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Pentafour to move CD-ROM plant to Dubai

Poor infrastructure like inadequate power, water and air-conditioning has forced the move Pentafour Software claims.

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"The Dubai government has already sanctioned us special land near the airport zone. We have also obtained permission to set up the CD-ROM plant without a local joint venture partner," V Chandrasekaran, chairman and managing director of Pentafour Software, has said.

Many Middle East countries do not allow 100 per cent foreign investment. However, the Dubai government has made an exception in the case of Pentafour Software.

Once the plant is moved to Dubai it is expected to become the first such facility in the whole of the Middle East.

"We were initially looking at the US, Singapore and the Middle East as possible destinations for the plant. But we have more or less decided on Dubai," Chandrasekaran said.

The Madras CD-ROM plant is to be moved to Dubai during this fiscal year and the shifting process is expected to take about six weeks.

The fully integrated plant was set up in phases spread over three years. The company had invested about $8 million in the plant. The fully integrated facility has state-of-the-art pre-mastering, mastering and replicating facilities.

The plant has the capacity to manufacture 12 million audio CD-ROMs per annum with a minimum economic order level of about half a million CDs. The plan can also manufacture 9 million CD-ROMs per annum on a single-shift basis.

The plant has produced over 100 CD-ROM titles in the past.

However, the plant has been operating way below its capacity due to the infrastructure bottlenecks. "At the time of setting up the plant, we were expecting 12 to 15 per cent of Pentafour Software's revenues to come from the it. But right now only 7 to 8 per cent of the company's revenues are coming from the plant," Chandrasekaran said.

"Infrastructure problems like saltish water and erratic power supply have increased the rejection rate of the CD-ROMs considerably. The plant is also not labour-oriented; thus taking away India's cost advantage. International manufacturing cost will not be much higher than India," Chandrasekaran explained.

"We will soon be asking permission from the Department of Electronics to move the plant," he added.

Also, Pentafour Software will become a zero-debt company as it plans to retire its borrowings from the proceeds of a recent private placement. "We do not have to take approval from financial institutions for moving the plant. These are some benefits of being a zero-debt company," he said.

- Compiled from the Indian media

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