Beating The Heat
Forbes India|August 4, 2017

Missteps in diversification once pushed air cooler Maker Symphony to bankruptcy. Wiser froM the ordeal, founder achal bakeri is noW taking the coMpany global through acquisitions

Samar Srivastava
Beating The Heat

Unlike most entrepreneurs in the white goods segment, Achal Bakeri, 57, has not built factories with rows upon rows of assembly lines. Nor does his venture Symphony Ltd have a finger in every pie of the sector. A single-product company, it devotes all its resources to what it does best—making air coolers.

Symphony develops its products in-house and provides the tools for manufacturing, but outsources the final assembly to third party plants. Its employees look after vendor management and quality control.

It is this asset-light—and consequently capital-light—model that has made the stock a favourite among investors. Shares of Symphony, which could be picked up for a little over ₹100 five years ago, were trading at ₹1,364 on BSE on July 11, 2017—that’s a compounded annual growth rate of around 62 percent in the period.

More importantly, Symphony has chosen to return cash to its shareholders. Its return on net worth has always been above 30 percent in each of the last five years. “Returning excess capital to shareholders is the hallmark of a good business and shows that the interests of the promoters are aligned with those of minority shareholders,” says Utpal Sheth of wealth management firm Trust Capital.

Devoid of major heavy assets, Symphony has been modelled as a “product innovation, marketing and distribution company”, says Bakeri, founder chairman and managing director.

The result has been a clear pole position in the domestic air cooler market and financials that are in the pink of health. Revenues in FY17 grew to ₹768 crore, clocking a compounded annual growth rate of 16 percent over the last five years. Profits, too, have kept pace, expanding at 22 percent a year in the same period, touching ₹165 crore in FY17.

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