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Moser Baer India hopes to break even by H2 FY12

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CIOL Bureau
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NEW DELHI, INDIA: 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.

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Moser Baer raised prices of optical storage media by 15-20 per cent in June and by a further 5-7 per cent 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.

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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 per cent, compared with 3.7 per cent a year back.

The company said its net loss for the quarter ended June 30, 2011 was Rs 92.21 crore, as compared to a net loss of Rs 87.84 million for the year-ago quarter. The company said its net revenue registered a sharp growth of 16.6 per cent Q-o-Q resulting in a turnover of Rs 523 crore.

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Commenting on the development in the markets, Bhaskar Sharma, CEO, Optical Media, MBIL, said the traction resulting from the correction of over supply in the global storage media market has enabled the company to renegotiate orders with the customers.

However, operating margins have improved to about 10 per cent, compared with 3.7 per cent a year back.

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

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"This is after taking just 1 month of price increase...you should comfortably see 18-20 per cent 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 annualised basis by the end of FY12.

Moser Baer shares, valued at about 5 billion rupees, were down 1.2 per cent to 28.85 rupees by 12:20 PM on the National Stock Exchange.

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