The CD rewritable project will have an annual capacity of 150 million units and will be fully operational by May, thus making Moser Baer the world's sixth largest manufacturer with a market share of close to 4 per cent. The recordable project is being implemented in a phased manner by adding three-four lines of production every month. The present output from the plant is around 25 million units.

The foreign currency loans are in Euro and US dollars and have been finalised at attractive coupon rates. The company has finalised a Euro 17 million loan from IFC Washington at a coupon of 5.1 per cent, $10 million from Exim Bank at 8.2 per cent and $9 million from IDBI at 8.6 per cent. Another Rs 50 crore has been arranged from the State bank of India which is a rupee loan at a coupon of 11.8 per cent.

The Rs 330 crore project has been funded through a loan component of Rs 200 crore and another Rs 130 crore through the equity issue at a premium, which the company has already raised. The company has placed equity with IFC Washington and Jardine Fleming group funds- JF Electra. Post-placement, promoters hold 34 per cent, IFC Washington holds 26 per cent, JF Electra holds 14 per cent and foreign institutional investors 12 per cent. The rest 14 per cent is held by the public.

Ratul Puri, business development manager, told The Financial Express that for Moser Baer, borrowing in foreign currency makes sense as these borrowings are hedged against our forex revenues. Puri said the CDR division would result in an additional turnover of Rs 375 crore.

"The company has a distinct cost advantage vis-a-vis the other CDR manufacturers and at a time when the CDR market worldwide is growing at over 200 per cent per annum, the CDR project would result in a healthy cashflows for the company", said Puri.

MBIL was earlier identified by IFC as one of the cheapest floppy disk producer in the world with a client list comprising majors like BASF, Dataright, Nashua and Sony, among others. Moser Baer has soft agreements with some of its clients to supply recordable CDs.

The CDR project is expected to result in a sharp change in the company's fortunes with projected profits set to double from Rs 21.1 crore in 1998-99 to around Rs 40 crore and further to over Rs 150 crore in 1999-2000 and 2000-2001 respectively.

In the domestic market, the company is licensed to manufacture and sell floppy discs using BASF brand. Moser Baer also markets floppies under its own brand `Xydan', which is positioned as a good quality diskette at a lower price point. The Xydan brand will also be extended to the CD-R range with a similar positioning. Branded sales contributed 35 per cent of MBIL's turnover in 1998-99. Moser Baer is already the eighth largest player with a 3.5 per cent of the world market share in the floppy disk segment.