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the power of green

the power of green a n n u a l r e p o r t

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the power of green a n n u a l r e p o r t

contents

00/01

Vision, Mission

03

Year at a Glance

04

Chairman’s Message

06

Board of Directors

10

Business Showcase Solar Photovoltaic

12

Optical Storage Media

16

Consumer Products

20

Entertainment

24

Management Discussion and Analysis

28

Corporate Social Responsibility

50

Financials

58

visionmission

02/03

vision

Touching every life across the globe through high technology products and services.

mission

We will drive growth through our excellence in mass manufacturing. We will move up the value chain through rapid development of technology, products and services. We will leverage our relationships, distribution, cost leadership and “can do" attitude to become a global market leader in every business.

year at a glance

year at a glance Strategic Tie-up • Moser Baer signs exclusive home video licensing deal with

Strategic Tie-up

• Moser Baer signs exclusive home video licensing deal with UTV Motion Pictures

• Moser

Baer

concludes a strategic tie-up with

LDK Solar

Global Certification

• Moser

Baer

gets

the

product certification

coveted

Blu-ray

• Moser Baer's thin film solar modules are now IEC (International Electrotechnical Commission) certified

New Initiatives

• Moser Baer launches a digital video processing and authoring facility in Chennai

• Moser Baer announces successful trials of first Gen 8.5 Thin Film plant

• Moser Baer to set up one of India's largest rooftop solar PV Installations in Surat

India's largest rooftop solar PV Installations in Surat Major Funding • Global investors commit more than

Major Funding

• Global investors commit more than Rs. 400 crore equity into Moser Baer’s photovoltaic business

Product Line Extensions and Launches • Moser Baer launches 600VA UPS with improved features for

Product Line Extensions and Launches

• Moser Baer launches 600VA UPS with improved features for better performance

• Moser Baer launches all new sleek and stylish MP3 players

• Moser Baer launches slim and elegant TFT Monitors

• Moser Baer launches LCD TV

Consumer Products

• LCD TVs

• DVD Players with Home Theatre

• Multimedia Speakers

• MP3 Players

• Colour TVs

• Digital Photo Frames

• IVO Media Players

Colour TVs • Digital Photo Frames • IVO Media Players • External Hard Disks • TV

• External Hard Disks

• TV Tuner Cards

• Speakers

• TFT Monitors

• PC Casings

• RAMs

Deepak Puri, Chairman and Managing Director

chairman’smessage

06/07

This is our hope: that the children born today still have, twenty years hence, a bit of green grass under bare feet, a breath of clean air to breathe, a patch of blue water to sail upon, and a whale on the horizon to set them dreaming

Jacques-Yves Cousteau, the Explorer-Ecologist-Scientist

Jacques-Yves Cousteau, the Explorer-Ecologist-Scientist Dear Shareholders, I wrote to you last year about our 25

Dear Shareholders,

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. It's 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 didn't 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, let's 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

company's 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 needn't 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 company's 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

The solar photovoltaic business stands for Moser Baer in the brave new world.

Moser Baer’s photovoltaic plant in Greater Noida

chairman’smessage

08/09

said that, I must add that blu-ray drive prices need to breach the $200 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 Baer’s 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.

I 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,

towards ensuring that your children have “a bit of green grass under their bare feet”. Best

Deepak Puri

Front Row Left to Right

Virendra Nath Koura

Non-Executive Director

Bernard Gallus

Non-Executive Director

Nita Puri

Whole Time Director

Frank E. Dangeard

Non-Executive Director

Back Row Left to Right

Viraj Sawhney

Non-Executive Director

Dr. Vinayshil Gautam

Non-Executive Director

boardofdirectors

10/11

 

Not in the picture

Ratul Puri

Prakash Karnik

Arun Bharat Ram

Executive Director

Non-Executive Director

Non-Executive Director

Deepak Puri

John Levack

Rajesh Khanna

Chairman and Managing Director

Non-Executive Director

Non-Executive Director

solarphotovoltaic

12/13

solar photovoltaic 1 2 / 1 3
solar photovoltaic 1 2 / 1 3

Moser Baer has positioned itself as a significant player in the global solar photovoltaic (PV) market by leveraging its high-volume technology manufacturing expertise with significant investments in research, development and manufacturing of products dedicated to generating solar power. Moser Baer believes that PV is the vital link in dealing with the energy crisis. The PV arm of Moser Baer's business comprises separate companies operating as subsidiaries.

comprises separate companies operating as subsidiaries. Moser Baer is present across the entire value chain—we

Moser Baer is present across the entire value chain—we manufacture cells and modules and control critical feedstock through strategic alliances. We are also ensuring that internationally accepted business models for downstream systems development, commissioning and O&M are established, especially in the rapidly emerging Indian market. Also, we straddle multiple PV technologies, whether crystalline silicon, amorphous silicon (thin film) and concentrator technology.

In addition, Moser Baer is investing in nano technologies, which are in the R&D phase. This is technology of the future and has the potential to bring the cost of electricity generation down considerably.

The solar energy sector is increasingly realising its potential as a cost-effective alternative source of power and our effort is to work diligently in all PV technologies and bring the solar dream to fruition to meet India's energy needs.

Renewable energy offers the biggest risk mitigation strategy as we prepare to deal with the climate change crisis.

The options are many: hydroelectric, wind, ocean tides, biomass, geothermal and solar. However, it is solar that is the most viable alternative source of power. It is a

continuous, unlimited source of energy, especially peaking energy, involving distributed generation, has no emissions and is totally non-hazardous.

The technological landscape of solar power is impressive

• Crystalline silicon is the most mature technology and has the largest market share.

• Thin Film is a maturing technology, poised for high growth and also has potential to reduce costs significantly.

• Concentrator PV is being rapidly developed for the market and has great cost reduction potential as well.

Finally, nano technology is in the R&D phase, with a potentially 'disruptive' cost profile given the right breakthroughs. Notwithstanding the temporary short term slowdown in certain segments of the PV sector as a direct result of the credit crisis, experts continue to forecast explosive growth as the sector drives towards grid parity costs. The company believes that multiple technologies will be complementary in meeting varied applications requirements and differential conditions as deployment of PV systems and applications extends across the globe.

solarphotovoltaic

14/15

Moser Baer is present across the solar photovoltaic value chain.

Solar energy is the most viable alternative source of power

opticalstoragemedia

16/17

opticalstorage media 1 6 / 1 7
opticalstorage media 1 6 / 1 7

Moser Baer's range of products makes it one of the world's largest manufacturers and technology innovators in the optical media spacean Indian company that has contributed to the establishment of new global technology standards. Our products are sold in more than 80 countries and we have a dominant market presence in the United States, Europe and India. In the Indian market, Moser Baer made its foray into the optical storage market with the launch of the Moser Baer label in 2003. The company has enhanced its leadership position by introducing technologically innovative and truly world-classproductsglobally.

innovative and truly world-classproductsglobally. A notable development in 2008 was the emergence of Blu-ray

A notable development in 2008 was the emergence of Blu-ray as the only relevant media for the high definition format, with Toshiba announcing the discontinuation of HD DVD investments. Blu-ray offers a considerable increase in storage capacity with its 25 to 50 GB data capacity. Moser Baer, having contributed significantly to the development of blue laser technology, stands to benefit from the exponential growth expected in this advanced format in years to come. The company will be present across all blue laser media formats, be it recordable media, or rewritable or replicated media. The company is set to leverage its R&D strengths to establish leadership position in terms of supply of Blu-ray media for global consumption.

Moser Baer's Blu-ray 1x-6x discs have also been accepted by the BDA (Blu Ray Disc Association) as test discs to benchmark the performance of Blu ray 1x-6x media in various BD drives being manufactured globally. This achievement underlines the strength of Moser Baer as a technological innovator for this cutting edge Blu-ray format. This continued impetus is poised to bring Moser Baer's optical media business its next wave of success.

The company continues to manufacture the entire spectrum of optical storage media products including Recordable Compact Discs (CD-R), Rewritable Compact Discs (CD-RW), Recordable Digital Versatile Discs (DVD- R), Rewritable Digital Versatile Discs (DVD-RW) and Blu Laser Discs (Blu-ray).

opticalstoragemedia

18/19

In optical storage media, Moser Baer is a name to reckon with.

The DVD manufacturing plant in Greater Noida

consumer products 2 0 / 2 1

consumerproducts

consumer products 2 0 / 2 1

20/21

Consumer products are the latest in Moser Baer's bold forays into new areas of business. Moser Baer has crafted products keeping in mind the needs of discerning Indian consumers. The consumer electronics market is one of the largest industry segments in India. A slew of IT peripherals and consumer electronics products comprise our growing product portfolio.

electronics products comprise our growing product portfolio. The consumer electronics portfolio comprises • Ultra

The consumer electronics portfolio comprises

• Ultra advanced LCD TVs

• DVD players

• Portable DVD players

• Digital photo frames

• Multimedia speakers

• MP4 players

• MP3 players.

The new, sleek range of LCDs has already created quite a market buzz. The LCD TV's come with HD ready format for an amazingly clear picture, with two models being Full High Definition.

Among other exciting products is the portable DVD player, with a swivel screen, digital photo frames and media players.

Consumer electronics apart, Moser Baer is scaling new heights in the PC peripherals space with its wide range of products. Moser Baer's IT peripherals' product range includes

• TFT monitors

• USB drives

• Memory cards

• DVD writers

• PC peripherals

• External hard drives

• TV tuner cards

• UPS.

The range of IT peripherals has been introduced with the objective of providing consumers value for money and reliable products. In storage devices like memory cards,

USB drives, SD Cards, and external hard drives, consumers have a wide range from which to choose. Moser Baer's UPS has been designed to protect personal computers and peripherals from possible power hazards. Its compact size makes itself very suitable for offices and home studios with limited space. The optical disc drives have fast access time and high data transfer rate. In the headphone category there are about 14 models that look trendy and deliver good sound quality. All the Moser Baer products are technically sound and have great features to suit consumer's needs. The company also has a robust service network to help consumers.

consumerproducts

22/23

entertainment

24/25

entertain ment 24/25
entertain ment 24/25

Moser Baer has become the dominant player in the home entertainment business with more than 10,000 titles in almost all major Indian languages. The entertainment business is now being hived off as a separate, wholly- owned, subsidiary.

Moser Baer is working towards the consolidation of the home video space in India, growing the market exponentially based on the twin pillars of driving mass consumption at affordable prices and 'everywhere' distribution. The vision is to wean consumers away from pirated products to original products that have the hallmark of quality and affordability.

that have the hallmark of quality and affordability. Consumers already have unparalleled access to Moser Baer’s

Consumers already have unparalleled access to Moser Baer’s entertainment products through:

• Traditional A/V stores

• Grocery stores

• Cigarette kiosks

• Online store

• Home delivery (Carts).

In addition, the company now has a clutch of franchisee stores in cities big and small–from Chennai to Rampur–to enable customers a pleasant browsing experience.

Moser Baer's entertainment products are widely retailed all over the country and the number is constantly growing. What is more, the company is constantly innovating entertainment packaging. For instance, Super DVDs, offering multiple films on one disc, have met with significant success in the marketplace.

Moser Baer is also producing films.

home productions, has earned critical acclaim and many other films are currently under production, mostly in Hindi

and Tamil.

From cinema classics to new films–Moser Baer Entertainment has it all. Here's your one-stop shop for home entertainment.

Piracy is a menace that is eating into the innards of the Indian film industry. Piracy flourishes because the gap between a film's theatrical and home video release is too large and before Moser Baer's entry, the home video product was priced at a level that enabled piracy to flourish. Our entry into the home video market has brought release windows down from six to seven months to two to three months. This is an important development because it is crucial in the fight against the menace of piracy. People consume pirated content because it is instantly available.

Shaurya, one of its

entertainment

26/27

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Overview Business-wise Performance Outlook Opportunities and Threats Risks and Concerns Operating Performance Review

If 2008 marked Moser Baer's 25th year, the year 2009 is about starting the journey towards the next 25 years afresh. It is with a sense of anticipation and excitement that the company looks at the road ahead. The sense of excitement is, however, tempered by cautious optimism. With the overall global economic growth slowing to a near standstill this year, 2009 will beaccording to the International Monetary Fundthe most challenging year for economies across the globe since World War II. Economic growth across the world will fall to just 0.5% in 2009 from 3.4% in 2008. Financial markets are therefore expected to remain conservative even after recovery, until investors and consumers gain confidence that policy actions can help improve market conditions. India is expected to rebound from the 2008-09 crisis faster than the rest of the world. However, the growth rate is estimated, by the central bank, at around 6 per cent, which will be the lowest in the last six years.

6 per cent, which will be the lowest in the last six years. COMPANY OVERVIEW For

COMPANY OVERVIEW

For Moser Baer, 2008-09 fiscal year was a year of consolidation. Given the tough environment that we operated in, we have reason to be satisfied with the progress of our business with our revenues growing 12.6 per cent over FY 2007-08. During the year the company focused on the key factors that were priority in the difficult business environment:

• Cash and liquidity: The company generated INR 4,684 million of cash from operations as against INR 3,077 million in the previous year

• Balance sheet strengthening: The company took various steps to strengthen its balance sheet. This was achieved mainly by better debt and working capital management. The company bought back US$ 51 million worth of FCCBs, out of US$ 150 million FCCBs, resulting into net exceptional profit of INR 910.3 million. The company also made adjustments

against certain strategic investments on account of current market conditions.

For our optical media business, FY 08-09 was an important year, in the course of which it went from high input costs and imbalanced demand-supply in the first two quarters to softening of input costs towards the latter part of the fiscal year. The difficult environment in which the business had been operating started to ease off significantly. The business ended the year significantly cash accretive and with margins recovering strongly.

It was a year of consolidation for the solar photovoltaic business in an extremely difficult global credit environment. Demand for solar panels remained subdued for most part of the year with global solar farm projects suffering delays in achieving financial closure. However, there are already indications that the worst could be over and the industry will recover once the

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FY 2008-09 was Moser Baers year of consolidation.

Moser Baer’s state-of-the-art manufacturing unit

The Indian optical media market is over one billion discs.

High Definition optical storage media manufacturing line

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pressure on liquidity has eased off. While re-phasing and reviewing expansion plans in line with the global environment, Moser Baer focused on upgrading technology with an accent on cost competitiveness. The entertainment business consolidated its position during the year. Moser Baer now has rights to over 10,000 titles spread across all popular languages in India. With superior quality and delightful pricing we have become market leaders and are taking initiatives to grow this segment which is plagued by rampant piracy in both sell- through and rental formats. The acquisition of new and premium content from UTV Motion Pictures was a highlight of the year, as too was the launch of the Super DVD product. This product, while making further inroads into the rampant piracy market, has brought down the cost of owning a title to a value point affordable for the masses. Moser Baer's consumer products business is making significant progress, as we continue to launch new products. In FY 08-09 we launched many products on the consumer electronics side and equally some in the IT peripherals space. Today's consumer looks for products with a trendy look and feel and easy, and yet enhanced, functionalities. Our products are both aesthetically and technologically pleasing and that is the reason they have been accepted in the marketplace with enthusiasm. Optical Media Moser Baer's optical storage business continues to be the mainstay. We continue to be market leaders both in terms of manufacturing capacities and also in our R&D work. It was an eventful year for the industry in every sense. The much-needed improvement in market conditions happened in the latter part of the year. The cost of raw material in the petrochemicals chain and fuels came down to a sustainable level and the demand-supply equilibrium was restored. Market dynamics improved significantly, licensing disputes were settled and capacity was consolidated. The industry reaped the benefit of the fall in prices of commodity-based raw material and fuel. With demand for CD-R tapering off, the share of DVD-R started rising rapidly. Indeed, DVD-R maintained a positive growth trend during the year with robust demand from developed as well as emerging markets. Strategic Marketing and Decisions (SMD) estimates global demand for blank optical media products to be 16 billion units in 2009, as against 18 billion in 2008. However, corresponding value growth will be driven by the transition to the DVD-R format and on to Blu-ray, led by the growth in the high definition media format and the expected growth in Blu-ray drive penetration. High definition media format, which for an extended period did not take off because of the presence of two formats in the market, is now poised to grow significantly with the tussle between Sony and Toshiba getting resolved leaving Blu-ray as the format of the future. High definition prices falling was great for the industry as the

share of high definition value-added media started registering significant growth. This trend is likely to keep growing exponentially in the coming years. The momentum is expected to come from increased drive penetration, led by dropping prices, which are expected to breach the $200 barrier internationally this festive season. Moser Baer's Optical Media Business The global economic environment in which Moser Baer's optical media business operated was challenging for most part of the Fiscal Year. The cost of raw material in the petrochemical chain and fuel had increased substantially. But with input prices softening, the business turned around rapidly and it will continue to reap the benefit of the fall in prices of commodity-based raw materials and fuel for some time to come. The reduction in inventory was a good sign for the optical media business. Moreover, the share of high valued- added media registered a 58 per cent growth in 2008-09 over the previous fiscal. The share of DVD-Rs went up by 60 per cent, while demand for CD-R is tapering off. The momentum towards advanced media formats will intensify further once Blu-ray drive prices climb down from their present high levels. EBITDA margins for the business has declined to 23.8 per cent from 26 per cent in the previous year but recovered strongly during the second half of the year. The optical media business is significantly cash accretive, driven by robust cash margins materially lower incremental capex resulting in better asset turnover and the continued improvement in working capital cycles.

and the continued improvement in working capital cycles. With customers increasingly migrating to new and value-

With customers increasingly migrating to new and value- added formats, the optical media product profile is changing and this will impact volumes in the near term. However, operating parameters for the business are recovering strongly and margin improvement and upgradation in product profile will continue to positevely impact business performance. High definition media formats will give Moser Baer a growth edge over competition and this year the industry is set to witness faster penetration.

this year the industry is set to witness faster penetration. Moser Baer received product verification from

Moser Baer received product verification from the Blu-ray Disc Association (BDA) for its next generation Blu-ray (BDR)1x-6x discs. This certification makes us the first company outside Japan to develop and ship BDR 1x-6x media. This latest innovation from Moser Baer came from OM&T, our Netherlands-based subsidiary. The discs were also accepted by BDA as test discs to check the performance of Blu-ray 1x-6x media in various BD drives being manufactured globally. The Blu-ray Disc Association (BDA) is responsible for promoting and developing business opportunities for Blu- ray disc, the next-generation optical disc format for storing high definition films, games, photographs and other digital content. The association has more than 180 members.

Outlook 2009 could be the year of Blu-ray. The world has been talking about the next generation format for a long time. But with the format war settled and Blu-ray drive prices coming down noticeably, disc prices too will rationalise. Moser Baer's optical media production lines will continue to move existing production lines to advanced formats, significantly raising our capacity to produce media that support the emerging high definition format. The US-based Strategic Marketing and Decisions expects the demand for BDR formats to grow sharply to over 1.3 billion discs over the next three years on account of increasing applications driven by high definition video content and improving price value proposition offered by these formats as their pricing curve approaches the inflection point required to expand market demand. Given the complexity and manufacturing capabilities required to mass produce these formats, only a small select group of companies will emerge as key players in this high growth segment, thereby increasing the differentiation between the technology innovators and developers and the tier-II companies over the long term.

Solar Photovoltaic The year 2008-09 was a year of challenges for the solar industry. The situation turned from under supply to oversupply, mainly driven by the credit crisis, reducing the availability of cost-effective financing and reduced customer spending. In addition to higher cost of project financing and lower cost of natural gas, both outgrowths of the current economic setup, have made it tough for the solar industry. However, the key long term industry variables continue to be strong with countries continuing to implement solar-friendly incentive and feed-in tariff programmes. Our belief is that continued demand for clean and renewable energy will drive solar energy costs towards grid parity in the next couple of years. There are strong pointers that prospects for solar energy are brighter than even before:

• 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

• From end-2004 to end-2008, total global power capacity from new renewables increased 75 per cent to 280 gigawatts.

• 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

• Notably, 45 countries and 18 states or provinces have feed-in tariffs, a temporary levy on all energy users, who pay premium prices for renewable electricity

• The upside of government market enablement programmes allied with pioneering investment is becoming ever clearer. In Germany, renewable electricity is 15.3 per cent of the total, and renewables provide almost 10 per cent of all energy.

and renewables provide almost 10 per cent of all energy. The drop in prices for solar

The drop in prices for solar power equipment could make solar energy more competitive with burning fossil fuels to generate electricity. Currently less than 1% of the world's electricity comes from solar power. While investors are very selective due to the low finance availability, they still see PV as a low-risk asset class. The reason: government support programmes (mainly feed-in tariffs) providing investor security in the long-term and the increased attractiveness of PV energy with the drop in overall costs.

attractiveness of PV energy with the drop in overall costs. The US-based Prometheus Institute for Sustainable

The US-based Prometheus Institute for Sustainable Development estimates that by 2012, Asia-based production (including Japan) is expected to account for 82 per cent of global producible crystalline silicon cells, at significantly improved efficiency and cost targets from todaya far cry from the days of European dominance. The think tank also says that manufacturing costs for PV are expected to continue to fall over the next several years, and should be at or below $1.50/W for all major technologies by 2015. Most importantly, the outlook for grid paritythe Holy Grail of solar energyis improving every day. Barclays Capital in a recent report said: "We believe grid parity outlook has not deteriorated with the recent decline in natural gas prices." India Market: The domestic market in India awaits its messiah. The solar energy sector needs a big push from the government, in policy and implementation to unlock the value of what the sector can do for India. It is today accepted worldwide that new and renewable energy will increasingly play a larger role in meeting the economic aspirations of growing economies. The government needs to put in place a definitive agenda for accelerating clean energy growth in India. It can do so by providing incentives for solar farms and solar energy production on commercial roof tops. This can only be done by offering attractive feed-in tariff rates, simplifying the installation and commissioning of SPV plants, and by combining state PPA with subsidy from the central government. The government has made a beginning in this direction , with the announcement of incentive scheme for under 50MW generation projects which would provide necessary impetus for investors in this field. India needs a solar PV incentive programme along the lines of Germany. In the German market there was initially

a strong push from the government until the market

reached 2-3 GW/annum and then gradually the subsidy

was reduced.

Entrepreneurs and engineers in India are more than ready

to respond to the clean energy challenge with the kind of

innovation and thrust that the IT industry witnessed at its peak. But this thrust needs to be backed by government's commitment and support to clean energy. The upside of government's market enablement programmes is obvious from the manner in which renewable energy sector has performed in many European economies.

Prospects for solar energy are bright considering that there are two government initiatives in the works with the potential to provide the incentive investors need.

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These are the solar policy under the Solar Mission being driven by the Prime Minister himself and the recently announced commercial solar PV rooftop diesel abatement policy . Moser Baer's PV business Moser Baer's photovoltaic subsidiaries have grown from revenues of Rs. 87.1 crore in 2007-08 to Rs. 341.9 crore in 2008-09. The business raised significant equity funding from a consortium of global investors in excess of Rs. 411 crore to fund capacity expansion of crystalline silicon and thin film solar verticals.

At the Greater Noida plant, we have stabilized 80MW production line in crystalline silicon cell manufacturing. In addition, our thin film line has a 40MW capacity. Thin film has some strong advantages as a technology:

• It reduces dependence on poly-silicon

• Higher energy generation as compared to silicon

Commission (IEC). The certification confirms that the thin film modules to be produced at the plant in Greater Noida will meet IEC's stringent requirements for functional and mechanical capabilities for long-term operation and safety specifications under challenging environmental conditions. In addition, Moser Baer has invested in strategic partnerships involving the entire value chain, particularly for strategic sources such as silicon ingots and wafers, glass, etc. through short-term and long-term supply agreements. Outlook While the solar industry has grown astonishingly over the last decade , it is still in a nascent stage of growth. Market structures differ between countries depending on subsidies in place, ownership of installation, nature of customer, variability of grid connection etc. While in the

customer, variability of grid connection etc. While in the High Concentrator Shopfloor in the PV plant

High Concentrator Shopfloor in the PV plant

panels, given the ability to generate energy in low light

and

equipment. We also have at Greater Noida a high concentrator photovoltaic module manufacturing facility that has started with an initial capacity. We have readied a state-of-the-art 40MW capacity thin film line for production at our Greater Noida PV manufacturing plant. The final testing and stablisation of output is in progress. The single junction thin film line has demonstrated the highest production capacity to date for manufacturing the world's largest (2.2m x 2.6m) solar thin film modules. The 40MW Thin Film Line also received the prestigious certification from the International Electrotechnical

• High

throughput

manufacturing

process

last year, Germany and Spain continued to dominate and the European solar market, Italy and France are establishing themselves as growth markets and there is tremendous potential in Czechoslovakia, Portugal, Greece, Belgium and Bulgaria. With European Union targeting 20% of its energy requirements from renewable energy by 2020, many countries are expected to come up with attractive subsidies to promote solar energy. The USA, with the passage of $28 billion fund for solar in energy efficiency and renewable energy fund, the solar market is poised for fast growth. Further, the $6 billion credit subsidy, $60 billion loan guarantee programme and $3.5 billion renewable energy transmission programme is expected to kickstart demand for the solar Industry. Asian markets like Japan, China, Korea and India are also showing positive signs of growth. Japan has come out with a attractive incentive plan for rooftop applications.

China has also been pushing its solar industry by giving incentives and promoting its domestic solar industry growth. Your company is also monitoring the government plans in other parts of world like Middle East, Turkey, Africa and Australia. Indian government has also initiated positive steps to grow renewal energy in general and solar energy industry in particular. With the new government in place post election, there are strong signs of focus on renewable energy options. Also, while the financial crisis has created a challenging environment in short term for the Industry, the fall in prices of modules across the board has helped the industry accelerate towards grid parity and therefore create greater opportunities for your company. Entertainment The film entertainment sector is estimated to have grown at a CAGR of 17.7 per cent in the past three years, to a report by KPMG and FICCI. The industry has clocked revenues of around Rs 109.3 billion in 2008, a growth of 13.4 per cent over 2007. Over the next five years, the industry is projected to grow at a CAGR of 9.1 per cent and reach Rs 168.6 billion by 2013. Growth drivers for the sector will include expansion of multiplex screens, resulting in better realizations; increase in the number of digital screens, facilitating wider film prints releases; enhanced penetration of home video segment, primarily in the sell through segment; increase in the number of TV channels fueling the demand for film content, and hence, resulting in higher C&S acquisition costs and improving collections from the overseas markets. Going forward, the report says, the sector should focus on improving consumer connect by investing in new formats and content, with more widespread distribution of home video - for instance, at grocery stores, to facilitate easy access; coordinated and proactive action to tackle piracy; promotion of and experimentation with new talent; and improvements in organisational ability to attract and retain talent. Moser Baer's Entertainment business Moser Baer's unique business model of high quality and large-variety content, priced reasonably for Indian consumer, has been highly successful. With the acquisition of rights to more than 10,000 titles and by offering video content in every popular language in India, it is already India's largest home entertainment Company. With the rise in disposable incomes, increased affordability of DVD players the market for home video is expected to show exponential growth. Moser Baer is releasing video content in the DVD, VCD and Super DVD (DVD with multiple films) formats using Moser Baer's proprietary and patented technology that ensures the highest quality standards while providing affordable prices.

highest quality standards while providing affordable prices. After establishing ourselves as leaders in catalogue

After establishing ourselves as leaders in catalogue content, we actively participated in acquisition of new films from reputed banners across all popular languages. In December, Moser Baer acquired the home video business of UTV Motion Pictures in an exclusive home video licensing deal. This gave Moser Baer all domestic home video rights, including rental rights, to 25 UTV films, including films like Fashion, Delhi6, DevD, A Wednesday, etc. and a slew of under-production films like Kaminey, Main aur Mrs. Khanna, Yahoo! and others.

like Kaminey, Main aur Mrs. Khanna, Yahoo! and others. Moser Baer's objective is to provide Indian

Moser Baer's objective is to provide Indian consumers new and premium content at regular intervals at delightful prices. The company wants people in India to watch original and quality films, not pirated products of abysmal quality.

In fact, Moser Baer is leading an effort to bring together the industry to form an 'Anti-Piracy Organization' which would focus on pan India, multi jurisdiction anti-piracy oriented activities in close cooperation with the legal machinery with the aim to curb the growth of piracy. To further delight the customer and make inroads into the piracy market we have launched 'Super DVD' (DVD with multiple films) and thereby brought down the cost of owning a title to a value point affordable by the masses. We have also successfully produced and released a Hindi

film

Seethai, Poo

both

Raman Thediya

Shaurya

and three regional films

and

Abhiyum Nanum

so

far.

In

languages we have established ourselves as quality film

makers with

Poo

is also getting screened

getting critical acclaim and

Shaurya

and

Poo

winning several awards;

Poo

in various international film festivals.

We also distributed three films Maan Gaye Mughal-e-

Azam, Righteous Kill

across theatres in India. Outlook The Indian film industry is projected to grow by 9.1% CAGR over the next five years, reaching a size of Rs 168.6 billion in 2013 from Rs 109.9 billion in 2008. The content prices for new films is also showing signs of falling to viable levels and Moser Baer will carefully evaluate and acquire content at the right price levels. The home video market is expected to double from Rs 8.63 billion in 2008 to Rs 16.06 billion in 2013, thereby showing a growth of 13.2% CAGR. With the advent of home video players at low prices, the player penetration have now grown to 45 million households out of the total 123 million TV households. It is estimated that home video penetration would double in the next five years translating into an average addition of 0.75 million per month. Piracy is the common enemy the industry needs to defeat. With the entry of DVD players in the country, the pirates have stepped up their activities and Moser Baer is leading concerted industry efforts to curb piracy and is in

The Ten Commandments

and

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The Indian entertainment industry is poised to grow more than 9% CAGR.

One of Moser Baer’s exclusive home entertainment stores

the forefront to form an anti-piracy organization. We expect our initiative will help the industry fight the menace. Consumer Products Moser Baer is now making waves in the highly visible consumer products space. Whether it is advertisements on television or swanky stores in Delhi, the Consumer Products business is getting noticed.

From LCD TVs and digital photo frames to USB drives and home video DVDs–these stores showcase Moser Baer's range of products. There's a buzz that's building up about these stores with the media making inquiries and the Moser Baer brand getting visibility in popular shopping areas. From being the world leader in optical media, Moser Baer has diversified into other business areas and consumer products is the newest of its forays.

The consumer electronics market being one of the largest segments in electronics industry in India, Moser Baer has crafted products keeping in mind the needs of discerning Indian consumers. We believe aesthetics and technology both will determine customer choice in consumer electronic products. This year we launched a whole range of products including:

• Ultra advanced LCD TVs

• Digital Photo Frames

• Media Players

• DVD Players with Home Theatre

• Multimedia Speakers

• MP3 Players

• Colour TVs

• Multimedia Speakers • MP3 Players • Colour TVs Moser Baer's ultra advanced LCD TVs have

Moser Baer's ultra advanced LCD TVs have been creating quite a market buzz. They have a unique panel that performs perfectly in all lighting conditions. The ultra dynamic LCD TVs also have a high dynamic contrast ratio which captures the subtle drama in images with greater detail. With eight models, ranging from 19'' to 42'', consumers have a wide range to choose from. The LCD TV's come with High Definition ready format for an amazingly clear picture, with two models being Full High Definition.

clear picture, with two models being Full High Definition. Among other exciting products is the portable

Among other exciting products is the portable DVD player which has a swivel screen and supports all the formats, a must have for movie buffs and music lovers on the go. Digital photo frames from Moser Baer are a new expression of cutting-edge technology in India. One can see photographs, in both horizontal and vertical formats and the entertainment quotient is not restricted to just photos but one can also choose favourite music setting as background to the video. The Media Players are the highlight of the entire Moser Baer product range. The three models iVO 510i, iVO 511i, and iVO 515i come in

2GB and 4GB and have an excellent sound quality. In terms of looks they are stylishly sleek and come in two classic colours white and black. IT Products

Consumer electronics apart, Moser Baer is scaling new heights in the PC peripherals space with its wide range of products. Moser Baer's IT peripherals' product range includes

• TFT monitors

• USB drives

• Memory cards

• DVD writers

• PC peripherals

• External hard drives

• TV tuner cards

• UPS.

With the objective of providing consumers value for money and reliable products, company has launched TFT monitors, adding yet another sleek and stylish product in its portfolio. This product is crafted in a manner that it occupies less table space and lesser power. It has a 15" wide display with high resolution and fast response time of 6ms, weighing only 4 kilograms. The elegance of the Moser Baer TFT Monitor is not just limited to its sleek design but also its vibrant colours and superior clarity. It also has inbuilt speakers for good sound quality and offers users a perfect balance between performance and price. In storage devices like memory cards, USB drives, SD Cards, and external hard drives, consumers have a wide range to choose from. Moser Baer's UPS has been designed to protect personal computers and peripherals from possible power hazards. Its compact size makes itself very suitable for offices and home studios with limited space. The optical disc drives have fast access time and high data transfer rate. In the headphone category there are about 14 models that look trendy and deliver good sound quality. All Moser Baer products are technically sound and have great features to suit consumer's needs. The company also has a robust service network to help consumers. Outlook According to the data compiled by the Consumer Electronics Association (CEA) and the GFK Group, LCD televisions, notebook PCs and Smartphones are anticipated to make up the major share of the global consumer electronics market in 2009, but the growth in overall market will remain flat. The CEA and GFK Group have projected the revenue earned by the global consumer electronics market at $724 billion for 2009 against $694 billion in 2008. Mobile devices account for the highest share of CE market and are likely to sell more than 1.2 billion units this year. As more and more North American mobile users are replacing their old handsets with smartphones, the segment may grow by around 31% in 2009, but the growth in global TV market is

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anticipated to tumble from 10.5% in 2008 to 2.6% in 2009. The relatively strong 2008 for the CE industry will make way for a slower 2009. Televisions represent the second highest consumer goods category both in terms of revenue and units sold. LCD televisions outnumbered plasma sets during 2008 in unit sales as well as revenue, but the sales trend is likely to change as revenue growth will turn negative while unit sales will see an upward movement. OPPORTUNITIES AND THREATS Optical Storage Media Opportunities

1. A first-to-market and unique IP position in the next generation Blu-ray based formats provides a significant competitive edge and growth opportunity as demand for these formats grows exponentially over the next two or three years. With a first mover

over the next two or three years. With a first mover advantage in this segment, the

advantage in this segment, the Company is likely to earn high margins on High Definition formats during the initial stages.

2. The Company has emerged as one of the largest players in the DVDR/RW formats in the world and continues to strengthen its position in the global market which is growing at a healthy clip of over 20% p.a.

3. Domestic market: India is one of the fastest growing markets for Optical Media. The Company has a strong Brand and presence in the channel and is well positioned to dominate this key market.

Threats

1. Alternative technologies: Given Moser Baer's presence in high technology businesses, managing technology evolution and being at the forefront of

the technology curve assumes prime importance. Threats of technology obsolescence exist at all times in the optical media space. However, over the years, the Company has evolved from a being a technology innovator to becoming a developer and creator of technology to emerge as a technology driven Company, thereby mitigating this threat.

2. Prices of key inputs: Polycarbonate for optical media is a critical key raw material, and is influenced by a variety of factors, including crude prices, demand- supply balance, etc. Any sharp increase in prices or demand supply imbalances could adversely impact business. The Company works on strategic sourcing relationships and has long term agreements with key vendors for critical raw materials. This should ease the impact of any pricing volatility and improve production planning.

3. Anti-dumping and anti-subsidy / government policies: The Company derives a significant part of its revenues from international markets. These have seen a growing protectionist attitude and a tendency by some local governments to use antidumping and trade protection tools to provide protection to local businesses. However, the Company continues to keep a close watch on this front and take necessary steps to minimize any fallout.

4. Fall in product prices: As products move into the

mature phase in their life-cycle, they start to emulate commodity type characteristics. Also, optical media industry has relatively high capital intensity; hence a sharp fall in prices could severely impact overall returns. The Company has been consistently improving its asset turnover by installing more efficient lines, improving product mix towards higher value added products, etc. The leadership position in high value next generation formats and resulting ability to leverage the higher profitability early in the product cycle should further improve these returns. Fungibility of equipment will reduce capital intensity while increasing sales of new formats. PV Business Opportunities and Threats–Industry Risks In the short term, Government subsidies play a significant role in the development and promotion of solar power across the globe. The subsidies have to be promoted and encouraged for the next 4-6 years, until solar achieves grid parity and becomes cost competitive. Interest rates also play a key role to ensure good return for investors, thereby promoting its growth. Moser Baer has been championing the development of solar energy in India through several means. The recently announced feed-in- tariff scheme, which was a cumulative effort of several groups and organizations, has created on investor friendly regime and will result in a significant creation of solar power capacity. Renewed efforts by the government to develop grid connected solar farms and promote minimum renewable energy purchase by state grids will add further momentum to development of the solar market in India.

Moser Baer offers differentiated and customised PV solutions.

The cell line for crystalline silicon

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Opportunities:

• Increasing adoption of subsidy programme around the world

• Indian market

• Multi technology platform to offer differentiated / customised solutions to customers

• Largest thin film substrate in thin films - offers roadmap to grid parity Threats:

• Technology obsolescence

• High manufacturing costs

• Dependence of government subsidies

• Increasing competition and overcapacities Entertainment & Media Industry Opportunities:

The new emerging revenue streams like animation, gaming, merchandise, etc are creating new business opportunities for E&M Industry. Next-generation technologies will reinvigorate maturing segments and drive E&M growth. Digital television and IPTV are replacing analog, thus expanding the potential market for advertisers and subscribers. Digital distribution of content in terms of digital music and digital cinema holds huge opportunities for growth in the entertainment industry, making content available in even smaller towns where it cannot currently reach in its physical form. Digital platforms are also facilitating rollouts of PPV and Video on-demand services, thereby fueling overall growth. Additionally, DVDs have revitalized home video, with rapid growth in the sell through market. Also, there are enormous opportunities for the Indian E&M industry in the overseas market. Threats:

• The major threat in E&M Industry is rising content price and piracy.

• Increase in content prices could put margins under pressure; however the company with its uinque business model and already dominant position in the home video market is well placed to leverage content at appropriate prices.

HUMAN RESOURCE / INDUSTRIAL RELATIONS This year has been challenging for the industry for a variety of national and international reasons; and we at Moser Baer have proactively attempted to meet these challenges through our human capital. Through our competitive employee-base, we have steadied our position in all our businesses. We have also evolved our HR policies/ systems so that they are able to meet the business requirements in an efficient and effective manner.

We have maintained focus on Employee Engagement in our organization and various interventions have been implemented to enhance employee-engagement across levels. Amongst the various initiatives, one of them is through continuous focus on our Reward & Recognition (R&R) schemes - that has facilitated employee-

appreciation and employee-motivation in all locations. We have also launched new schemes (like TIPS Value award) to further appreciate positive behaviours on Moser Baer's values – consisting of Teamwork, Integrity, Passion and Speed.

Similar to last year, there has been a comprehensive approach towards training & development. The training interventions have become an integral part of Moser Baer's work culture, and we have delivered more than 12,500 training man-days (including Training on Behavioural/ Leadership skills, Competencies, Technical training, etc.). We have also implemented special Management Development Programmes (MDPs) for our identified Key Resources - in order to enable them to transition from managers to leaders. For our senior colleagues, we have launched Multi-Stakeholder 360 Feedback again this year – this enables us to identify organization and individual strengths/ development areas in a comprehensive manner. This is followed by Individual Development Plans (IDPs) and Leadership Workshops based on broad organization- themes.

Many such illustrative interventions, clubbed with managerial ownership have helped us to improve our employee engagement scores – we are proud to share that we have seen a substantial jump of over 30% in the overall satisfaction levels captured during the Gallup Employee Engagement survey. Improvement trends have been observed over the last three consecutive years!

We are also proud to share that the Industrial Relations have been cordial in all our manufacturing units, and we continue to provide a joy of association to our associates at plants. With various proactive communication and involvement forums, employees are included in the decision-making process for aspects related to Cafeteria, Transport, Sports, Housekeeping, Telecommunications, etc. This ensures that we have a two-way communication with our employees in a periodic manner. We also go out- of-the-way to help our employees in times of personal crisis - ensuring that our Moser Baer family is always there to take care of our employees.

With Balance Scorecard now been implemented in all our businesses, we have achieved synergy of individual KRAs with the corresponding Business goals for our managerial employees. Our PMS cycle helps to award employees as per the relative performances in line with the overall business performance. This facilitates in building a performance-oriented culture across our organization.

As we continue to strive forward into different businesses, our employee strength has also increased over the last year. During the year 2008-09, the company added 421 employees, taking the total strength to 6559 - up from 6138 at the end of the previous financial year.

RISKS & CONCERNS

Running a business in any environment has risks that are as varied as they are copious. Stringent and effective risk management throughout the organization is imperative to succeed in the fierce business environment. An effective risk management framework drives continued competitive sustainability of an organization, as it enables alignment of operations and activities of the organization to its vision and values.

At Moser Baer the vision is to establish and maintain enterprise-wide risk management capabilities for active monitoring and mitigating the risks on continuous basis.

monitoring and mitigating the risks on continuous basis. BUSINESS RISK MANAGEMENT Your company has a comprehensive

BUSINESS RISK MANAGEMENT

Your company has a comprehensive risk management policy . The risk management inter alia provides for review of the risk assessment and mitigation procedure, laying down procedures to inform the Board in the matter and for periodical review of procedures to ensure that executive management controls the risks through a properly defined framework.

During the year, the audit committee and Board reviewed the adequacy of the risk management framework of the Company, the risk associated with the businesses of the company and the measures and steps in place to mitigate the same.

Some of the key risks affecting your company are illustrated below:

Technology Risk

Moser Baer is a global leader in the development, manufacture and supply of technology products across the globe and is fast transforming into a multi-business

technology group. All three businesses–optical media, photovoltaic and content distribution–have an inherent risk quotient, a primary one being technology obsolescence. Over the years the company has evolved from being a technology innovator to becoming a developer and has emerged as a technology driven company thereby mitigating this risk.

Mitigation of Technology Risk

The Company as a prudent and forward-looking organization, has invested substantially in R&D and engineering to address and mitigate risks:

• Strong

in-house

R&D

capabilities

enable

the

Company to rapidly commercialize new products

• Longstanding

strategic

partnerships

with

key

technology providers, allows the Company to access new technologies

• Cooperative links with all major hardware suppliers facilitate drive/media compatibility

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Value creation at Moser Baer through effective risk management.

At the optical storage media shopfloor

• Technology collaborations and tech sourcing arrangements with global technology companies in emerging areas

• Acquisition of pioneering companies in optical media R&D (ie OM&T) or partnering with leading technology companies and IP owners to stay ahead in building the appropriate development and manufacturing capabilities. OM&T's capabilities played a role in making Moser Baer the first company outside Japan to develop and ship BDR 1X-6X media.

OTHER RISKS AND ITS MITIGATION INITIATIVES

a) Customer Attrition Risk

Being dependent on few large customers could

Attrition Risk Being dependent on few large customers could Cell line for crystalline silicon impact revenues

Cell line for crystalline silicon

impact revenues in case of attrition of the customer.

The Company is making efforts to introduce new customers base to maintain revenue growth with its combined value proposition of high quality standards, competitive prices, and excellent services. It has always maintained a strategic relationship cutting across business, technology and other forms of partners with all key OEMs. The company is constantly pursuing business opportunities with leading retail private label players in partnership with importers. Further the company is increasing its base among non OEM customers as well as in the domestic market.

b) Geographic Risk

Being concentrated only in a particular geography

could have adverse effects in case of some of the regions not delivering as per expectations.

The company enjoys healthy presence among global technology OEMs, which sell products in different continents across the globe. However, we are further diversifying in different geographies to focus on emerging and new markets.

c)

Human Resources Risk

The company's ability to deliver value depends on its ability to attract, motivate, empower and retain the best professional talents . These abilities have to be developed across Company's rapidly expanding operations. There is significant competition from emerging sectors, which poses inherent risks associated with the ability to hire and retain skilled and experienced professionals.

Your company continuously benchmarks HR policies and practices with the best in industry and carries out necessary improvements to attract and retain best talent and build intellectual capital.

e)

Foreign Exchange Risk

Your company’s policy is to hedge its long term foreign exchange risk as well as short term exposures within the defined parameters . Forward sold positions are built up against net dollar inflows based on continuous monitoring of forex cash flow supported by top forex counter parties.

f)

Failure to enter into Long Term Contract for Critical Raw Materials and consumables:

Your company is exposed to the risk of price fluctuation and supply for key raw materials. The Company has entered judiciously into long term contracts for procurement of critical raw material and consumables.

g)

Cash Flow Risk

Your Company operates in a high growth and capital intensive industry. Hence, it is imperative to efficiently estimate and manage cash flows in this volatile environment. The Company's working capital arrangements are well in place to guard against any uneven or unforeseen factors. Our business is significantly cash accretive, driven by higher asset turnover and continued improvement in working capital cycles.

h)

Security/Disaster Risk

The terrorist attacks in Mumbai during Nov. 2008 highlighted the need for companies to adopt

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systems and processes to safeguard its assets and people as well as to ensure business continuity. To mitigate these risks, the Company has a comprehensive security plan in place, which is preventive in nature and aims to protecting its facilities from such risks. Additionally the company has a detailed IT disaster recovery plan across all its facilities. The Company has mapped out all the related risks on these accounts and put in place sufficient risk mitigations and control mechanisms which are regularly updated and monitored.

i) Regulatory Risk

The industry is subject to various regulatory compliances under various laws of the country. To mitigate this risk, the company has established a

and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

The company has robust and independent internal audit system covering on a continuous basis, the entire gamut of operations and services spanning all locations, businesses and functions. Two reputed firms of Chartered Accountants are appointed as Internal Auditors to carry out internal audit across all major locations as well covering all key business processes. Internal audit reports to the audit committee of the Board of Directors regularly cover adequacy of controls, recommendations for improvement and action plans as well as the progress of implementation of recommendations contained in those reports.

of recommendations contained in those reports. Packaging unit for blank optical media compliance mechanism

Packaging unit for blank optical media

compliance mechanism to ensure 100% regulatory and legal compliances.

Internal Control Systems and their Adequacy:

The company has a strong, independent and adequate system of internal control procedures commensurate with the size and nature of its business to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported correctly. An extensive programme of internal audits, reviews by management and documented policies, guidelines and procedures, supplements the internal control systems. The internal control systems are designed to ensure that the financial

OPERATING PERFORMANCE REVIEW

(in INR million)

Particulars

FY 09

FY 08

Income from Sales/service (net of taxes/duties)

21,811.0

18,997.9

Other Income

1,438.1

1,219.1

Increase in stock of Finished Goods/Work in Progress

195.5

1,025.0

Total Income

23,444.6

21,242.0

Total Expenditure

18,914.3

15,902.2

Exceptional Items

910.3

-

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

5,440.6

5,339.8

Interest & Finance Charges

2,053.2

1,793.6

Depreciation/Amortization

4,971.4

4,315.9

Profit /(Loss) before Tax

(1,584.0)

(769.6)

Tax Expense:

   

Current Tax

(0.04)

(1.6)

Deferred Tax

(91.6)

2.9

Fringe Benefit Tax

16.3

18.1

Net Profit/(Loss) after Tax

(1,508.7)

(789.1)

Add:- Profit carried forward from last year

260.1

1,246.3

Profit available for appropriation

(1,248.6)

457.2

Cash from Operations

4,684.0

3,077.0

FINANCIAL ANALYSIS Overview The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, and Accounting Standards in India. Our management accepts responsibility for the integrity and the objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect, in a true and fair manner, the form and substance of transactions and reasonably present our state of affairs and loss for the year. Revenue Analysis The gross revenues in fiscal year 2008-09 increased by 12.6% over the previous year to INR 22,045 million, while declining margins resulted in loss after tax of Rs.1,508.7 million. The Company EBITDA (including other income and after exceptional items) increase by 1.9% to INR 5,440.6 million from INR 5,339.8 million in FY 08. Despite the current industry conditions , the Company was able to

hold its operating margin through production efficiencies, control on working capital and also helped by depreciation of rupee viz a viz dollar. Fully diluted earnings per share for FY 2008-09 were INR (8.96) against INR (4.70) in FY 08. The Company continues to generate INR 4684 million cash flow from operations in FY 2008-09. Capital Structure There is no major change in the capital structure of the Company and the paid up equity capital remained at INR 1,683.1 million as on 31st March 2009. Reserves The Company's reserves stood at INR 15,150.2 million in FY 09 against INR 18,013.2 million in FY 08. As on 31st March 2009, securities premium account comprised 55% of the total reserves. There are no re-valuation reserves as on 31st March 2009. Loans Over the years the Company has part funded its ongoing expansions and investment programs through loans raised aggressively at lower costs. The company has also

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Manufacturing excellence

at Moser Baer

operating margins.

driving

The cell line for crystalline silicon technology

tried to build a prudent basket of currency to borrowings hedge against currency risks and minimize cost. Currency wise total debt outstanding is as follows :- Table on Currency-wise total debt outstanding

in millions

Currency

Amount in

Amount in

% of Total Debt

Currency

Indian Rupees

USD

135.9

6,894.4

29

Euro

9.3

624.1

3

INR

15,905.6

15,905.6

68

During the year the company made a net repayment of debt of INR 2,749.2 million. The company’s net total debt on equity ratio declined during the year from 1.3 to a healthy 1.4 with interest service cover ratio of 2.7. Financial objectives, initiatives and achievements Your Company is taking proactive measures to ensure all financial costs are effectively reduced to positively impact the bottom-line. The Company continued to focus on efficient working capital management to release cash into the system, generating INR 4,684 million of cash from operations as against INR 3,077 million in the previous year. Foreign Exchange has been particularly volatile in the year, and the ongoing foreign exchange risk management policy has been further strengthened to assure that there is no adverse impact of volatile exchange rates beyond agreed-upon tolerance levels. Further the Company implemented the statutory option of Accounting Standard 11, issued by the Ministry of Corporate affairs vide notification dated March 2009, whereby the Company has been able to insulate its Income statement from interim foreign exchange volatility and at the same time ensure that its balance sheet position is protected. Interest The company has maintained its effective interest cost as percentage of the average debt at 8.3 per cent in a year of hardening interest rates. The outflow on account of interest and finance charges increased to INR 2.053.2 million in FY'09 from INR 1,793.6 million in FY 08. Capital expenditure Gross block of the Company increased by INR 2,487.0 million during FY 09 to reach INR 47.6 billion. Majority of this increment in assets was towards creation of capacities for next generation formats and new businesses of the Company. Going forward, the incremental Capital expenditure will be on creating additional capacities, as company has developed capabilities to create new generation formats by effective conversion of existing capacities. Incremental capital expenditure prudent mix of internal accrual and debt. Depreciation Depreciation increased by 15.2% in FY 09 (from INR 4,315.9 million to INR 4,971.4 million) on account of

increase in gross fixed assets and amortization of foreign exchange fluctuation. Due to the flexible nature of the asset base and the relatively long life-cycle of products in the industry, we believe that the risk of the asset base becoming obsolete is low. Working capital management The overall net working capital was 26.7% of gross revenues in FY 09 reduced from 32.7% in FY 08, through a reduction in overall operating cycle. This was achieved by better credit risk controls and inventory management. The inventory holding was reduced by more than ten days and debtors outstanding maintained at same level as last year, inspite of the tough credit environment. The accounts payable was better by more than 15 days, as compared to the previous year. The more than six months debt was significantly reduced from 4.2 per cent in FY07 and 3.8 per cent in FY 08 to 2 per cent. Loans and advances In FY 09 the loans and advances increased to INR 3,837.7 million against INR 2,415.7 million in FY 08, mainly due to lease receivables from its subsidiaries. Capital employed The capital employed stood at INR 40,258 million, a decrease by 12.4% over FY08 level. The decrease in capital employed is mainly on account of reduction in working capital and mark to market of the Investments. Management of surplus funds Short term surpluses were invested mainly in bank deposits or low risk financial instruments that optimized return and protected the invested principal. Significant accounting policies

1. Revenue recognition Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customer and when no significant uncertainty exists regarding realization of the consideration. Sales are recorded net of sales returns, rebates and trade discounts and price differences and are inclusive of duties. Theatrical revenues from films are recognised as and when the films are exhibited. Revenue from other rights such as satellite rights, music rights, overseas assignment rights etc. is recognised on the date when the rights are available for exploitation. Service income of SEZ Division is recognised as and when services are rendered. Interest is accounted for based on a time proportion basis taking into account the amount invested and the rate of interest. Dividend is recognised as and when the right of the company to receive payment is established.

2. Inventory valuation Finished goods, work in progress, goods held for resale, raw material and stores & spares are valued at lower of cost or net realizable value. Cost of raw material, other than for exports, is accounted upon completion of manufacture. Inventories of under production films and films completed and not

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released are valued at cost. The cost of released films is amortized using the individual film forecast method. The said amortization pertaining to theatrical rights, satellite rights, music materials, goods held for resale, packing materials and stores and spares, is determined on the basis of the weighted average method. Cost of work in progress and finished goods is determined by considering direct material, labor costs and appropriate portion of overheads. Liability for excise duty in respect of goods manufactured by the company, other than for exports, is accounted upon completion of manufacture. Inventories of under production films and films completed and not released are valued at cost. The cost of released films is amortized using the individual film forecast method. The said amortization pertaining to theatrical rights, satellite rights, music rights, home video rights and others is based on management estimates of revenues from each of these rights. The inventory, thus, comprises

from each of these rights. The inventory, thus, comprises of unamortized cost of such movie rights.

of unamortized cost of such movie rights. These estimates are reviewed periodically and losses, if any, based on revised estimates are provided in full. At the end of each accounting period, such unamortized cost is compared with net expected revenue. In case of net expected revenue being lower than actual unamortized costs, inventories are written down to net expected revenue. The purchase cost of the rights acquired in released films is apportioned between satellite rights and other rights (excluding home video rights) based on management's estimates of revenue potential.

3. Fixed assets Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes all expenses, and indirect, specifically attributable to its acquisition and bringing it to its working condition for its intended use. Expenditure pending allocation are

allocated to productive fixed assets in the year of commencement of the related project. Intangible assets are stated at cost less accumulated amortization. The cost incurred to acquire "right to use and exploit" home video titles, are capitalized as copyrights/ marketing and distribution rights where the right allows the company to obtain a future economic benefit from such titles. Impairment, if any, in the carrying value of fixed assets is assessed at the end of each financial year in accordance with the accounting policy on "Impairment of Assets".

4. Depreciation and amortization Depreciation on tangible fixed assets is provided under the straight-line method on a pro-rata basis and in the manner specified in Schedule XIV to the Companies Act, 1956. In respect of assets whose useful life has been revised, unamortized depreciable amount is charged over the revised remaining useful life. In case the historical cost of an asset undergoes a change due to an increase or decrease in related long term liability on account of foreign exchange fluctuations, the depreciation on the revised unamortized depreciable amount is provided prospectively over the residual useful life of the asset effective from 1st April 2007. Intangible assets other than copyrights/marketing and distribution rights are amortized on an equated basis over their estimated economic life not exceeding 10 years. Copyrights/marketing and distribution rights are amortized from the date they are available for use, at the higher of the amount calculated on a straight line basis over the period the intangible asset is available, not exceeding 10 years, and the number of units sold during the period basis. Leasehold land and improvement to the leased premises are amortized over the period of the lease. The assets taken on finance lease are depreciated over the lease period.

5. Taxation

a) Current Provision is made for current income tax liability based on the applicable provisions of the Income Tax Act, 1961, for the income chargeable under the said Act and as per the applicable overseas laws relating to the foreign branch.

b) Deferred Deferred tax assets (DTA) and liabilities are computed on the timing differences at the balance sheet date between the carrying amount of assets and liabilities and their respective tax bases. DTA is recognised based on management estimates of reasonable/ virtual certainty that sufficient future taxable income will be available against which such DTA can be realised. The deferred tax charge or credit is recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

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corporate social responsibility 5 0 / 5 1
corporate social responsibility 5 0 / 5 1

At Moser Baer, we believe that Corporate Social Responsibility (CSR) is the way to conduct business that achieves an integration of economic, environmental and social imperatives while at the same time addressing stakeholder expectations. Under its CSR policy, the company affirms its commitment to seamless integration of marketplace, environment and community concerns with business operations. We keep environmental, social and ethical issues in focus while determining our business and growth strategy.

in focus while determining our business and growth strategy. Being a large high-technology manufacturing company places

Being a large high-technology manufacturing company places onerous responsibilities on us. 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 the hazards and risks. Moser Baer realizes that business has to be not only profitable but also sustainable in the long run which is achieved by a dedicated cross-functional team of SustainAblers.

Moser Baer uses CSR as an integral business process in order to support sustainable development and constantly endeavors to be a good corporate citizen and enhance its performance on the triple bottom line. Moser Baer Trust–a dedicated vehicle has been set up for this purpose focusing on the issues of:

Livelihood & Vocational Training

DISHA

DISHA, our flagship livelihood generation programme has proved to be a grand success with 85 per cent

placement record from 110 villages of NOIDA and Greater NOIDA in its first phase. These youth have been employed at an enhanced salary and some have been awarded as best employees in their respective companies. MBT is currently implementing Phase II of Disha – Ek Mauka beginning March 2009.

E-Shiksha

E-Shiksha, partnered with Microsoft is yet another of our initiatives which educates underprivileged children and school teachers on the basics of computer usage in a unique public private partnership with the local villagers and the government. Moser Baer has set up a computer lab at Shaheed Bhagat Singh School at Surajpur, which is adjacent to our Greater NOIDA plant. This centre has received an overwhelming response with over 100 school students already enrolling for this initiative. Till now, 92 candidates have successfully completed the course.

Vocational Training

Moser Baer Trust has partnered with Noida based Jan Shikshan Sansthan, Ministry of Human Resource

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Moser Baer believes in sustainable development and corporate social responsibility.

Valedictory ceremony of our flagship programme–DISHA

Development to set up this educational cum vocational training centre which has dual aims, i.e. imparting education and at the same time providing some vocational skills such as sewing and stitching, mehndi, beauty culture etc to these girls to make them economically independent.

SHGs of Women

Moser Baer is committed towards women empowerment apart from literacy and vocational training. We have facilitated formation of SHGs which are now being linked up with various Government Schemes and also with garment export houses to generate business for these groups.

targeted boys and girls from villages and interactive sessions were conducted on self awareness, interpersonal communication, stress management, and dealing with emotions etc. Of these some have been selected to work as “Agents of Change” for development of their village with support from the Moser Baer Trust team.

Winning is an Attitude

Moser Baer Trust participated in the NGO Sports Day which was held on 7th February 2009.There was active participation from 20 NGO teams comprising children from under-privileged background. Our Kakrala village children fared extremely well in all the events winning 11 Prizes of which five were for securing the first position.

Prizes of which five were for securing the first position. Women empowerment programme Education and Youth

Women empowerment programme

Education and Youth Development

Project Taleem – Empowering the Youth

On June 9, 2008, MBT proactively stepped into establishing a Taleem centre in Kakrala to cater to the educational needs of the community especially women and girls. Since its inception there has been a steady increase in the enrollment of the girls.

Nayee Roshni – Catalysing Change Nayee Roshni is aimed towards providing life skills training to the adolescents in the village, so as to provide them relevant knowledge and skill-set to lead their lives in a self-fulfilling manner. This year, this initiative has

MBT

Change

is proud

to

be

a

Development …

facilitator in this process of

and

finally Empowerment.

Health

Swasthyautthan

The project aims at improving the health indicators of the neighboring communities through various activities that are carried out under this project. A significant improvement in health-care indicators has been noticed in the area of reproductive health as we have been able to provide quality health care services at their doorsteps. Another positive impact has been noticed in containing

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Education and youth development is the core focus of our CSR activities.

Project Taleem

Seamless integration of business operations and community concerns.

Ambassadors for change

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the prevalence of skin diseases that was endemic in neighboring villages.

Key features

that was endemic in neighboring villages. Key features • Daily Free Medical Services in surrounding villages

• Daily Free Medical Services in surrounding villages of Kakrala, Tilapta, Kasna, Surajpur and Nagla. On an average, 60 patients are attended to per day.

• Free health services for unorganised labour and their family members.

of

• Referral

to

speciality

hospitals

and

costs

treatment taken up by the Moser Baer Trust.

• Community

participation

as

villagers

have

themselves provided space and infrastructure.

• Strong linkage with District Health Services, synergy with Government PHCs.

with District Health Services, synergy with Government PHCs. CSR Reporting Moser Baer realizes that business has

CSR Reporting

Moser Baer realizes that business has to be not only profitable but also sustainable in the long run. Towards this end a cross-functional team of SustainAblers was trained for integrating sustainability issues in business operations. The team would work on matching the company’s value drivers with stakeholder expectations and allow us to not just meet but exceed the stakeholder expectations. The company has also published its first Corporate Responsibility based on GRI Guidelines.

In the year 2008, Moser Baer also joined Global Compact to reaffirm its commitment to Human Rights, Labour Rights, Environment and Anti-Corruption measures, and has committed to integrate its principles in organizational culture and strategy.

Strategic Co-branding

Realize Your Dreams

Moser Baer Trust has joined hands with Chronic Care Foundation (CCF) to promote good health and proactively minimize the incidence and effects of non-communicable chronic diseases through an educative animation cartoon film.

UDAAN - Making Books Talk

Moser Baer has contributed about 70,000 Udaan CDs to DAISY Forum of India to reach out to thousands of visually challenged students across India through 67 organisations led by National Association of the Blind.

Environment, Health and Safety

Moser Baer is an ISO 14001:2004, OHSAS 18001:2007 and SA- 8000 company, and is fully committed to develop and operate a safe, healthy and clean environment to protect vital human resources, plant, machinery and the environment from the hazards and risk. The company, under its EHS Policy, ensures safe work practices towards achieving "Zero Incident and prevention from ill health".

In an endeavor to continually improve the processes, work practices for prevention of Pollution and resources conservation, the company saved 2 2 5 1 3 M w h o f energy during 2008-09 which reduced 9680.86 tons of Carbon dioxide gas generation, thus intangible impact on global warming could reduce. The company overall saved

on global warming could reduce. The company overall saved 15570 Keekar trees through in-house recycling/reusing wood

15570 Keekar trees through in-house recycling/reusing wood pallets for product packing. The company has implemented RAIN WATER HARVESTING at 16 locations ensuring water conservation. The company is aggressively involved in the substantial amount of material recycling for some of the scarce industrial products like polycarbonate, dye, silver, etc.

Moser Baer has won many recognitions and accolades in the previous year for environment management by Sony Green Partner Certification (securing 96.5%), ELCINA- DUN & Bradstreet Award 2008 and has been the recipient of the prestigious Golden Peacock Award for Eco Innovation 2008.

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Directors' Report

61

Corporate Governance Report

72

Auditors' Report

92

Balance Sheet

96

Profit and Loss Account

97

Cash Flow Statement

98

Schedules

100

Significant Accounting Policies and Notes on Accounts

109

Balance Sheet Abstract and Company's General Business Profile

131

Auditors' Report on Consolidated Financials

132

Consolidated Financials

133

Statement Relating to Subsidiary Companies

169

Information Pertaining to Subsidiary Companies U/S 212 (8)

171

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DIRECTORS' REPORT

Dear Shareholder,

Your Directors take pleasure in presenting their 26

together with the Audited Accounts for the financial year ended 31 March, 2009.

th

Annual Report on the business and operations of the Company

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Financial Results

60/61

 

(Rupees in Million)

Particulars

Year ended March 31, 2009

Year ended March 31, 2008

Gross Sales, Service Income and Other Income

23,924.4

20,873.1

Profit Before Depreciation, Interest, Exceptional Items and Tax but after Prior Period Items

4,530.3

5,339.8

Depreciation / Amortisation

4,971.4

4,315.9

Interest and Finance Charges

2,053.2

1,793.6

Profit before Exceptional Items and Tax

-2,494.3

-769.6

Exceptional Gain

910.3

-

Profit Before Tax

-1,584.0

-769.6

Tax Expenses

-75.3

19.5

Profit after Tax

-1,508.7

-789.1

Profit carried forward from Last Year

260.1

1,246.3

Profit available for appropriation

-1,248.6

457.2

Appropriations:

Dividend (Proposed)

101.1

168.5

Provision for Tax on Proposed Dividend

17.2

28.6

Transfer to General Reserve / Profit and Loss account

-1,366.8

260.1

Operations

Revenue for FY 09 stood at Rs. 23,924.4 million, profit before depreciation, interest, exceptional items and tax stood at Rs. 4,530.3 million and losses after tax was Rs. 1,508.7 million. Turnover was impacted during the year by the difficult economic environment, partially offset by weakening of Rupee. The Company was able to hold its operating margin through production efficiencies and control on working capital. The Company continues to generate gross cash flow and the same was Rs. 3,462.8 million in FY 09. The Company continues to focus on both extension of geographic reach in emerging growth markets as well as on development & growth of new customer accounts across major product lines globally to cement its leading position on storage media. These efforts will renew focus following the recent royalty settlement and resultant increased levels of Business certainty.

Market environment and outlook

Moser Baer's range of products makes it one of the world's largest manufacturers and technology innovators in the optical media space. Here's an Indian company that has contributed to the establishing of new global technology standards. Our products are sold in 82 countries and we have six marketing offices in India, the US, Europe and Japan. In the Indian market, Moser Baer made its foray into the domestic optical storage market with the launch of the Moser Baer label in 2003. The company has blazed a new trail by introducing technologically innovative and truly world-class products in the Indian market.

A notable development in 2008 was the emergence of Blu-Ray as the future high definition format, with Toshiba

announcing the discontinuation of HD DVD investments. Blu-Ray offers a considerable increase in storage capacity with its

25 to 50 GB data capacity. Moser Baer, the first non-Japanese company to have developed its own technology for

manufacturing Blu-Ray, stands to benefit from the exponential growth that will inevitably come in sales of advanced formats in coming years. In line with its vision of touching every life across the globe through high technology products and

services, Moser Baer plans to promote Blu-Ray media by making available all formats of Blu-Ray media, be it recordable media, or rewritable or replicated media. The company is set to leverage its R&D strengths to establish leadership position in terms of supply of Blu-Ray media for global consumption.

Blu-Ray 1x-6x discs have also been accepted by the BDA (Blu Ray Disc Association) as test discs to benchmark the performance of Blu ray 1x-6x media in various BD drives being manufactured globally. This achievement underlines the strength of Moser Baer as a technological innovator for this cutting edge Blu-Ray format. This continued impetus in the Blu-Ray format is poised to bring Moser Baer's optical media business its next wave of success.

The company manufactures the entire spectrum of optical storage media products including Recordable Compact Discs (CD-R), Rewritable Compact Discs (CD-RW), Recordable Digital Versatile Discs (DVD-R), Rewritable Digital Versatile Discs (DVD-RW) and blue laser discs (Blu-Ray).

Your Directors are pleased to inform that the Company has settled its long drawn licensing and patent dispute with Phillips. The amicable settlement paves the way for Moser Baer to maintain and strengthen its market leadership position as the worlds leading manufacturer of optical storage media products.

Photo Voltaic Business

Moser Baer as a group, through it's operating subsidiaries has positioned itself to be a significant player in the global solar photovoltaic (PV) market by leveraging its high-volume manufacturing expertise and with significant investment in research, development and manufacturing of products dedicated to generating solar power. Moser Baer believes that PV is the vital link in dealing with the energy crisis.

Moser Baer is present across the entire value chain. It manufacture cells and modules and control critical feedstock through strategic alliances. Also, it straddle multiple PV technologies, whether crystalline silicon, amorphous silicon (thin film) and concentrator technology (high and low). The business also has PV Systems as one of its business verticals under which it undertakes design, engineering, procurement and building of complete PV systems.

In addition, Moser Baer is investing in nano technologies, which are in the R&D phase. This is a futuristic technology and

because it will use very little material, it has the potential to bring down the cost of electricity generation considerably.

The solar energy sector is increasingly realising its potential as a cost-effective alternative source of power and our effort is

to

work diligently in all PV technologies and bring the solar dream to fruition to meet India's energy needs.

In

the year, Moser Baer Photovoltaic Limited has consolidated its production facilities by installing 80 MW Module line and

80 MW Cell line manufacturing capacity. Our cumulative efforts have resulted in your company achieving a growth of more

than 100% over previous year. Despite an increasingly difficult environment for Solar especially in 3 & 4 quarter of the year, as the credit market froze, we continued to execute on our strategy to make your Company, a global provider of high quality solar solutions.

While the solar industry has grown astonishingly over last decade, however, it is still in a nascent stage of growth. Market structures differ between countries primarily on account of subsidies in place, ownership of installation, nature of customer and variability of grid connection. Last year, Germany & Spain continued to dominate in Solar market and governments across the world have increasingly announced subsidies to promote renewable energy industry in general and solar, in particular.

While the financial crisis has created a challenging environment in short term for the Industry, the fall in prices of Silicon and solar modules has helped the industry to accelerate towards grid parity and therefore, create greater opportunities for your company.

Content Business

Within a few months of operations, your Company has become the largest Home Video Company in the country. We have been able to consolidate the market and now have rights to approximately 10,000 titles spread across all popular languages in India.

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After establishing ourselves as leaders in catalogue content, we actively participated in acquisition of new films from reputed banners across all popular languages.

We are also leading an effort to bring together the industry to form an 'Anti-Piracy Organization' which would focus on pan India, multi jurisdiction anti-piracy activities in close co-operation with the legal machinery with the aim of denting the growth of piracy.

During the financial year, the consolidated entertainment business registered revenues of Rs. 1,889 Mn.

The movies released this year are, a Hindi Film 'Shaurya' , 3 regional films "Raman Thediya Seethai", "Poo" and "Abhiyum Nanum" and the distributed 2 English films 'Righteous Kill' and 'Ten Commandments' in theatres across India.

Going forward, the emphasis will be on acquiring new content and consolidating our leadership position in Home Entertainment.

Subsidiary Companies

The company has received an exemption from the Ministry of Corporate Affairs, Government of India, vide order No 47/ 376/ 2009/CL-III dated15.05.2009 under Section 212(8) of the Companies Act, 1956 with regard to attaching the various documents in respect of the subsidiaries for the year 2008-09. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information upon request of any member of the Company and its subsidiaries who may be interested in obtaining the same.

The annual accounts of the subsidiary companies will also be kept for inspection by any member of the company at its Registered Office & Corporate / Head Office located at 43B, Okhla Industrial Estate, Phase III, New Delhi - 110 020.

Dividend

Your Directors are pleased to recommend payment of a dividend of 6% (Rs. 0.6 per share) for the year ended 31 March, 2009. The total cash outflow on account of Equity dividend payments, including distribution tax and surcharge, will be Rs. 118,233,581/-

Directors

Mr. Frank E. Dangeard and Mr. Viraj Sawhney, were co-opted as Additional Directors at the meeting of the Board of Directors held on 19 March, 2009 to hold the office upto the date of the ensuing Annual General Meeting in terns of the provisions of Section 260 of the Companies Act, 1956. The Company has received a notice under Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Frank E. Dangeard and Mr. Viraj Sawhney as Directors of the Company.

In terms of the provisions of Section 255 and 256 of the Companies Act, 1956, Mr. Deepak Puri, Mrs. Nita Puri, and Mr. Prakash Karnik, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Auditors

Your's Company's Statutory Auditors, Price Waterhouse, Chartered Accountants, holds office until the conclusion of ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. Your Company has received a letter from them to the effect that their re-appointment, if made, will be in accordance with the provisions of Section 224(1B) of the Companies Act, 1956.

Auditors' Report

The observations made in the Auditors' Report are self- explanatory and therefore, do not call for any further comments.

Stock Option Plan

Your Company had introduced a Stock Option Plan for its Non-Executive Directors i.e. Directors Stock Option Plan - 2005 ("DSOP-2005") and for its employees i.e Employees Stock Option Plan-2004 (ESOP-2004).

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The particulars of options issued under the said plans as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are appended as 'Annexure A' and forms part of this report.

Foreign Currency Convertible Bonds (FCCB)

Your Company has issued the Foreign Currency Convertible Bonds in Tranche A being US$ 75 million and in Tranche B being US$ 75 million with tenure of five years.

During the year under review, RBI vide its letter RBI/2008-09/317 dated 8 December, 2008 liberalized the guidelines for the buyback of the Foreign Currency Convertible Bonds and allowed the Indian Companies to complete the procedure of buy back its FCCB till 31 March, 2009, without taking approval of the RBI. RBI vide its further Notification RBI/2008-09/411 dated 13 March, 2009 extended the said time limit till 31 December, 2009. During the financial year ended 31 March,

your Company bought back US$ 26 million of face value of Bonds of Tranche A and US$ 25 million of face value of

Bonds of Tranche B.

Particulars of employees

Particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, this report is being sent to all shareholders of the Company, excluding the aforesaid information and the said particulars are made available at the Registered Office of the Company. The members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Secretarial Audit

As directed by Securities and Exchange Board of India (SEBI), secretarial audit is being carried out at the specified periodity by M/s. Deloitte Haskins and Sells, the Secretarial Auditors of the Company.

Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given as per Annexure 'B' and forms part of the this Report.

Fixed Deposits

During the year under review, your Company has not accepted any deposit under Section 58A of the Companies Act, 1956, read with Companies (Acceptance of Deposits) Rules, 1975.

Corporate Governance

It has always been the Company's endeavour to excel through better Corporate Governance and fair and transparent practices, many of which have already been in place even before they were mandated by the law of the land. The Company complies with all the provisions of clause 49 of the Listing Agreement. A separate report on Corporate Governance compliance is included as a part of the Annual Report along with the report on Management Discussion and Analysis.

The certificate from the Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is annexed to this report.

The Managing Director and Group Chief Financial Officer have certified to the Board in regard to the financial statements and other matters as required in clause 49 of the listing agreement and the said certificate is annexed to this report.

In compliance with the Corporate Governance requirements, the Company has formulated and implemented a Code of Conduct for all its Board members and for the senior management of the Company. The said Codes of Conduct have been posted on the Company's website. All board members and senior management personnel have affirmed compliance with the code of conduct for the year 2008-09. A declaration to this effect signed by the Managing Director of the company forms part of this report.

2009,

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Listing At Stock Exchanges

The Shares of the Company continue to be listed on the Bombay Stock Exchange and National Stock Exchange. The annual listing fees for the year 2009-2010 have been paid to the Stock Exchanges.

Directors' Responsibility Statement

As required under section 217(2AA) of the Companies Act, 1956, your Directors state:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2009 and its profit for the year ended on that date;

c) that we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) that we have prepared the annual accounts on a going concern basis.

st

Conclusion

Your Company has always focused on its core competencies of innovation theory, creating new values to delight the customers and the stakeholders. It has outperformed the industry in a challenging year and continues to maintain its leadership position. It has also been surpassing all international quality and cost benchmarks and continues to build shareholder's value. This, indeed, is how your Directors propose to drive the business endeavours, as we face the future with great optimism and confidence.

Directors place on record their appreciation for the overwhelming co-operation and assistance received from investors, customers, employees, business associates, bankers, vendors, as well as regulatory and government authorities.

Place : New Delhi

Date

: 30

th

July, 2009

For and on behalf of the Board of Directors

Sd/-

Deepak Puri

Chairman and Managing Director

ANNEXURE- A

INFORMATION REGARDING EMPLOYEES STOCK OPTION PLAN, 2004 (ESOP-2004) AND DIRECTORS' STOCK OPTION PLAN, 2005 (DSOP-2005) (AS ON 31 MARCH, 2009)*

ST

S.No.

Particulars

   

ESOP-2004

   

DSOP-2005

1

Number of Stock Options granted

 

5,903,300

   

700,000

2

Pricing Formula

 

(i)

Normal allocation:-Rs.125 per Option or prevailing Market Price, whichever is higher.

Rs.170 per Option or prevailing Market Price, whichever is higher.

 

(ii)

Special allocation:- 50% of the Options at Rs.125 per Option or prevailing Market Price, whichever is higher and the balance 50% of the Options at Rs. 170 per Option or prevailing Market Price, whichever is higher.

3

Number of Options vested

   

1,356,950

 

250,000

4

Number of Options exercised

   

616,125

 

75,000

5

Number of shares arising as a result of exercise of option

 

616,125

 

75,000

6

Number of options cancelled/ lapsed

 

2,324,825

 

50,000

7

Variation of terms of options

   

N.A.

 

N.A.

8

Money realized by exercise of options

 

Rs. 135,403,076

   

Rs 17,122,500

9

Number of options in force

   

2,962,350

 

575,000

10

Employee-wise details of Options granted to:

   

(a)

Senior managerial personnel; and

 

Mr. Jan Brink Mr. Vivek Chaturvedi Mr. Rajiv Kenue Mr. Deepak Shetty

-

24,000

 

N.A.

 

-

150,000

 

-

24,000

-

45,000

(b)

Any other employee who receives a

N.A.

grant in any one year of option amounting to 5% or more of option granted during that year.

 

11

Identified employees who were granted options during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrant and Conversions) of the Company at the time of grant;

 

NIL

12

Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with AS 20

 

(8.96)

 

13

Method

of

calculation

of

employee

 

The Company has used intrinsic value method for calculating the employee compensation cost with respect to the stock options.

compensation cost

 

14

Difference between the employee compensation cost so computed at serial number 13 above and the employee compensation cost that shall have been recognized if it had used the fair value of options

 

Rs. (12,463,985)

15

The impact of this difference on profits & on EPS of the Company

 

Impact on profit- Rs. (12,463,985) Impact on EPS (Basic)- (9.04) Impact on EPS (Diluted)- (9.04)

16

Weighted-average exercise prices and weighted-average fair values of options granted during the year

a.

Weighted average Exercise Price - Rs. 142.19

b.

Weighted average Exercise Price - Rs. 228.30

b.

Weighted average fair value of the options - Rs. 39.33

b.

Weighted average fair value of the options-NIL

a

n

n

u

a

l

r

e

p

o

r

t

0

8

/

0

9

a n n u a l r e p o r t 0 8 / 0

66/67

The Weighted Average of Vesting Period in respect of the Options granted to the Directors were as follows:-

 

Grants

Weighted Average of Vesting Period

1 st

Grant on 11

th

August, 2005

2.5 years

2 nd

Grant on 12

th

December, 2006

2.5 years

3 rd

Grant on 25

th

January, 2007

2.5 years

4 th

Grant on 19

th

June, 2007

2.5 years

The Weighted Average of Vesting Period in respect of the Options granted to the employees were as follows:-

 

Grants

Weighted Average of Vesting Period

1 th

st

Grant on 9

January 2004

3 years

nd

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

rd

th

th

th

th

th

th

th

th

th

th

th

th

th

th

th

th

th

st

Grant on 29 Grant on 27 Grant on 24 Grant on 17 Grant on 27 Grant on 24 Grant on 26 Grant on 7 Grant on 27 Grant on 24 Grant on 30 Grant on 11 Grant on 25 Grant on 30 Grant on 17 Grant on 29 Grant on 30 Grant on 22 Grant on 23 Grant on 30

th

th

th

th

th

th

th

th

November 2004

January 2005

June, 2005

August, 2005

October, 2005

January, 2006

April, 2006

June, 2006

th

th

th

th

th

th

th

th

th

nd

rd

th

October, 2006

January, 2007

April, 2007

July, 2007

October, 2007

January, 2008

April, 2008

April, 2008

July, 2008

October, 2008

October, 2008

January, 2009

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

2.5 years

Fair value of options based on Black-Scholes' Enhanced Model i.e. Enhanced FASB 123 Model for ESOP-2004

Grant Date-

30/04/2007

8.07% (for 4.25 years, source-NSE/ Reuters as on on 27th April, 2007)

7 yrs

1.25x

56.14%

(based on 5 years stock data from NSE)

0.46%

(Weighted

average

dividend

yield for

last 3

financial

years)

342.50

Grant Date-

24/01/2007

7.73% (for

4.28 years,

source-NSE/

Reuters as

on 23rd

Jan 2007)

7 yrs

1.25 x

55.03%

(based on 5 years stock data from NSE)

0.46%

(Weighted

average

dividend

yield for

last 3

financial

years)

315.30

Grant Date-

27/10/2006

7.54% (for

4.28 years,

source-NSE/

Reuters as

on 27th

Oct 2006)

7 yrs

1.25 x

54.66%

(based on 5 years stock data from NSE)

0.46%

(Weighted

average

dividend

yield for

last 3

financial

years)

238.80

Grant Date-

07/06/2006

7.37% (for

4.56 years,

source-NSE/

Reuters as

on 6th

June 2006)

7 yrs

1.25 x

56.84%

(based on 5 years stock data from NSE)

0.58%

(Weighted

average

dividend

yield for

last 3

financial

years)

201.10

Grant Date-

26/04/2006

6.96% (for

5 years,

source-NSE/

Reuters as

on 25th

Apr 2006)

7 yrs

1.25 x

57.30%

(based on 5 years stock data from NSE)

0.58%

(Weighted

average

dividend

yield for

last 3

financial

years)

229.40

Grant Date-

24/01/2006

6.77% (for

5 years,

source-NSE/

Reuters as

on 23rd

Jan 2006)

7 yrs

1.25 x

59.02%

(based on 5 years stock data from NSE)

0.58%

(Weighted

average

dividend

yield for

last 3

financial

years)

196.60

Grant Date-

27/10/2005

6.80% (for

5 years,

source-NSE/

Reuters as

on 27th

Oct 2005)

7 yrs.

1.25 x

60.76%

(based on 5 years stock data from NSE)

0.58%

(Weighted

average

dividend

yield for

last 3

financial

years)

214.70

Grant Date-

17/08/2005

6.74% (for

5 years,

source-NSE/

Reuters as

on 16th

Aug 2005)

7 yrs.

1.25 x

61.44%

(based on 5 years stock data from NSE)

0.58%

(Weighted

average

dividend

yield for

last 3

financial

years)

234.75

Grant Date-

24/06/2005

6.67% (for 5 years, source- NSE/ Reuters as on 23rd Jun 2005)

 

7 yrs.

1.25 x

62.03%

(based on 5 years stock data from NSE)

0.85%

(based on

simple

average of

the dividend

history of

past 4

financial

years)

209.80

Grant Date-

27/01/2005

6.55% (for

5 years,

source-NSE/

Reuters as

on 27th

Jan 2005)

7 yrs.

1.25 x

67.0%

(based on 5 years stock data from NSE)

0.85%

(based on

simple

average of

the dividend

history of

past 4

financial

years)

213.20

Grant Date-

29/11/2004

6.79% (for

4 years

source-NSE/

Reuters as

on 29th

Nov 2004)

7 yrs.

1.25 x

70.0%

(based on 5 years stock data from NSE)

0.85%

(based on

simple

average of

the dividend

history of

past 4

financial

years)

224.05

Grant Date-

09/01/2004

(Options

subsequently

cancelled)

4.21% (for

6 years,

source-

Reuters as

9th Jan

2004)

7 yrs.

1.25 x

70.0%

(based on 5 years stock data from NSE)

1.0%

(based on the

dividend

history for

past 3

financial

years)

342.00

Assump-

tions:-

Risk-free

interest

rate

Expected life

Expected

Multiple

Expected

volatility

Expected

Dividends

Price of the underlying share in market at the time of option grant (in Rs.)

a

n

n

u

a

l

r

e

p

o

r

t

0

8

/

0

9

a n n u a l r e p o r t 0 8 / 0

68/69

Fair value of options based on Black-Scholes' Enhanced Model i.e. Enhanced FASB 123 Model for ESOP-2004

Assump-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

Grant Date-

tions:-

11/07/2007

25/10/2007

30/01/2008

17/04/2008

29/04/2008

30/07/2008

22/10/2008

23/10/2008

30/01/2009

Risk-free

7.52% (for

7.91% (for

7.42% (for

7.93% (for

7.96

% (for

9.28% (for

7.44% (for

7.41% (for

6.17% (for

interest

4.26

years,

4.31

years,

4.28

years,

4.26

years,

4.27

years,

4.57

years,

4.57

years,

5

years,

5.08

years,

rate

source-NSE/

source-NSE/

source-NSE/

source- NSE/

source-NSE/

source-NSE/

source-NSE/

source-NSE/

source-NSE/ Reuters as on 29th January,

Reuters as

Reuters as

Reuters as

Reuters as

Reuters as

Reuters as

Reuters as

Reuters as

on 10th

on 24th

on 29th

on 17th

on 29th

on 30th

on 22nd

on 22nd

July, 2007)

Oct, 2007)

January, 2008)

April 2008)

Apr 2008)

July 2008)

October 2008)

October, 2008)

2009)

Expected life

7 yrs.

7 yrs.

7 yrs.

7 yrs.

7 yrs.

7 yrs.

7 yrs

7

yrs

7 yrs

Expected

1.25

x

1.25

x

1.25

x

1.25

x

1.25

x

1.25

x

1.25

x

1.25 x

1.25

x

Multiple

               

Expected

56.19%

59.98%

59.70%

60.79%

60.92 % (based on 5 years stock data from NSE)

61.97%

63.41%

63.45%

57.59%

volatility

(based on 5 years stock date from NSE)

(based on 5 years stock date from NSE)

(based on 5 years stock date from NSE)

(based on 5 years stock data from NSE)

(based on 5 years stock data from NSE)

(based on 5 years stock data from NSE)

(based on 5 years stock data from NSE)

(based on 5 years stock data from NSE)

Expected

0.54%

0.54%

0.54%

0.54%

0.54%

0.44%

0.44%

0.44%

0.44%

Dividends

(Weighted

(Weighted

(Weighted