Moser Baer hopes to break even by H2 FY12

Moser Baer hopes to break even by H2 FY12

New Delhi: Moser Baer India expects to break even by end of the current financial year, as recent prices increases and a correction in demand-supply mismatch are likely to boost the compact disc maker’s cash flow, a top executive said on Friday.

Moser Baer raised prices of optical storage media by 15-20% in June and by a further 5-7% in July, chief financial officer Yogesh Mathur told Reuters.

“Basically there will be very significant price increases, which will cover substantially the cost increases and it will restore strong cash flows," Mathur said by phone.

Moser Baer, the world’s second-biggest maker of optical storage media, is seeing a decline in its core business with the rise of the internet and easier availability of data hitting profits.

The decline in optical media has forced the company to look more aggressively at expanding its solar business, as it seeks to tap the country’s estimated $70 billion solar power market, its founder and chairman Deepak Puri told the Reuters Global Energy and Climate Summit in June.

Late on Thursday, Moser Baer posted its fifth straight quarterly loss for April-June, mainly hurt by soaring raw material costs. However, operating margins have improved to about 10%, compared with 3.7% a year back.

“The input costs, which have been increasing, have stabilized (and) margins have also improved," Mathur said.

“This is after taking just 1 month of price should comfortably see 18-20% EBITDA margins starting in the next two quarters," Mathur added.

He added the company should break even by the second half of the current fiscal year, or even turn profitable.

“We have seen a strong return of cash flow which has been our hallmark," Mathur said, adding that the company may see operating cash flow of $80-$100 million on an annualized basis by the end of FY12.

Moser Baer shares, valued at about Rs500 crore, were down 1.2% to Rs28.85 by 12:20 pm on the National Stock Exchange.