MoserBaer Globalisation

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  • 8/3/2019 MoserBaer Globalisation


  • 8/3/2019 MoserBaer Globalisation


    Dr Amit [email protected]


    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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    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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    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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    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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    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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    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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    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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    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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    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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    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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    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


    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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    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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    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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    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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    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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    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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    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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    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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    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 Rangnekar

    [email protected]


    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

    [email protected]

    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


    Dominate media industry & be a technology leader

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    [email protected]

    Global optical media demand

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    Dr Amit Rangnekar

    [email protected]

    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

    [email protected]

    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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    Dr Amit Rangnekar

    [email protected]

    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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    [email protected]

    Home entertainment-Key revenue driver abroad

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    Dr Amit Rangnekar

    [email protected]

    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

    [email protected]

    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

    [email protected]

    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

    [email protected]

    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

    [email protected]

    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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    Dr Amit Rangnekar

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    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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    Dr Amit Rangnekar

    [email protected]

    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


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    Dr Amit Rangnekar

    [email protected]

    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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    Dr Amit Rangnekar

    [email protected]

    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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    Dr Amit Rangnekar

    [email protected]


    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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    Dr Amit Rangnekar

    [email protected]


    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