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Limited
A
Compelling
Investment
Opportunity
in
Worlds
Largest
Air
Cooler
Selling
Brand
January 2014
ExecuDve
Summary:
Symphony
Limited
(1/2)
The
world
largest
air
cooler
company
Enjoys
50%
market
share
in
India's
branded
cooler
market.
Sold
575,000
coolers
in
FY13.
The
purchase
price
of
a
cooler
is
less
than
half
the
price
of
an
AC.
Running
costs
are
10%
that
of
ACs.
Owns
and
control
100%
of
US
based
Impco
(acquired
in
2011),
a
pioneer
in
industrial
coolers.
Industrial
coolers
are
ideal
in
applica.ons
where
extreme
heat
is
encountered
or
in
large
facili.es
where
refrigerated
air
is
considered
expensive
or
infeasible.
India
is
a
hot
country
where
most
factories
dont
have
air
cooling,
and
air
condi.oning
is
too
expensive
to
install
Highly
protable
company
with
a
solid
balance
sheet
Pre-tax
ROE
of
98%
in
FY13
aYer
adjus.ng
for
surplus
cash
Asset
light
model
based
on
outsourced
produc.on
Nega.ve
working
capital
demonstrates
signicant
power
over
suppliers
and
customers
Debt
free
balance
sheet
Surplus
cash
and
current
investments
of
INR
1,348million
as
on
June
2013
MulDple
sources
of
Moat
Strong
brands-
which
have
become
synonymous
with
air
cooler
to
millions
in
India
Wide
distribu.on
network
spread
across
4,500+
ci.es/towns
,
750+
distributors
and
16,000+
dealers
across
India.
Also,
has
presence
in
60
countries
Large
scale
provides
low
cost
advantage
and
enables
to
oer
wide
product
range
Access
to
proprietary
technology
:
8
patents,
49
designs,
108
trademarks
and
7
copyrights
Private
and
Conden.al
ExecuDve
Summary:
Symphony
Limited
(2/2)
Huge
untapped
growth
potenDal
in
all
segments
(residenDal,
commercial
and
industrial)
Addressable
market
in
India:
132
million
households
living
in
hot
and
dry
part
of
India.
11
million
in
moderate
clima.c
region.
Only
12
million
households
have
coolers.
Exis.ng
coolers
need
replacement
every
4
years
or
so.
Currently,
the
Indian
air-
cooler
industry
is
growing
at
20%
per
annum;
the
organized
segment
is
growing
faster
at
25%
per
annum
The
industrial
and
heavy
duty
air
coolers
industry
in
India
(es.mated
at
~
INR
70
billion
opportunity)
is
at
a
nascent
stage
of
growth
and
is
gaining
increasing
importance
as
corporates
are
looking
to
create
a
congenial
working
environment.
Impco
has
provided
Symphony
access
to
proprietary
patented
technology
in
industrial
coolers
.
Symphony
has
started
installing
these
coolers
in
hot
workplace
seings
in
India
including
factories
and
warehouses
Current
market
value
is
very
low
in
rela.on
to
poten.al
future
value
given
the
high
protability
and
scalability
of
the
business
model
Private
and
Conden.al
Worlds
Largest
Air
Cooler
Selling
Brand
Overview
Revenue Growth
(INR Million)
R
32%
CAG
1,283
FY 09
2,986
3,197
FY 11
FY 12
FY 13
27
25
25
FY 11
FY 12
FY 13
1,941
FY 10
EBITDA
Margins
(In
%)
33
FY 09
Pre-tax ROE
30
FY 10
FY
10
100%
FY
11
68%
FY
12
67%
FY
13
98%
3,947
SegmentaDon
and
PosiDoning
PosiDoning
between
AC
and
fan,
product
aordability
USP
of
air
cooler
industry
Strong
Brands
Over
the
years,
Symphony
has
been
able
to
create
a
strong
brand
name,
which
has
become
synonymous
with
air
cooler
to
millions
in
India
Symphony
is
Indias
leading
evapora.ve
air
cooler
manufacturer
with
market
share
of
50%
(value
terms)
in
the
organised
product
category.
With
its
focus
on
R&D
and
innova.ons,
Symphony
constantly
evolves
its
products
to
enhance
design,
technology
and
post
sales
services.
The
company
has
launched
more
than
one
new
model
annually
for
six
years.
Symphony
has
created
the
largest
basket
of
23
plas.c
and
64
metal
air
cooler
models
for
diverse
residen.al,
commercial
and
industrial
applica.ons
5.0%
4.0%
4.2%
4.4%
123
3.2%
3.0%
200
150
3.7%
115
100
2.0%
54
60
50
1.0%
0.0%
0
FY
09
FY 10
FY 11
FY 12
FY 13
Wide
Spread
DistribuDon
Network
Global
Network
Presence
in
60
countries
Oces
in
US,
Mexico
&
India
Sales
team
in
15
countries
across
4,500+
ci.es/towns
750+
distributors
16,000+
dealers
across
India
Symphony
has
strengthened
its
distribu.on
network
and
expects
to
scale
from
approximately
16,400
outlets
as
on
June
30,
2013
to
40,000+
over
the
medium
term
across
Indias
rural
and
semi-urban
markets.
The
company
completely
operates
through
an
asset
light
model
wherein
it
outsource
manufacturing
of
air
coolers
to
eight
exclusive
vendors
(total
annual
capacity
~1
million
unit)
in
India
and
uses
the
cash
and
carry
model.
Symphony
acquired
Mexico
based
Impco
to
diversify
into
various
geographies
and
get
the
opportunity
of
cross
selling
products
by
leveraging
an
established
dealers
network.
It
has
also
established
a
full
edged
export
unit
in
Gujarat
(SEZ,
Surat)
with
an
installed
capacity
of
200,000
units
p.a.
Private
and
Conden.al
Company
Milestone
AcquisiDon
of
IMPCO,
Mexico
AcquisiDon
of
Mexico
based
Impco
In
order
to
expand
business
in
developed
na.ons,
Symphony
acquired
a
100%
stake
in
Mexico
based
Impco
S.DE.R.L.
DE.
C.V.
(Impco)
with
an
investment
of
~
INR
35
million
Currently,
Impco
contributes
~18%
to
the
consolidated
topline
with
a
majority
of
the
revenue
(65%
of
overall
sales)
coming
from
centralized
and
heavy
duty
air
coolers
and
the
remaining
(~35%
of
sales)
coming
from
room
coolers.
Currently,
Impco
serves
markets
like
the
US,
India,
Iraq
and
some
of
the
Middle
East
countries.
Symphony
started
leveraging
the
enduring
rela.onships
established
by
Impco
with
large
format
stores
like
Wal-
Mart,
Sears,
Home
Depot,
Lowes,
Famsa
and
Costco,
among
others,
to
widen
its
presence
in
North,
South
and
Central
America
Symphony plans to supply cheap residen.al air coolers to Impco which can then sell them to US and Mexican markets
through
its
distribu.on
channel
which
include
Walmart,
Costco,
Sears,
etc.
Impco
has
provided
Symphony
access
to
proprietary
patented
technology
in
industrial
coolers
.
Symphony
has
started
installing
these
coolers
in
hot
workplace
seings
in
India
including
factories
and
warehouses
Business
Model
Asset
Light
Business
Model
with
No
Debt
10
FY
10
100%
FY
11
68%
FY
12
67%
FY
13
98%
Business
Model
Symphony
Limited
Revenue
FY13:
INR
3,776
million
18%
82%
ResidenDal
Segment
Revenue
FY13:
INR
3,083
million
89%
INDIA
Revenue
FY13:
INR
2,730
million
11%
Rest
of
World
Revenue
FY13:
INR
353
million
ResidenDal Range
11
ResidenDal
Segment
:
Highlights
FY
2013
Product
Development
Sold
574,750
units
in
2012-13
against
495,849
units
in
2011-12
a
16%
growth
Introduced
new
i-series
models
with
unique
features
Dura
pump
technology
resul.ng
in
longer
pump
life
Empty
water
tank
alarm
to
no.fy
whenever
water
tank
is
empty
System
restore
func.on
(the
cooler
will
restart
with
the
same
seings
and
func.on
aYer
any
power
outage
is
restored)
Feather-touch
digital
control
panel
Upgraded
six
models
with
novel
cool
ow
dispenser
oering
beuer
cooling
eciency
DistribuDon
Network
Increased
our
distribu.on
network
from
14,000
dealers
(June
30,
2012)
to
16,400
dealers
(June
30,
2013)
Global
footprint
Widened
the
global
footprint
by
establishing
a
presence
in
Ecuador,
Bolivia,
Armenia,
Kazakhstan
and
Mauri.us
Finalised
a
large
distributor
in
Pakistan
for
focused
market
development
Tied
up
with
prominent
large
format
stores
in
various
na.ons
for
strengthening
our
global
presence
12
Industrial
Segment:
Highlights
FY
2013
Business
Development
Completed
109
installa.ons
against
56
installa.ons
in
2011-12
Penetrated
some
new
industrial
segments,
namely
paints,
logis.cs
and
moulding
industries
Executed
orders
for
some
renowned
brands
namely
Asian
Paints,
DHL,
Dixon
Technologies,
Swaminarayan
Temple,
ISKCON
Temple,
Marico,
Tractor
India
and
Shivam
Auto
Tech
(part
of
Hero
Group)
Received
the
rst
order
from
Indian
Railways
to
install
air
coolers
in
wai.ng
rooms
of
Kota
and
Godhra
railway
sta.ons
Received
a
repeat
order
from
Patanjali
Yogpeeth
DistribuDon
network
Increased
the
dealer
base
from
about
15
dealers
as
on
June
30,
2012
to
44
dealers
as
on
June
30,
2013
Worlds
Largest
Air
Cooling
Project:
Executed
by
IMPCO,
Mexico
13
Indian
Air
Cooler
Market(1/3)
The
highly
fragmented
Indian
air
cooler
industry
is
es.mated
at
INR
20
billion
with
approximately
50%
of
the
business
contributed
by
un-organized
players
and
organized
players
contribu.ng
the
remaining
50%
to
the
industry.
These
organized
players
include
Symhony,
Kenstar,
Bajaj,
Usha,
Orient
Fans
and
Havells.
Un-
organized
Market
50%
15%
Organized
Market
50%
50%
30%
Symphony
Kenstar
Bajaj Electricals
Others
The
industrial
and
heavy
duty
air
coolers
industry
in
India
(es.mated
at
~
INR
70
billion
opportunity)
is
at
a
nascent
stage
of
growth.
Symphony
is
the
only
branded
player
Poten.al
clients
include
mainly
factories,
godowns,
commercial
space
and
large
residen.al
houses.
14
Indian
Air
Cooler
Market(2/3)
Key
Demand
Drivers
of
Air
Cooler
Market
in
India
In
India,
especially
among
the
mid-income
groups,
there
is
a
huge
demand
of
air
coolers,
especially
for
the
cost
of
ownership:
an
air
condi.oner
costs
between
INR
23,000
to
INR
35,000
whereas
branded
air
coolers
(like
Symphony)
cost
between
INR
4,500
to
INR
17,000.
Besides,
air
coolers
consume
90%
less
electricity
compared
to
air
condi.oners
a
cri.cal
factor
in
swaying
the
decision
in
favor
of
the
coolers.
Air
cooler
(Symphony
Jumbo)
Air
condiDoner
(1.5
tonne)
Growing
Middle
Class
and
Increasing
UrbanizaDon
15
Indian
Air
Cooler
Market(3/3)
Key
Demand
Drivers
of
Air
Cooler
Market
in
India
Rising
disposable
income
would
provide
more
room
for
expenditure
in
discre.onary
items
Growth
in
Middle
Class
Income
and
DiscreDonary
Expenses
will
Fuel
the
Demand
of
Air
Coolers
Global Warming
With
rising
average
temperatures
(Indias
mean
temperature
increased
from
18.7C
in
1973
to
23.2C
in
2012),
air
cooler
market
is
expected
to
grow
Industrial
cooling
is
gaining
increasing
importance
as
corporates
are
looking
to
create
a
congenial
Increasing
demand
for
industrial
air
cooling
globally
working
environment
For
certain
factories,
centralized
cooling
becomes
mandatory
due
to
opera.onal
process
or
product
characteris.cs
like
tex.le
applica.ons,
certain
dyes,
chemicals,
etc.
In
factories
that
house
large
boilers,
large
furnaces
and
other
equipment,
that
generate
lot
of
heat,
air
cooling
emerges
as
the
only
cooling
solu.on
in
these
areas.
Also
nd
applica.on
in
warehouses
that
need
to
store
material
at
controlled
temperatures
16
Management
Has
Learnt
Important
Lessons
from
Its
Past
Mistakes
So
while
we
were
engaged
in
videa0ng
how
to
restructure
the
Company,
one
of
the
many
responses
was
a
small
idea,
which
suggested
Be"er
to
generate
a
lower
return
with
a
lower
capital
outlay
and
no
debt
than
a
higher
return
with
a
larger
capital
outlay
but
a
liberal
quantum
of
debt
Company
Annual
Report
FY
2012
FY
04
248
4
(18)
(18)
FY
13
3,947
959
913
602
2%
-7%
24%
15%
EBITDA
Margin
PAT
Margin
Market
Cap
31
11,018
EPS
(1)
17.2
Dividend
Pay-out
Ratio
( %)
-
38
Networth
Debt
Debt
to
Equity(x)
(72)
2,001
172
-
(2)
0.0
17
Symphonys
Track
Record
of
Growth
and
Protability
In
INR
million
FY 09
FY 10
FY 11
FY 12
FY 13
CAGR
22%
9%
Revenues
EBITDA
PBT
PAT
32%
24%
EBITDA
Margin
PAT
Margin
32%
34%
29%
19%
26%
17%
25%
17%
3,947
959
913
602
Networth
Debt
Debt
to
Equity(x)
Pre-tax ROIC
n.a.
100%
68%
67%
volumes
Increasing
realiza.on
rate
over
the
years
Revenues
grew
at
CAGR
of
32%
9%
24%
15%
Market
Cap
385
3,481
7,597
6,879
11,018
EPS
12.4
10.6
14.6
15.2
17.2
Dividend
Pay-out
Ratio
(%)
2
5
14
36
38
Strong growth in
of over 15%
131%
9%
Excellent returns
98%
Despite
huge
value
crea.on
(market
cap
has
grown
over
480
.mes
in
the
last
10
years),
the
stock
is
s.ll
selling
for
less
than
13
.mes
pre-tax
earnings
(TTM
Mul.ple).
18
Thank You
19