Moser Baer (India) Ltd Management Discussions.

The year ending March 31, 2017 continued to be a challenging year for Moser Baer. The Company continued on its path to recovery, building upon key initiatives of the Government of India, including the "Make in India" initiative, the Energy Efficiency drive and the National Solar Mission, however it has been severely constrained on account of liquidity. As per IMFs World Economic Outlook (April 2017) report, the world economy gained speed in the fourth quarter of 2016 and the momentum is expected to persist. With buoyant financial markets and a long-awaited cyclical recovery in manufacturing and trade under way, world growth is projected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. But binding structural impediments continue to hold back a stronger recovery, and the balance of risks remains tilted to the downside, especially over the medium term.

Company Overview

For the year ended March 31, 2017 Moser Baer continued to witness financial constraints and internal challenges that impacted its operating performance. The Company has been constantly working on consolidation measures and restructuring of operations with the objective of re-aligning priorities, resources and capabilities to succeed in the identified areas of growth.

For the year ended March 31, 2017:

Total Income: The total income from operations for the twelve months ended March 31,2017 was INR 5,610 million on a standalone basis;

Cash and Liquidity: Net cash flows from operating activities stood at INR 251 million;

Net Loss: The Company made a net loss of INR 11,140 million, inclusive of exceptional items amounting to INR 8,034 million In the Storage Media business, liquidity challenges continued to persist impacting operations during the financial year under consideration along with the effects of demonetization. While ASPs held strong during the year, the volumes were negatively impacted. However, the Company has been consistently working on improving cost efficiencies across the entire value chain. Moser Baers Storage Media business undertook several steps that were aimed at lowering the operating costs and aligning manpower, cash flows and other resources to the current levels of operations.

Moser Baer continues to focus on its key strengths - wide geographic presence across the world, broad product portfolio across all formats, strong focus on quality and a strong distributor network and is thus well placed to target the market opportunities even in the mature phase of the industry.

Regulatory action by the Government of India against dumping of USB drives by players from select industry and the support of a key OEM customer has allowed Moser Baer the opportunity to build back its market share in the Solid State Media segment through sale of the Moser Baer and other OEM branded products.

The Company is also moving towards establishing itself in the Indian LED lighting market, with a large number of B2B clients and an initial foray into the B2C segment leveraging existing capabilities, brand recognition and distribution network. In the Solar PV segment, 2016 was a record year with the global solar industry witnessing installations of 76.6 GW while the home market added more than 4.3GW capacity in 2016 to reach a cumulative capacity of 9.8 GW by the end of the calendar year. Moser Baer utilized its cell and module manufacturing facilities to take advantage of opportunities due to the Domestic Content Regulations in the solar sector. During the year, liquidity pressures continued to persist and have been critically impacting our ability to sustain manufacturing operations and capacity utilization levels. However, the positive global macro sector environment along with a high potential domestic market provides opportunity to us to benefit from these segments, given that we are one of the largest integrated PV manufacturer in India.


Storage Media Industry

The optical media industry (CDs and DVDs) has witnessed de-growth over the years and stood at a market size of 6 billion units in 2016. While global demand for optical storage disc market is declining, increasing demand for archival solutions and positive outlook for the media and entertainment industry is expected to create significant demand for recordable optical discs in the near future. The ongoing re-alignment and transition in the global Optical Media industry impacted the demand for all the top tier players.

The Storage Media business includes the Solid State Media segment (Flash Drives, SD and Micro SD cards). The Flash drive market has been witnessing healthy growth in India, while the demand for SD and Micro SD cards is stabilizing.


The Company continues to supply wide range of high quality products across all regions and maintain a key position in the domestic and international market. Over the past year, production and sales volume of optical media was severely impacted by liquidity constraints at the operating level resulting in lower revenues and pending order book. While the traction remained healthy for OEM customers, the domestic market was additionally impacted by the effects of demonetization which created short term economic pressures but is expected to result in structural changes which will be beneficial in the long term. In the SSM segment, the Company has registered an annualised growth of over 40% on the back of increased market share. However, margins have been under pressure due to shortages in NAND due to technology transition from 2D to 3D.

Given the liquidity constrained manufacturing environment and the need to become more working capital efficient, we further optimized raw material as well as finished goods inventory levels and set new reference levels in this important area.

However, the Company continues to be constrained by its liquidity challenges, and seeks the support of its secured lenders to help revive the Company.


In the medium term, the Optical Media industry is expected to continue to witness overall volume decline globally. The Optical media market is expected to declined by 5.6% (CAGR) over 2015-25 and reach 4,224 Mn units by 2025 according to Future Market Insights. The trend is more accelerated in the developed economies.

Furthermore, it is possible to achieve a higher market share in select markets through both OEM and non OEM channels, provided the company is able to improve liquidity in this business segment through working capital & fixed costs rationalization as well as injection of fresh liquidity.

In the near future, the Solid State Media segment is expected to continue to show healthy growth, given the market demand, regulatory action against predatory imports, strong relationships with OEM customers and strong brand equity of Moser Baer in India and is limited mainly by liquidity constraints.

The Company continues to focus on product innovation, upholding of its high quality standards, increase in its cost competitiveness and widening of its distribution network.



The global LED lighting market accounted for $ 26.09bn in 2016 as per Zion Market Research (Report titled "LED lighting Market for Residential, Architectural and Outdoor Applications: Global Industry Perspective, Comprehensive Analysis, and Forecast, 2016 – 2022").

Asia pacific is considered to be the fastest growing market for LED lighting and expected to hold significant market share in years to come. Developing infrastructure of roads, upcoming development projects, the booming construction industry in developing countries such as China, India, and Indonesia is expected to create massive demand for LED lighting for residential as well as outdoor application.

The Indian lighting sector is estimated at INR 180bn in CY 2015 and has witnessed strong growth in the past few years. This growth was driven by increase in the number of households and transition from traditional bulbs to CFL and LED bulbs. LED is comparatively a new entrant and its market size is estimated to be close to INR 51bn. However sales of LED bulbs have been growing at the fastest pace in the lighting industry as a whole, primarily in urban markets due to higher awareness about its energy efficiency. The LED lights industry has witnessed a phenomenal CAGR growth of ~59% between CY 2010 and CY 2015. Key growth drivers for LED lighting in India include Government initiatives to promote LED light adoption, increasing efficiencies and declining prices, all of which have reduced pay back periods and improved overall economics considerably.

Strong Government Focus

Taking into account the energy efficiency and other benefits of LED products, the Government of India has taken several steps to promote and build awareness of the same among consumers. In 2015, Prime Minister Mr. Narendra Modi launched the National Programme for LED-based Home and Street Lighting. The project involves installing LED streetlights in100 cities by March 2019.

Under this Programme, a total of 770 million ordinary bulbs and 35 million conventional street lights are to be replaced by energy efficient LED lamps by March 2019. The Make in India Program launched by the Honble Prime Minister has highlighted Electronics Systems as a focus sector, and the LED Lighting industry falls under its ambit. Further, the Government is supporting local manufacturing by imposing lower custom duties and Special Additional duties on the import of components used in the manufacturing of LED lights. To ensure that quality products are available in the market to the consumers, The Indian Department of Electronics and Information Technology (DEITY) made it compulsory in 2015, to register self-ballasted LED lamps with the Bureau of Indian Standards (ISI). Currently LED bulbs, LED tube lights with deccobaten, certain fixed general purpose luminaires are covered by the standards. The Government of India has also announced the Smart Cities Mission, an urban renewal and retrofitting program with a mission to develop 100 cities all over the country making them citizen friendly and sustainable. This is expected to further increase the demand for LEDs in the country.

Factors which have led to an increase in demand of the LED products are:

Improved efficiency and reducing prices have improved the value proposition significantly,

Mandatory Energy Efficiency regulations for new buildings and facilities,

Government focus on LED adoption to save energy,

More Investments in Green Buildings,

Large size of Real Estate Market in India,

Growing interest among Healthcare, Hospitality, Retail and

IT sectors, and

Demand from Institutions, Industries and Corporate houses

Replacement of street lights with LEDs under the governments demand side management initiatives which are being implemented by Energy Efficiency Services Ltd.

Chinese Imports

China, Taiwan and Korea have emerged as the dominant LED chip manufacturing base for the world. As a consequence of the economies of scale and access to the complete LED supply chain and various subsidies, Chinese manufacturers have managed to reduce product pricing quite significantly. Chinese Companies are exporting LED lighting products and components to all major countries in the world including India.

Some of the low quality and low priced imports into India had failed to deliver and consequently hurt the perception of LED products in the Indian market. However, this issue has been addressed to an extent with the introduction of BIS certification (ISI marking) for selling select LED products in India.


During the year, the Company moved towards establishing itself as a trusted Brand in the domestic LED market. The Company continues to strengthen its brand presence in the retail market and achieve regular growth in the in B2B and B2C segments through its sustainable quality.

Moser Baer is well positioned to tap this opportunity in India on account of the strong Brand recall and key capabilities including:

Precision Mouldings Assets and capabilities (from its Optical

Media Business)

Surface Mount Technology (SMT) Assets and capabilities

(from its Solid State Media Business)

Relevant experience and knowhow relating to Product

Quality and Reliability, Design, Product Development, Testing and Optics

Global Sourcing strengths

Strengths in Indian Sales, Marketing and Distribution which can be synergistically exploited Moser Baers LED business model does not require any immediate capital expenditure since the company utilizes its existing assets and manufacturing knowhow.

The company is manufacturing LED lighting products at its Noida and Greater Noida manufacturing facilities. We have commenced production of certain LED lighting products such as Street lights, High bay lights, Panel lights, Tube lights, etc. (with imported LED package and some other components), leveraging our existing asset and skill base. The Product design and development team is focused on designing products with higher reliability and efficacy. Besides the in-house manufacturing capabilities, the company also outsources manufacturing of basic, high volume products like bulbs to contract manufacturers based in tax efficient locations. Stringent quality control processes have been established and being followed to ensure that our quality standards are met by outsourced products as well. The company has set up an in-house state-of-the-art Research & Development laboratory with testing capabilities to ensure supply of high quality LED lighting products in the market.

The Company is also using the Selling and Distribution capability and skill set available with its subsidiary, Moser Baer Entertainment Limited, to address the B2C opportunity in India. The existing distribution allows the Company to address the entire market in India.

The Company has positioned its product as a Higher Performance product of superior quality, and is able to easily and successfully demonstrate this advantage to the B2B segment. The company has successfully entered the professional segment of the LED lighting industry with a marquee list of customers/ installation across segments and established Moser Baer as a competitive player in this product category. In addition to the direct sales and supply to large institutions / corporates by the in-house sales team, the Company is also appointing specialized B2B distributors who supply and service industrial sectors like textile, automobiles, pharmaceuticals, etc.

The Companys brand received approval by the Bureau of Standard of Bhutan for supplying in Bhutan and sales have already commenced.


The global LED lighting market accounted for $ 26.09bn in 2016 and is expected to reach $ 54.28bn by 2022, growing at a CAGR of around 13% between 2017 and 2022 The company plans to scale up operations in the consumer LED lighting space by leveraging its brand strength and expanding its distribution network nationally. The company has appointed exclusive and non-exclusive Super stockists (large distributors) across the country to distribute LED lighting products in the electrical markets for consumer segment.



2016 was a record year for solar. A total of 76.6 GW was installed and connected to the grid in 2016 as per ‘Solar Power Europe. This is a 50% year-on-year growth over the 51.2 GW installed in 2015 and the third highest rate recorded since 2010, though at much higher absolute levels. In 2016, Asia-Pacific has become the largest solar-powered region in the world – with 147.2 GW of total installed capacity, equal to a 48% global market share. The cumulative installed solar PV power capacity increased 33% to 306.5 GW by the end of 2016, up from 229.9 GW in 2015.

Evolution of Global Cumulative Installed PV Capacity -2005-2016 (Figures in GW)

Indian Solar Market

The Indian solar market, on the other hand, has seen strong growth since the launch of the National Solar Mission (NSM), which has since then been enhanced from 20GW to 100GW in 2022. There is strong growth opportunity in the domestic solar market given the governments enormous thrust on the development of the sector. Though the anti dumping duties were not implemented in 2014, the government has given impetus to the growth of the domestic solar manufacturing sector through ‘Domestic Content Manufacturing (DCR). As of March 31, 2017, India had installed 12,163 MW of utility scale solar PV capacity. Capacity under development as of March 31, 2017 stands at 12,381 MW. Tamil Nadu, Andhra Pradesh and Telangana have emerged as the fastest growing states.

The Union Budget 2017-18 has provided further thrust to solar sector:

Second phase of Solar Park development to be taken up for additional 20,000 MW

is proposed to feed about 7,000 railway stations with It solar power in medium term

Compared to last year (Rs 5,036 crore), this year the allocation to the Ministry of New and Renewable Energy stands at Rs 5,473 crore. The total budget is further split between Rs 3,361 crore for solar and only Rs 408 crore for wind, a clear indication that the government will continue to prioritise solar.

Government is allocating a record Rs 745 crore for modified special incentive package scheme (MSIPS) and EDF that were designed to encourage local manufacturing for the year of FY18 The Indian government is now working on drawing up a well thought out plan to support domestic manufacturing including:

1) WTO Compliant DCR (Domestic Content Requirements) Projects:

On account of the recent WTO developments, and the subsequent impact on the DCR projects, the government is expected to implement a scheme wherein additional DCR projects would be floated by Central Public Sector Units/ Government for self consumption which will be WTO compliant.

CPSU Schemes: Schemes exclusively for PSU tenders for 7,000MW will be released during the year by many PSUs for self consumption. These projects have been cleared by MNRE and Viability Gap Funding of Rs 5,000 crores will be sanctioned at Rs 70 lacs/MW to ensure PSUs are not unduly burdened.

NTPC – Auxiliary Demand of 12,000 MW: For every 100 units generated there is a consumption of 9 units for self usage by NTPC. Tenders for meeting this demand will be released starting September 2017.

Roof top Solar Projects: Under the National Solar Mission, 40GW is allocated to Rooftop Projects and so far only 1.1GW has been installed. These are small projects of size 1-100 kw and it is important to protect the interest and ensure high quality, reliability and ease of procurement and installation for the small/ household user. Currently, imports dominate in this area as well, and to prevent the use of poor quality product and poor access to manufacturers based in China for small quantities, the Government of India is expected to mandate use of DCR products only in the segment.

2. Anti Dumping Duty (ADD):

Application has been filed on behalf of Indian Solar

Manufacturers Association (ISMA) with DG (Anti Dumping Directorate). Letters have been issued to manufacturers to provide data required for detailed investigation and conclusion

3. Safeguard Duty:

Fearing unprecedented injury due to continued dumping an application has been filed under Safeguard Protection with DG ( Safeguard) by ISMA

4. Quality Focus:

The Government of India will release stringent norms of testing to ensure the quality of products. Products manufactured in India as well as imports would need to pass the stringent tests for validation.

Going forward, ensuring grid robustness and investment/ lending appetite at aggressive tariff levels will be the two main challenges. In addition, financing and cost of financing is a key challenge in achieving the targets set. Policy interventions to address these challenges together with demand growth measures will be key to sustainable growth of the sector.


Despite liquidity headwinds, the PV business undertook several steps towards running its operations including managing working capital through customer and vendor support. Over the last 6 months of the financial year, the business has focused on manufacturing DCR modules to take advantage of the large DCR market. PV Group made sales of 20.5MW of Cells and 17.5 MW Modules during FY17 for key customers. However, the liquidity constraints experienced by the Company has impacted its ability to sufficiency leverage the opportunities presented in the Indian solar market to a large extent. During the year, the liquidity pressures continued to persist and critically impacted our ability to enhance manufacturing operations and capacity utilization levels. Volatility in DCR orders and delay in disbursement of approved government subsidy also continues to impact the manufacturing operations. For solar PV manufacturing to be cost effective, plants need to operate 24x7, which has been a serious concern due to lack of consistent demand arising from intermittent release of tenders. The Government is attempting to address this issue with release of large sized tenders.

The operating parameters of our upgraded solar PV crystalline silicon cell line continue to show steady improvement through the concerted efforts of the manufacturing team and improvements in supply chain in terms of superior quality inputs at competitive prices. Over the years, Moser Baers PV Business has completed over 340 MW of projects in the EPC segment. The Company is however currently constrained, on account of its financial position, to aggressively target this segment.

Our focus on cost reduction continues, with particular emphasis on rightsizing of the organization, power costs and other operating costs, duly aligned to its current / anticipated level of operations.

Moser Baers solar subsidiaries also qualified under the Special Incentive Package Scheme notified by the Government in 2007 to boost the semiconductor manufacturing sector. The Governments detailed diligence process for technical and financial validation has been completed and definitive feedback from the Government has been received by the applicant entity regarding approval and the Government conditions for its utilisation. The receipt of the funding is taking time. Post receipt of funding, Company will have the requisite working capital to scale up operations.

The Solar Subsidiaries continue to engage with their secured lenders to seek support for their revival and continue to operate based on customer support and efforts at optimizing cash flows. Lender actions and resolution of liquidity issues will continue to play a key role in the revival of the Company.


Solar Power Europe has projected the cumulative solar market at 772 GW by 2021. It is certain that Asia will continue to dominate the solar sector in the near future While solar energy is now competitive with conventional electricity generation in many global markets, and dependence on subsidies has decreased significantly, there is still an element of policy uncertainty that impedes its unfettered growth. However, it is expected that economic rationale shall prevail and the policy outlook will become even more favourable over the coming years. With declining prices in the last few years, policy makers in several countries from high solar radiation regions such as Africa, the Middle East, Southeast Asia and Latin America, have increased their plans for PV deployment in these geographies. Indian market is expected to emerge as a key solar market. However, in order for the sector revival to be sustainable, we believe that it would be critical for emerging policy to address the following issues:

Ease of implementation, particularly addressing concerns relating to land, connectivity, enforceability of solar purchase obligations and bankability of Power Purchase Agreements from distribution utilities;

Stable long term perspective including long term demand visibility which will allow for appropriate investment decisions;

Financing, high cost of financing, and risk of currency

fluctuations need to be addressed from the perspective of attracting international capital as well as reducing the overall cost of solar energy; and

Visibility for support to Domestic Manufacturing over a period of time in the context of anti dumping duties which were not imposed

Availability of cost effective and reliable power

Subject to addressing the debt and liquidity issues, the Company plans to ramp up operations in line with the emerging opportunities in the Indian market and announcement of key Government policy initiatives, and increase the utilization of our existing infrastructure. Our strong presence in the Indian solar PV market, integrated operations, high quality profile and strong brand value position us to benefit from the high potential Indian market in both the off-grid and utility scale markets in the years to come. Timely receipt of the SIPS subsidy from Government of India is critical for the Company to ramp up its operations in a time bound manner.


Please refer to the section Debt Restructuring in the Directors Report for further details.



Ongoing consolidation in the industry is throwing open newer customer opportunities for remaining players

Growing Solid State Media market in India

Scope for increasing non-OEM business in geographies where Moser Baer presence was earlier limited

Stable margins due to reduced competition/ consolidation in the industry leading to stable, industry pricing and cost


Gradual decline in the optical media industry globally

Competition from Taiwanese Players in Optical Media and Global Leaders in Solid State Media products and possible circumvention of the anti dumping measures implemented by Government of India

Progressive growth in alternative data storage technologies including online and digital storage

Regulatory developments in debt/capital markets that could adversely effect the companys interest costs and debt restructuring

Threat of disruption in plant operations in the event of disturbed Industrial Relations

Recovery actions by the companys lenders/ creditors

Threat of any financial or operational creditor initiating proceedings under Insolvency and Bankruptcy Code 2016



Improving economics of LED Lighting given improvements in efficiency, reduction in costs and overall environment friendliness

Strong Growth potential in Global and Local Market including government sourcing

Government regulatory support to LED given the role of energy efficiency in Indias Energy Scenario

Preferential Purchases by Government Organizations for Products Made in India

Availability of large and competitive supply chain from


Growing action by businesses and institutions both private and government to switch to LED as increasingly cost effective & energy efficient lighting; THREATS

Strong established players in the Lighting Industry who have a strong presence in India also Imports from China

Competition from small Indian players importing poor quality products from China

Technology obsolescence and emergence of disruptive technologies

Sudden increase in input costs of key components, in particular, LED Chips

Strong IP position of key players in LED Chips and


Threat of disruption in plant operations in the event of disturbed Industrial Relations

Recovery actions by the companys lenders/ creditors

Threat of any financial or operational creditor initiating proceedings under Insolvency and Bankruptcy Code 2016



Global acceptance of solar power along with strong focus on sustainable clean energy sources worldwide provides strong growth opportunity for solar power

Strong growth potential in key markets such as US,

China and Japan that have taken centre stage as the next growth drivers in the global solar industry

Strong thrust on solar power in the domestic market and preference / incentive for domestically manufactured cells and modules

Advancement of grid parity globally and in India on account of improvement in cost competitiveness of solar energy vis--vis conventional energy;

Support for solar manufacturing as a key ingredient in the national solar strategy; THREATS

Withdrawal or reduction of State support in key markets through reduction of subsidies and other incentives or change in government policies

Delays in implementation of duties

Continuation of challenged economic environment in

Europe, a key market for solar- PV products is likely to affect demand for solar power in the region

Slowdown in demand from the current growth drivers such as China, Japan and the US

Lack of enforcement of the Solar Purchase Obligations in the Indian Solar market

Delay in JNNSM /State Solar project tendering process/

DCR projects

Sudden increase in capacity in the global PV market amid an improving industry environment

Increase in pricing of key raw materials

Technology obsolescence & emergence of disruptive technologies

Continuation or prolonging of the high interest rate scenario in the domestic market

Steep fall in the module prices in the uncertain market conditions.

Threat of disruption in plant operations in the event of disturbed Industrial Relations

Recovery actions by the companys lenders/ creditors

Threat of any financial or operational creditor initiating proceedings under Insolvency and Bankruptcy Code 2016


In the era when industries are facing multi-fold challenges and competition internally as well as externally, maintaining synergies of Human Capital for rising up to the Business challenges takes prime importance and is inevitable. Despite liquidity constraints & operational bottlenecks, the company is maintaining a cordial working environment.

During the recent times industries in the region and especially our vicinity are making efforts to maintain the Industrial harmony. On part of Industrial Relations (IR) at the manufacturing locations, IR has been largely peaceful since the time we had reached a three year wage settlement with workers in April 2015. Although, there have been some intermittent IR disturbances for wages and benefits, the HR is expectedly playing a vital role in maintaining harmonious relations with workers and employees and is watchful for possible preventive measures.

In order to bring down the operational costs and sustain business survival, HR has played a significant role and several cost cutting initiatives were launched which helped in considerable savings for the company. On account of liquidity constraints and the contraction in business, the company could not implement the increments due to the Workers effective 1 April 2017 under the Settlement Agreement of 2015. In March 2017, the Company had apprised the concerned authorities regarding the same and indicated its commitment for implementing the same as and when circumstances permit. The matter has since been referred for conciliation proceedings before the concerned authorities. Efficient communication measures and well-constructed HR strategy for driving employee commitment when anxiety is high have helped us in sustaining challenges from time-to-time. Our continued focus on proactive involvement, employee friendly practices and policies, two way communications and grievance redressal mechanism, and interface with families of employees have helped us to enhance engagement level of our employees and build strong bonding with the organization. Voluntary participation of employees in activities like family visits, sports & recreation, health related initiatives, CSR activities etc. have enabled us to make maximum use for fun aspect of work-life, which in turn, is very important for efficient and productive working.

We continued to encourage Associates Involvement in decision making process through various means. At the same time, Employee Communication Forums like Open Houses, Communication Meetings, Town-Halls, HR Help Desk, provide all possible opportunities for employees to express and exchange views on the various issues that impact them.

Through all these activities & interventions, the Human Resource function continues to play a pivotal role in improving the competitive edge of the business. Moser Baer ended the financial year with 2,889 employees as compared to 3,021 employees at the end of last financial period.


The Company is constantly endeavoring to improve the standards of internal control in various areas and taking steps to strengthen the internal control system to make it commensurate with the size of entity and the nature of its business. The Companys accounting and reporting guidelines ensures that transactions are recorded and reported in conformity with Generally Accepted Accounting Principles and that all assets are safeguarded and properly protected against unauthorized use. Such controls, which are subjected to periodical review, also ensure efficiency of operations, accuracy and promptness of financial reporting, prevention and detection of fraud and errors, besides complying with the applicable laws and regulations.

The Companys Internal Audit department along with professional Risk Advisory firm independently tests the design and operating effectiveness of internal controls system. The Internal Audit Department develops an audit plan using an appropriate risk based methodology. This audit plan is submitted to the Audit Committee of the Board for review and concurrence at the commencement of the financial year. The Internal Audit process also monitors the status/progress in implementation of suggestions for improvements. Internal Audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of such recommendations.

During the financial year, a full review of Internal Financial Controls and internal controls over financial reporting was conducted on which the statutory auditors also expressed their qualified opinion as a part of their Audit report. The auditors have opined that the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and that these were operating effectively, except in respect of the lack of evidence relating to uncertainties underlying the significant assumptions used in the valuation reports for assessing the recoverable value of fixed assets of the Company and assessment of provision for other than temporary diminution in the value of investment, trade receivables and short term loan and advances in a wholly owned subsidiary and absence of definitive agreement between the Company and lenders in respect of interest rates.


Revenue & Profits

The total income from operations for the financial year ended March 31, 2017 was INR 5,466 million compared to INR 7,596 million during the fifteen months ended March 31, 2016. Loss after tax for the year is INR 11,140 million as against INR 7,036 million during the fifteen months ended March 31, 2016. Fully diluted earnings per share for the year ended March 31, 2017 was INR (50.23) against INR (32.11) in the fifteen months ended March 31, 2016. The company generated INR 251 million cash from operations during the year.

Capital Structure

The was no change in the paid up equity capital which stood at INR 2,218 million as on March 31, 2017. Reserves The Companys reserves stood at INR (31,273) million at the end of March 31, 2017 against INR (19,471) million at the end of March 31, 2016. There are no re-valuation reserves as of March 31, 2017.


The Companys total net debt decreased by 2.6% over the previous year.

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 more efficient working capital management to release cash in to the system, generating INR 251 million of cash from operations.


The amount on account of interest and finance charges for year ended March 2017 was INR 2,126 million as against INR 2,744 million in the fifteen months ended March 31, 2016.

Capital Expenditure

Gross block of the Company stood at INR 45,112 million as on March 31, 2017 as against INR 45,038 million as on March 31, 2016.

Depreciation/ Impairment

Depreciation/Impairment for the year ended March 31, 2017 was INR 1,231 million (including impairment of Rs 610 million) compared to INR 1,061 million for the fifteen months ended March 31, 2016. Due to the flexible nature of the asset base and the relatively long life-cycle of the products in the industry, we believe that the risk of the asset base becoming obsolete is mitigated.

Loans and advances

As on March 31, 2017, both long term and short term loans and advances put together, decreased by INR 326 million.

Capital employed

The capital employed stood at INR (26,965) million as on March 31, 2017 as compared to INR (9,128) million as on March 31, 2016


Risk Management is an important and integral part of business in current economic environment. Your Company is committed to managing the risk in a pro-active and efficient manner. The Company evaluates potential risks, and has over the years evolved an appropriate risk-management strategy. This takes into account changing market trends, competition scenario, emerging customer preferences, potential disruptions in supplies, financial performance and regulatory changes, among others. Your Company has a comprehensive risk management policy/ framework which is reviewed by the Risk Management Committee. Risk evaluation and management is an ongoing process within the Organization. The objective of Risk Management framework is to identify, analyze, mitigate, monitor and report risks on a timely basis, in respect of the events that may pose risks for the businesses. Key business risks and mitigations are:

Liquidity risk: The Company continues to operate at suboptimal levels due to severe working capital constraints, resulting in adverse impact on cash flow from operations.. Due to continued liquidity issues, primarily arising from non-release of sanctioned working capital limits and refunds due to the Company from lender banks, the Company has been unable to comply with repayment terms of its borrowing arrangement with secured lenders in terms of the Corporate Debt Restructuring package approved in the year ended 31st March, 2013. As a result and consequent upon the report submitted by Monitoring Institution (MI), the CDR-EG approved exit of the Company from CDR mechanism on 10th October, 2016. The lender banks have sought to recall the entire outstanding amounts owed to them by the Company and have initiated recovery measures through notices under section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Company has challenged the loan recall notices and the SARFAESI notices through its Legal Counsel and will take further appropriate steps as may be advised by its lawyers. The Company in the meanwhile continues to dialogue with, and pursue its secured lenders for resolution of the debt. The company also continues to follow through with the Monitoring Institution, Central Bank of India for reduction in tagging of 9% that has been imposed by the banks.

Moreover, the Company has outstanding foreign currency convertible bonds (FCCBs) with principal value of USD 88.4 million equivalent to Rs 57,327 lacs which were due for redemption along with premium on 21 June 2012. As at 31st March, 2017, accrual for premium on FCCB aggregates Rs. 56,468 lacs. The Company is in the process of negotiation with bondholders to re-structure the terms of these bonds. This is now subject to approval of secured lenders, which is expected to be settled only along with the resolution of secured debt.

In view of the above factors, and also the fact that the company has various outstanding financial obligations, the company is subject to the risk of any creditor seeking to initiate a Corporate Insolvency Resolution process under the IBC Code, 2016. The Company however believes that it would be able to work with its lender banks / creditors towards maintaining holding on operations while debt resolutions is under negotiation.

Technology risk: A key challenge of your Company has been to ensure that it is equipped with updated technologies in order to serve market and customers, secure cost competitiveness and maintain R&D leadership. Optical Media and to some extent Solid State Media have reached a product maturity phase and are not likely to undergo significant changes in technology. Therefore, the Company is mainly focusing its efforts on cost optimizations to make this business sustainable. In respect of Solid State Lighting products, on-going efforts continue to be made to introduce new products with top of the line performance characteristics in response to market demands. Product development and R&D efforts are carried out continuously to enhance Lumens / watts, development of reliable drivers, and products with multiple features. Moreover, efforts have been made to carry out backward integration though development of various plastic components. Strategic alliances with key vendors also enable the Company to keep abreast of the latest technology developments.

Business concentration risk: Dependence on few large customers and concentration in particular geographies and business / product segments could have adverse effects on revenues in case of attrition of the customer, technological obsolescence of the product or some of the regions not delivering as per expectation. We strive to diversify customer and geographic base to avoid dependence on a particular business / geography / set of customers. The de-growth in Optical Media business has been sought to be offset with corresponding growth in Solid State Media and Solid State Lighting segments to ensure a wider business portfolio along with customer and geographical dispersion. Solid State Media business continues to grow on the back of enhanced market share through key customers in India and partnering with new OEMs. In the Solid State Lighting (SSL) segment, the Company continues to strengthen its brand presence in the retail market and achieve regular growth in the in B2B and B2C segments through its sustainable quality.

Input cost and falling sale price risk: Production and sales volumes were severely impacted by liquidity constraints at the operating level resulting in lower revenues. The company continues to work on enhancing its overall margins through concerted efforts in improving efficiencies and reducing costs. Consolidation of plant operations, as well as other cost reduction initiatives such as process optimization, efficient asset utilization, alternate sourcing, alternate material usage, cost re-engineering has resulted in overall reduction in fixed overheads and employee costs. Softening key input costs in Optical Media, stable fuel prices accompanied by sustained cost reduction initiatives continued to support the business and offset softening of selling prices. In-house manufacturing of key components and products in Solid State Lighting have helped to enhance competitiveness. Continuous and conscious efforts are made to increase share of value added products to offset contracted ASPs in finished goods.

Exchange fluctuation risk: As we export a substantial part of our product offerings and import key input materials from various countries, our operations are prone to the risk of adverse exchange rate fluctuations. Moreover, we have outstanding foreign currency denominated debt and hence we are sensitive to fluctuations in foreign currency exchange rates. These transactions are denominated in foreign currencies, primarily the U.S. Dollar and Euro. The Treasury department of the Company continually tracks the foreign exchange movements and underlying currency exposures and takes advice from financial experts as and when required to decide its hedging strategy in accordance with approved foreign exchange risk management policy. The hedging of foreign exchange exposures is, however, currently restricted by the non-availability of renewed hedging limits.

Employee Related Risks: In the scenario of prolonged financial and liquidity stress, it is a challenge to align business interests with the interests of our workforce. The Company endeavors to strike a balance through constant dialogue / communication with associates to understand their issues and work out solutions, while keeping them updated with the challenges in business scenario. Although, the organizational structure is periodically reviewed in order to align it with the changes in business scenario and strategy, the efforts of the Company for rightsizing the organization could not be implemented on account of liquidity constraints and regulatory restrictions. On account of prolonged financial & liquidity stress, the company continues to face a risk of industrial unrest and disruption in plant operations, which it seeks to manage through constant dialogue and communications.

Performance of the subsidiaries: The Company has made investments in its subsidiaries and provided corporate guarantees on behalf of subsidiaries. As a result of the business operations and financial performance of these subsidiaries having been negatively impacted, the value of the Companys investments have suffered consequent erosion in value. Any recovery or enforcement actions by the lenders of the subsidiaries, including any initiation of proceedings under Insolvency and Bankruptcy Code 2016 by the lenders, guarantee holders or other creditors could impact the Company. One of the Lenders of Moser Baer Solar Limited (a subsidiary company) has already filed an application under Insolvency and Bankruptcy Code before National Company Law Tribunal which is to be heard for admittance.

In the opinion of the Board, except as stated herein above no other risk have been identified that may threaten the existence of the Company.


Moser Baer Trust, the community development wing of Moser Baer India Limited has completed its 10th year of operation with an outreach of more than 1.5 lakhs lives touched through its various interventions across locations. MBT has consolidated its interventions from few areas but has grown as an organisation in terms of its programme approach, interactions with district administration and partnership development with like-minded organisations. The programme approach is now inclusive, need based, collaborative and sustainable in nature. We critically analyse our programs and performance to see beyond the horizon. All our programmes focus addressing the issues in comprehensive manner rather than focusing on one issue which are impacting our beneficiaries. The focus is more on integrated development of areas of influence.


The main aim of our Education intervention is to enhance the relationship communities have with education by affecting learning behaviorally and structurally. The following interventions under the theme are being implemented to achieve the larger goal:

Support Classes

Moser Baer Trust started class intervention in 2010 with a view to increase the level of education and provide quality education. Keeping this focus in mind, this year MBT ran 12 support class centres in 12 villages and provided quality education inputs to 683 students.

In addition to providing support to the students at primary and middle level, the classes were also organised for the students appearing in 10th standard. This is the time when most of the students drop out because they can not qualify Maths and science subjects. To deal with this, special classes for such students were organised. These students are taught all subjects of Class 10th and given focus to clear state board examinations at the end of the year. A total of 60% of the enrolled students in this intervention have qualified their 10th standard this year.

Mainstreaming in formal school

Mainstreaming in formal education is one of the integral parts of our theme -"Education". The main objective of this intervention is to bring all "Out of School" students in the ambit of education. A total of 431 students were mainstreamed in the reporting year.

Adult Literacy and Non-Formal Education

Adult Literacy is one of important aspect of the Non Formal Education provided through the trust which helps spread knowledge to the every level of the society. These are generally women, who are illiterate and face daily challenges from reading to the basic daily needs calculations. This year, a total of 53 women have been covered under this initiative. In addition to this, 17 women from SHGs had given 5 months trainings to read Hindi language and on basic mathematics. They were in the age group of 20 -45 years. This helped them grasp knowledge to deal with daily readings such as pamphlets, cards or even calculate the wages they earn or savings they do.

Digital Learning Programs (DLP)

MBT has set up DLP CENTRE to engage the entire surrounding community and significantly impact human development, economic and gender indices. These centres help rural and disadvantaged communities, by facilitating access to information and training services, providing opportunities through capacity building and using ICT as outreach platform and attempt at enhancing existing livelihoods for under-served communities. The initiative of MBT has touched approximately 10,000+ lives till date whereas in the preceding year it has catered to 4000+ beneficiaries.


Moser Baer Trust (MBT) believes that health is one of the core areas of family well-being especially in remote areas such as Anuppur which is one of the important geographical areas of MBT, thus health outreach activities are initiated with theme "Arogya" which involves Mobile Medical Services, Specialized Camps as well as other emergency assistance through Ambulance services. The following are the major highlights of this intervention:

Overall 283 OPDs conducted in which 6793 patients are treated from 27 villages in this year

Apart from daily OPD, 4 health camps and 2 blood donation camps were organized.

1090 patients were treated in these quarterly health camps while 226 donors had donated their blood in two camps during this year

Nearly 91% treated patients are from SC,ST and OBC

Youth Development

YUDAI was developed to groom underprivileged youth from urban or rural areas with a focus Life Skills and Leadership qualities. Furthermore, to identify, train, mentor and form a group of Peer Leaders for preparation of near future. This year 164 beneficiaries were covered and engaged in various activities aiming at developing them as future leaders who spearhead change in their respective communities.

Peer Leaders with the help of Master Trainer work in tandem to train 71 new beneficiaries

Apart from regular trainings, they had Awareness Rallies and Nukkad Natak on "Importance of Education" as part of Sarva Shiksha Abhiyan, Dengue, Anti-Tobacco and Voter Awareness Campaign. These activities were organised by the Peer Leaders with minimal assistance of project staffs.


SAFAL contemplate the possibility to work with the farmers and their families in improving the food productivity thus augmenting cash flows. Further supplementary enhancements are done to directly impact the farmers and their families such as irrigation, check dams, goat husbandry, lighting & sanitation and self-help group creations.

MBT started working in Anuppur district of Madhya Pradesh since 2011, till date a lot of interventions has taken place from cultivation to other major livelihood improvements programs. This years intervention in the varied livelihood programs of SAFAL targeted 7938 beneficiaries. The following are the major highlights of this intervention this year:

Withdrawal of chemical fertilizers has affected the yield significantly (42% fall), the Dhaincha (green manure) effect on the yield have shown incremental value that is up to 10 %.

Paddy, the average production has come to 13.74 Q/acre, In however the average yield is 16.98 Q/acre.

Maize intervention, 95% of the participating families In have yielded more than 10 Q/acre which is above the state average (3Q/acre) and national average (10Q/acre).

Wheat intervention, the average yield for the year comes In out nearly 4.8Q/acre which is higher than district yield (2.94Q/acre) but less than national yield (11.48Q/acre).

Oyster Mushroom cultivation was also promoted this year with 20 families in 15 villages on pilot basis. The average production is 800gm per bag with price 95 Rs./Kg.

Vocational Training

MBT runs vocational training centre with an aim to provide a platform for overall personal grooming and economic security to the village girls coming from poor families. The programme is in collaboration with USHA International and Jan Shikshan Santhan, Ministry of HRD. A total of 201 girls were trained in Apparel Designing, Beauty Culture, Hina Application and Health Care.


As in preceding years, this year too the trust celebrated the first week of December (29th November to 5th December) as the CSR week. This whole week was aimed at enhancing employee voluntarism by organizing various drives and campaigns as well as interactive and creative sessions. As part of the CSR week various activities were conducted including Folk dance by local people from our area of interventions, session on gender equality with employees, Sports Meet and so on. The CSR week is a major event and is organized at our business locations. The whole CSR week culminates into the annual stakeholder meet called SANGAM. SANGAM is the annual event of MBT which celebrates the spirit of partnership every year. SANGAM observed the presence of all significant stakeholders and partners of MBT.


At Moser Baer, our objective is to achieve Zero accidents and Environment sustainability. In order to achieve this objective, we have a fully integrated EHS Management system as one of our core values. We are fully committed to this value and are striving to enhance leadership in EHS within the Organization by creating a culture of work safety in order to achieve the target of Zero accidents. Our "Journey to Zero" begins with the development of leadership actions that will deliver safety performance excellence, while leveraging learning from shared best practices across the entire organization.

Moser Baer as an organization has achieved many milestones in regard to EHS (Environment, Health & Safety); a few of them are listed below:

1. Recycling of materials, energy efficiency and renewable energy are said to be the pillars of sustainable policy. Recycling turns materials that would otherwise become waste into valuable resources. Initiatives taken for conservation of resources during the period included the following :

Saved2715 Keekar trees through in-houserecycling / reusing 17403 wooden pallets for product packing.

Recycled 1617 Tons of polycarbonate during this period.

Recycled 88Tons of solvent.

Reduced HFO consumption with clean fuel CNG& Grid power from NPCL to reduce CO2 emission.

Reduced kitchen waste by installing Biogas plant & producing biogas equivalent to half cylinder of LPG from kitchen waste on a daily basis through our Biogas Plant.

2. Accident rate for the 12 month period was 0.84 as against 1.28 the previous year.

3. Covered more that 83%of associates in EHS Training. Achieved Training rate (Training / man / year) more than 3.5 hrs / employee against 3.00 hrs / employee in the Annual Performance Plan.

4. Designed and developed in-house Fire prevention and Practical Fire Fighting Training and covered more than 667 associates in these workshops.

5. Successful re-certification under the Integrated Management System of ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, Disney ILS Audit and SA 8000:2008 Standards for Environment, Health & Safety Management and Social Accountability respectively, audited by various certifying agencies like Kauffland, SA 8000& DNV etc.

6. Designed, developed and implemented over 15 EHS Training modules like Fire prevention, Lock out /Tag out, defensive driving for drivers, Industrial Hygiene and personal grooming for cafeteria employees, Electrical Safety, Hazards communications, Effective use of Personal Protective Equipment, RoHS Directives, Legal aspects of Industrial Safety, Machine Guarding and Material Handling etc.

7. Elimination of PVC Pouches as per EEEC Directives. Strict implementation of RoHS, REACH Directives and E- waste management system.

8. Substantial amount of material recycling (polycarbonate, dye, silver, etc) to reduce input cost of the product along with improvement in environmental sustainability.

9. Non-use of Banned Substances in product inputs.

10. Benchmarking process with nearby industries to improve EHS systems.

11. Active participation in more than 14 Emergency preparedness (Mock Drills) in the neighbourhood industries, organized by Director of Factories and Chief Fire Officer. 12. We have successfully celebrated the National Safety Day/ Week in the month of March2017with great zeal & enthusiasm.

13. We celebrated the World Environment Day on 5th June to promote the theme of "Connecting People to Nature – In the city and on the land, from the poles to the equator".The company was witness to lot of tree plantation on that day. Commitment of Management & EHS teams remains highly visible for promoting safe environment.