Ratal Puri of Moser Baer discusses his strategy as he switches focus from Optical storage to Photovoltaics
Q: So, it was in 2004 that you realized that your storage media business was going through a phase of struggle?
I think what we saw in the core business (optical media); two things that happened. First growth rate slowed down. Growth rates in the global markets fell off from 3 years prior CAGR of 70-80% down to a CAGR of 15-20%. So you saw a significant slowdown in growth rates. That was scuttled with two factors. One was the petrochemical cycle which started to see an upsurge and that caused input costs to go up for us. And we saw a period of oversupply develop. So, 2004 onwards till about 2007, the industry was still trying to sort out its oversupply problems. And typically these cycles take anyway between two to four years to work themselves out of the system. There was a third factor which was that Blu-ray which is a very critical factor; every five years the optical industry needs a new format to come in and drive growth. Blu-ray got caught in a series of difficulties. So, Blu-ray which was a new format that needed to come in and reinvorigate the market, because when a new format comes in you typically start at very high margins, it is a very profitable product. But, once the product gets commoditized your margins fall off. So, we had costs increasing in the commoditized product, we had over supply developing and the next generation format which could drive growth, which could potentially solve oversupply and other problems continuously get pushed back.
Q: Do you think that a lot of the overcapacity problem of the PV industry has to do with the pace at which the Chinese manufacturers grew?
Under capacity existed for the last four years. What happened at the end of 2008 has got nothing to do with the Chinese creating too much capacity. It happened due to the European credit markets. If you look at analyst research going back a few years, you would find supply shortages existing up to 2009 and a possible equilibrium by 2010. The challenge was not coming from a supply perspective but it came because of a credit crisis.