Moser Baer (India)

I wrote to you last year about our 25 years in business.  Now, as we
 begin the journey that will take us through our next 25 years, I have
 little hesitation in making a prediction: Our best years lie ahead.
 Call that a promise.  Or call that a pledge. I know we will get there.
 Having said that, we are going to have to work very hard to redeem that
 pledge. Its going to be anything but easy. But, then, nothing ever is
 easy.
 
 Consider what we have done to Planet Earth. The warnings about global
 warming have been very, very clear for a long time now. We didnt pay
 heed. Now we know what we need to do to ensure that our children have
 grass under their bare feet…and a whale on the horizon. So, lets just
 do it. As Al Gore, the environmental activist, says: we should not
 wait, we cannot wait, we must not wait
 
 The theme of our Annual Report is quite simply–green.  Culturally,
 green has broad and sometimes contradictory meanings. But the most
 common association of green in this modern world is with regeneration.
 And we need to regenerate Planet Earth to ensure a safe future for
 generations to come.
 
 Having introduced the theme, let me quickly move to the task on hand,
 which is to tell you what FY 2008-09 looked like for Moser Baer.  This
 is my perspective as the companys Chairman and Managing Director. You
 will get more granular detail in pages that follow.
 
 I am these days often asked how I view the prospect of running and
 growing this business in the pall of economic gloom that has settled
 over the world. So, while I neednt say any more about the global
 economic environment, about which enough has already been said by just
 about everyone with active vocal chords, what I will say is this: Those
 who excel do so not because of the situation they are in but in spite
 of it. I believe the tough environment can act as a stimulus, producing
 more effort, more creativity, and more innovation.
 
 Challenging times these may be, but throughout our companys history we
 have embraced challenges as opportunities to achieve results and this
 year again showed how we have not at all lost the propensity to do
 that. Overall, I see the year as one in which we strengthened our
 balance sheet and managed liquidity.
 
 Optical Media
 
 The first couple of quarters were difficult for the optical media
 business but with input prices softening and the market dynamics and
 the environment in which the business operated improving significantly
 later in the fiscal year, EBITDA margins for the business are growing.
 Also, with high definition media prices falling, our focus on blu-ray
 technology is now starting to pay off. Having said that, I must add
 that blu-ray drive prices need to breach the 0 barrier for high
 definition optical discs to get a real impetus in sales.
 
 Our optical media disc manufacturing is fungible. Hence, without much
 capex we will move our existing production lines to advanced formats
 and margin improvement and upgradation in product profile will continue
 to have a positive impact on the performance of the optical media
 business.
 
 With the significant reduction in input costs, and relatively stable
 pricing, the optical media business is a strong cash generator for the
 group. In FY08-09, the optical media business generated over Rs.4,917
 million in operating cash.
 
 Solar Photovoltaic
 
 The PV business, of course, stands for Moser Baer in the brave new
 world. And while the long-term prospects of the solar energy industry
 remain as strong and buoyant as before, the sector is currently facing
 strong headwinds with the global meltdown impacting solar markets
 worldwide. Yet, countries continue to implement solar- friendly and
 feed-in tariff programmes, while global financial institutions view
 solar financing as a low-risk asset class. Which leaves me in no doubt
 that continued demand for clean and renewable energy will drive solar
 energy costs towards grid parity in the next couple of years.
 
 In 2008, for the first time, both the European Union and the US added
 more capacity from renewables than from fossil-fuel and nuclear
 sources. Global solar PV production rose 85 per cent to 7.9 gigawatts.
 Such growth is possible, continuing even in recession, because some 73
 countries have set renewable power generation targets, and at least 64
 of them are attempting to hit the targets.
 
 Our own expansion plans have to be seen in the light of what is
 happening around the globe. Moser Baer is very bullish on the PV
 market. A recovery in worldwide credit markets and a flow of funds to
 renewable energy companies will boost solar demand, although in the
 near term solar producers will slash production forecasts.  Moser Baer
 is reviewing its plans too. However, we remain committed to PV growth
 coming from both crystalline silicon and amorphous silicon
 technologies.
 
 Entertainment
 
 The entertainment business stands poised to be hived off into a
 separate subsidiary. The outlook for the business remains strong, as we
 are working towards the consolidation of the home video space in India.
 Our significant acquisition of new and premium content consolidated our
 leadership position in the industry.  Moser Baers entertainment
 business now sells more home video content in India than the next five
 players combined. Many more exciting things are on the anvil, specially
 our strategy to provide legitimate content to consumers in a market
 plagued by piracy. I am constantly meeting people who congratulate me
 on making DVD films affordable. That, more than anything else, tells me
 that we are doing the right thing.
 
 Consumer Products
 
 Our Consumer Products business too is making significant progress with
 the launch of a slew of products during the year. Many more are planned
 to be launched in the coming year.
 
 At Moser Baer, sustainable development holds the key.  We keep
 environmental, social and ethical issues in focus while determining our
 business and growth strategy.  Environment and health safety objectives
 and targets are incorporated in annual business plans. We are fully
 committed to developing and operating a safe, healthy and clean
 environment to protect vital human resources, plant, machinery and the
 environment from hazards and risks.
 
 thank you for all the support and encouragement you have always given
 to us at Moser Baer. I can only assure you that our hunger for growth
 is far from sated. After all, we are working towards ensuring that your
 children have a bit of green grass under their bare feet.
 
                                                   Best regards,
                                                    Deepak Puri