CD media prices to go up by 20-25 percent; shortage expected

Prices of blank CD media are expected to go up by nearly 20-25 percent in the
Indian market. This drastic price hike is linked to a number of phenomena
experienced in the global market. Most significant of which is the fact that
despite a heavy increase in the consumption, new manufacturing lines have not
come up to cater to increased demands. Secondly, with CD media prices touching
rock-bottom, manufacturers worldwide have shifted their focus on DVD media,
which still continues to bring in good margins.

Devang Shah With worldwide shortage in raw material for CD media, prices will rise steeply in days to come

Already leading Taiwanese manufacturers including Ritek and CMC Magnetics
have announced a hike of nearly 20 percent. "We would also be reacting to
these price hikes. Prices of our blank CD-R are expected to touch Rs 10.50 as
compared to Rs 9 per unit currently," says Gautam Broker, MD, Computerskill.
Computerskill manufactures Sprint brand of CD media and is the only other
optical media manufacturing entity in the country apart from Moser Baer.

Gautam feels that within two-three months time, prices may even rise to the
extent of 60-80 percent. Agrees Devang Mehta, Director, Crystal Impex,
"With an acute shortage of Polycarbonate, the basic raw material for CD
media, happening across the world, prices are going to rise steeply in the days
to come."

Gautam also cautions of a shortage to happen in the months of March and
April. "Over 50 percent of Indian demand is catered by imported material.
However, with manufacturers not offering supplies until April, the Indian market
could face with acute shortage." Gautam informs that presently the Indian
market consumes approximately 22-27 million units of CDs annually and that the
market grows between 6-7 percent every month.

However, resellers are reported to be feeling good about this hike. "We
had nearly stopped dealing in CD media after incurring heavy losses because of
rampant price-drops that was happening every fortnight for the last eight
months. Now we can at least recover our money with this price hike," says
Hasmukh Javeri of 21st Century.

Gautam too shares the same view and says, "So far we were earning
wafer-thin margins. Now with this price-hike, we can at least enjoy reasonable
profits." However, Gautam dismisses that either Computerskill or Moser Baer
will enjoy an advantage in case of a shortage. "Both these companies have
prior export commitments, which we cannot compromise upon just to cater to the
shortage in Indian market."

GOLDIE