Thursday, December 21, 2006

Is Moser Baer on a winning track ?

From Economic Times Moser Baer is planning to come out with Hindi movie DVDs at Rs 38, VCD at 24. If they can get this pricing going, It will be run away winner.

Does this pricing sound feasible ?
They are promising FMCG margins to retailers so lets say 20% or Rs 8 per DVD
Royalty , lets say is 10 Rs per DVD
That leaves Rs 20 for manufacturing, packaging, distribution, inventory carrying costs & profits
Blank DVDs retails for about Rs 10, So it appears that if they have got the manufacturing costs right and can get their demand forecast right, they may be able to pull it off.

Even if they don't, I like the bold move made by the company which has been through some tough times in the last couple of years

Dislosure : I do not own any Moser Baer stock.

3 comments:

Neelakantan said...

That will break the back of the pirates hopefully, while giving the company room to survive/thrive...

RJ said...

Pirates seem to focus on new movies. I expect with the kind of royalty that Moser must be considering, new movies would not be on offer. So not sure if it will do much to fight piracy

Rajesh said...
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