product scope
CDR / RW- Global demand 12 billion units in 2007,growth in Asian, Latin, American & Middle East markets.
Global supply consolidates through capacity conversions,demand-supply balance equilibrium, pricing firm
DVD / RW- Shifting consumer preferences, increasing
drive penetration & improving price-value proposition ledto 68% growth & 6.2 billion units, 2007 would be 9billion units @ 43% growth, prices may reduce due toeconomies, healthy margins retained
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Dr Amit Rangnekar
Next generation formats
Blue lazer technology (BD & HD DVD) can mitigateimpact of cannibalization of optical media demand byemerging alternate technologies
1st shipments by Moser Baer offers hope
Pricing of 15-23 GB formats is 15-20 times DVD formats
Demand for next gen HD DVD and Blu-ray media,expected to be 1.7 billion discs over next 3 years
Increasing applications driven by HD video content &improving price value proposition offered will expandmarket demand.
Complexity & manufacturing capabilities to mass producethese formats, will restrict competition to select group ofcompanies
Key players emerging in this high growth segment, willincrease differentiation between technology innovators &developers & the tier-II companies over the long term
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The home entertainment business
Demand drivers- Rising disposable incomes, hecticlifestyles, growing hardware penetration, large andincreasing content base
India has over 26 million DVD/ VCD users
Barely a quarter of TV owning population in the country
DVD/VCD owners will grow @ 25% per annum. Indian home video market, only 8% (250cr) of Rs 79bn
film industry. Hollywood generates double revenue from2.5bn DVDs, than its theatre sales. The opportunities aremassive
Home Video share could rise sharply with increasingconsolidation and improving price value proposition
offered to consumers.
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Home entertainment-Key revenue driver abroad
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The home entertainment business
2006- Idea mooted, work on proposal, board clearance Legal team met Indian content owners & offered leveraged
low-cost disc capabilities to home entertainment
Signed 3-4 deals daily
End 2006- Acquired copyrights/license for 7000 movie titles
in languages- Hindi, English, Tamil, Telugu, Marathi,Malayalam, Kannada, Bhojpuri, Bengali, Gujarati & Punjabi
Strong 3-tier distribution covering 200,000 outlets through450 distributors across India
2007- Moser Baer VCDs & DVDs @ piracy busting price of
Rs 28 & Rs 34 We cant keep up with demand & roll out fast enough. Its a
problem, but better than having no one buying our discs
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Dr Amit Rangnekar
Home entertainment
Short term Acquire copyright/exclusive license of 40% mainstream
films ever produced across all languages
Establish strong pan-India distribution reach.
Selectively acquire new content, scale up business.
Medium term Clear leadership / dominance
Selectively enter content creation, launch other contenttype through established channel.
Evaluate alternate distribution platform
Long term
Leader in creation and distribution of quality contentspanning entire entertainment & infotainment segments
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Dr Amit Rangnekar
Home entertainment strategy
To leverage proprietary manufacturing technology &established network to offer quality product
Sensitive price point will change current dynamics
Superior price value proposition benchmark for consumers
Difficult to emulate for competition
Key differentiator- diversity of content, library size,language options and a strong delivery mechanism
Copyrights/exclusive license/rights of a third of allmainstream films ever made in India
Biggest player in the home video segment
Adopted pull and awareness marketing strategy Hello happiness" campaign to reach out to consumers
and communicate value proposition offered
Certified quality money back guarantee for anymanufacturing defect, free replacement
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Dr Amit Rangnekar
PV Global scene
Energy security- key global concern Increasing dependence on renewable energy sources
PV has most viable technology & potential to bridge gap
EU implementing PV technology
High Global PV demand for energy and systems
The global PV industry 2006, @ 40%
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Dr Amit Rangnekar
PV business
Short term- Rapidly scale up crystalline siliconcapacities, efficient sourcing strategy for raw material.
New technologies, key people to scale up
Achieve best in class cost benchmarks on efficiency &yields.
Medium term- Rapidly scale up different technologyverticals.
Emerge as one of the worlds largest & most efficient
Increase integration across the value chain upto BOS.
Long term- Emerge as leading, multi technology,
integrated & efficient, global PV manufacturer
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Challenges
Having made the products, distribution was an issue
We had mostly dealt with industrial clients. Distribution
was an interesting challenge. We aim to reach 100,000
distribution points across the country. We want to target
panwallahs and street vendors as well as big retail.
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And in the process, touch every town where there is amovie loving family
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Strategic Alliances / Acquisitions
2006- MBPV acquired a stake in Stion Corp, ananostructures technology company in California.
Launched USB Flash drives in the Indian Market.
Launched 'Platinum' optical media range to ensure dataprotection for 200 years and tackle key optical media data
storage problems- scratches, scruffs, smudges & grime strategic sourcing tie-up with Deutsche Solar, one of the
largest global producers of silicon wafers
Entered into a strategic partnership with Pyramid SaimiraTheatre for home video marketing & retailing
Acquired OM&T BV- Philips subsidiary, only Blu-ray discmanufacturing capabilities outside Japan .
2007- Acquired 40% stake in Solarvalue, to ensure assuredsupply of solar grade silicon
wafers
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Success Drivers
R&D focused, rich research pool of personnel Market driving, global alliances facilitate product & process
development & innovation
Hi-tech manufacturing excellence & low cost leadership
Synergy between Indian and EU operations
Product customisation0 meeting diverse client requirement Tie-ups with 11 out of 12 largest global OEM
Successful CRM- not lost a single OEM customer till date
Deep understanding of business cycles & markets led toproductive investments, high returns & a competitive edge
Comprehensive IT enabled integrated logistics & SCMsystem reduced shipment lead time by 20% & delayedshipments to < 0.1% of total despatches
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Emerging scenario
Global optical media industry recovery due to continuingcapacity consolidation, consumer demand growth &softening of input costs
MB consolidated position as second largest globalmanufacturer of optical storage media
Global blank optical media products demand- 19 billionunits in 2006 @ 15% driven by 68% growth in DVDR/RWformat demand & shipments of next gen HD DVD & Blu-ray
Blue laser optical pick up heads & drives that read/writeboth HD DVD and Blu-ray formats will drive future
growth impetus
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Future
To become a dominant player across multiple verticals &across the value chain in solar energy
Leverage mass manufacturing & thin-film coating
capabilities in new growth businesses
To dominate global storage media industry across allapplication classes and geographies
New businesses will contribute Rs 560-640 crore to the top
line in 2008.
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Future
I have the view from the sky, he knows the nitty-gritty ofthings Puri Sr
You know, I would like to think of myself as a managerand not a promoter. I have to constantly do things to provethat I am not here because of who I am, but because I amgood. As a shareholder I would be insane to sit here ifsomeone else could give me a better return Puri Jr
Decentralisation is a key challenge as the need for lesshands-on control rises
Now planning to sell small pen drives
If you think about it, crystalline silicon solar cells aresemiconductors too. So never say never