Moser Baer sells 16% to FIIs for Rs 650 crore

Moser Baer India Ltd, the country's largest producer of digital storage devices, is raising over Rs 650 crore from foreign institutional investors (FIIs) by making a preferential issue.

The company's board of directors, which met here yesterday, cleared the sale of 20.1 million American depository receipts/global depository receipts/shares or other convertible instruments to institutional investors on preference, at a premium of not less than Rs 319 a share.

These shares could be issued to existing institutional shareholders or to other institutions. The shares will represent a little over 16 per cent of the company's expanded equity capital.

At present, Moser Baer has a share capital of Rs 97 crore. The preferential issue could happen within the next three months as yesterday's board resolution is valid for 90 days.

The Moser Baer stock closed at Rs 354.1 on the Bombay Stock Exchange, down from its previous close of Rs 369.7.

The board has appointed a committee of directors to finalise the terms of the issue, including the nature and combination of securities to be issued.

To make room for a higher FII stake, the company's directors also cleared a proposal to raise the limit of FII holding in the company from 40 per cent to 74 per cent. A 100 per cent FII holding is permitted in the sector.

At present, FIIs like Warburg Pincus, International Finance Corporation and JF Electra hold a 29 per cent stake in the Deepak Puri-promoted company.

The board also gave its nod to a proposal to increase the company's authorised share capital from Rs 110 crore to Rs 150 crore.

The company plans to invest the money in expanding its recordable DVD manufacturing capacity.

Moser Baer's DVD manufacturing unit, commissioned in 2002, has an installed capacity of 1.5 million DVDs a year.

The global market for recordable DVDs is expected to grow from Rs 150 crore to Rs 15,000 crore by 2006. In an industry where obsolescence is rapid, Moser Baer will also need the money to invest in future storage technologies.

"This is an enabling resolution that will provide the management greater flexibility and access to funds to carry out our expansion plans," Rakesh Govil, head of corporate strategy and treasurer, Moser Baer India, said.

Moser Baer is the world's third largest magnetic and optical fibre storage media company, with a turnover of Rs 1,069.5 crore in 2002-03. Nearly 80 per cent of its revenue comes from exports.