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Moser Baer to cut costs to return to profit

Moser Baer to cut costs to return to profit
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First Published: Fri, Feb 11 2011. 02 53 PM IST
Updated: Fri, Feb 11 2011. 02 53 PM IST
New Delhi: A shift in manufacturing lines and high commodity prices saw compact disc maker Moser Baer failing to meet demand, dragging its October-December earnings into the red, but cost cutting could usher in better earnings in the current quarter, a top official said.
Reacting to the earnings, shares of the company, which makes optical storage media and equipment used in solar technology, tanked as much as 10% to Rs37.35 in early trade. At 01:20 pm, the stock was down 7.84% at Rs38.20.
“Indications are there that this quarter should improve due to a variety of reasons including one-time factors going away. We also had some one-time provisions in those (Q3) results, which will not be there,” chief financial officer Yogesh Mathur said on Friday.
It is putting in place cost-reduction measures that should aid earnings regardless of commodity price fluctuations, he said.
“Major portion of our costs has to do with equipment productivity and to do with material. We want to achieve efficiency in terms of material uses to get further commercial and purchasing synergies,” he added. Mathur said it has been in talks with foreign players to partner in its solar business.
“They have interests, we have the same interests, not only in manufacturing but right up the entire value chain,” chief financial officer Yogesh Mathur said, but decline further details.
Government’s push to use domestically made components in solar projects are forcing many companies to set up new plants and expand aggressively in the country, and also opens the door for foreign tie-ups.
Q3 disappoints
Moser Baer reported a net loss of Rs116 crore for October-December versus a profit of Rs3 crore in the year-ago quarter while revenue slumped 19% to Rs436 crore.
“We experienced a dip in production of our CDs/DVDs due to ongoing conversion of the lines into higher value advanced blue-ray format. This has resulted in a lower sales volume,” executive director Ratul Puri said in a statement.
Moser Baer also said “significant sum of amount paid to a technology partner had adverse impact on the cash flow,” but did not provide details.
The company, which is expected to benefit from India’s ambitious solar programme, said its plant to make 100 megawatts of crystalline-silicon cells will be operational in early FY2012.
India last year selected 37 companies to build solar power projects, as the country moves forward with a plan that seeks to significantly scale up production from near zero to 20 gigawatts by 2022.
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First Published: Fri, Feb 11 2011. 02 53 PM IST