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India's largest optical disc unit coming up

The Fidelity Group, which is part of the TV Sundaram family of businesses, will invest an estimated Rs 730 million in the project. The manufacturing facility will be spread over 12 acres at the Gujarat Industrial Development Corporation's Electronics Estate in Gandhinagar, the capital of Gujarat.

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The Rs 1.75 billion Madras-based Fidelity is joining hands with the $5.6 billion Japanese conglomerate Hitachi Zosen to produce 16 million optical discs annually.

The project is being set up at Fidelity's latest acquisition, R C Laser Tech (I), till recently an NRI-promoted public limited company which has since been renamed Multimedia Frontier Limited after being taken over by the Fidelity Group.

Incidentally, R C Laser Tech, which was set up to manufacture compact discs, was sold off to the present promoters in 1996 because of the earlier promoter's inability to raise equity.

D V R Seshadri, managing director, MFL, said "Of the investment of Rs 730 million, Rs 310 million is to be raised through equity and the rest, Rs 420 million, through loans."

Equity funds from promoters are to not exceed the current level of Rs 100 million and so the balance is to be raised through private placements with foreign institutional investors and venture capital people.

According to the company, Rs 90 million has already been raised through private placement and the remaining equity, worth Rs 120 million, will be placed by the middle of 1998.

Secured loans worth Rs 260 million have come from the project funders - Industrial Development Bank of India, State Bank of India and Canara Bank - and the rest is to be tied up with the placement of remaining equity.

"The company has already tied up Rs 500 million to be invested in phase one of the implementation. Another Rs 230 million will be invested in phase two, targeted to be up and running by 1999," he said.

The first phase is expected to see the company reach its annual production capacity of 16 million discs, which would include CVDs and audio CDs apart from the regular CD-ROMs. Phase two of the project plans to set up a backward integration facility for mastering. "Next on the company's agenda is the manufacturing of DVDs," Seshadri added.

Hitachi-Zosen's participation in the project is envisaged as technology partner and a commitment to outsource 80 per cent of the facility's manufacturing capacity. However, the Indian partner does not rule out equity participation by the foreign collaborator at a later stage.

- Compiled from the Indian media

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