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CARE Rates Moser Baer

Credit Analysis & Research Ltd. (CARE) announced that it has assigned a CARE BBB- rating to the long-term bank facilities of Moser Baer India Ltd. and a PR 3 rating to its short-term bank facilities.

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Unedited press release follows:


CARE has assigned a CARE BBB- [Triple B Minus] rating to the long-term bank facilities of Moser Baer India Ltd (MBIL). This rating is applicable for facilities having tenure for more than one year. Facilities with this rating are considered to offer moderate safety for timely servicing of debt obligations. Such facilities carry moderate credit risk.

Also, CARE has assigned a ‘PR 3’ [PR Three] rating to the short-term bank facilities of MBIL. This rating is applicable for facilities having tenure up-to one year. Facilities with this rating would have moderate capacity for timely repayment of short term debt obligations at the time of rating and carry higher credit risk as compared to facilities rated higher.

CARE assigns ‘+’ or ‘-’ signs after the assigned rating (wherever necessary) to indicate the relative position within the band covered by the rating symbol.

Sr. No. Facility Amount (Rs cr) Rating
1. Long-term Bank Facilities 1,207.55 CARE BBB-
2. Short-term Bank Facilities 345.25 PR3
3. Long/Short term Bank facilities* 844.88 CARE BBB-/PR3
Total 2,397.68
* CC limits (Rs.102 cr) interchangeable with PC/PCFC limits.

Rating Rationale
The ratings factor in MBIL’s experienced promoters and management team, MBIL’s dominant position as one of the world’s largest manufacturers of optical storage media, established brand name, reputed original equipment manufacturers (OEMs) clientele, broad product range and wide geographical presence. The ratings also take into account recent trends indicating a revival in photovoltaic (PV) business in export market. However, the ratings are constrained by pricing pressure in optical media leading to fall in margins, weak financial profile with continuing operational losses and high overall gearing, susceptibility to raw material prices and foreign currency fluctuations, substantial exposure to its subsidiaries and technology risk. Going forward, the company’s ability to improve profitability and prudently manage capital structure and extent of support to subsidiary companies would remain the key rating sensitivities.

Company Profile
Moser Baer India Ltd (MBIL) was promoted by Mr. Deepak Puri in 1983. It is one of the world’s largest manufacturers of optical storage media. Majority of MBIL’s revenue is derived from optical storage media contributing to over 85% of the total sales turnover and balance contributed by ITCE and Home videos and entertainment segment. MBIL derives majority of its revenue from exports sales of optical storage media to reputed Original Equipment Manufacturers (OEMs).

During FY09, total income increased to Rs.2,182cr. registering y-o-y growth of 13% on account of growing market and increasing demand for optical storage media and consequent volume sales primarily for CD/DVD. MBIL’s overall gearing stood at 1.53 times (standalone) and 3.67 times (consolidated) as on Mar 31, 2009. During H1-FY10, MBIL incurred a loss of Rs.46 cr on a total income of Rs.1077 cr.