Balance between demand and supply in the optical storage media along with a hike in prices of such devices has boosted technology company Moser Baer?s profitability by R90 crore. A price hike to the tune of 20% in optical discs has resulted in additional profitability of R60 crore per quarter with another R30 crore expected to trickle down in the next quarter, the company said.
?During the last few years, the optical storage media industry was plagued by over-capacity, where there was an over supply of 3-5 billion discs. Hence, there was a selling price depression. However, the over supply has corrected itself during the last six months due to exiting of some players,? said Yogesh B Mathur, Group chief financial officer, Moser Baer.
At a manufacturer level, the pricing which was in the range of 9-12 cents per disc, has now gone up to 12-16 cents per disc and the impact of the price hike has translated into a rise of R2-3 per disc for the consumer. Moreover, commodity prices of silver, poly carbonate and other plastics used in packaging which were on the rise previously, have now begun to soften.
The incremental profit will narrow the company?s losses which stood at R131 crore for the quarter ended March 31, 2011. Over the last 3-5 quarters, Moser Baer was impacted by a high increase in commodity prices and decrease in demand.
The incremental revenues in the optical media space have been driven by CDs for music content, DVDs for videos in standard definition and Blu Ray for high definition (HD) content. ?Blu Ray is the driver for HD content and the margins here are almost 40% while for CDs and DVDs, it is 20%,? added Bhaskar Sharma, CEO, Moser Baer India.
Going ahead, the firm expects a dip in Blu Ray margins because of increased competition in the space.
According to consulting firm Futuresource, the Blu Ray market grew from a negligible 5 million in 2007 to about 69 million in 2010 and is expected to grow to 594 million units by 2014.
The growth is driven by an increase in consumer spending in developed markets, Blu-ray drive base expansion and a growing Blu-ray content market.
For Moser Baer, Mathur said, the key markets for Blu Ray are the US, Western Europe and Japan and these developed markets are expected to witness an increasing share of Blu-ray retail sales as compared to DVD retail shares due to the increasing 3D content in these countries.
