were sold out that summer.
Bakeri, who had seen his family
struggle with collections in the
real estate business, was clear
that he would not extend credit to
anyone when he started Symphony.
Even today, the company pays its
manufacturers upfront in exchange
for cash discounts and supplies to
dealers in exchange for immediate
payment. (Well-known chains
like Tata Croma and Vijay Sales,
though, are allowed short credit
periods.) This frees Symphony
from the burden of working capital
requirements—it does not have to
borrow for its day-to-day operations.
After the initial success, Symphony
progressively expanded sales across
Gujarat and then across India, with
the help of an aggressive marketing
strategy. “In 1989, we might have
clocked sales of 3.5 crore, yet in 1990 we spent as much as1.8 crore on
advertising,” says Himanshu Shah,
director, sales and marketing, at
Symphony. Liberal advertisement
spends helped it become a national
brand. In 1994, the company went
public raising a little over 10 crore. And then, the music stopped. Being a publicly traded company, analysts, at meetings with Bakeri, stressed that Symphony is focusing on just one product, whereas competitors like Usha, Crompton Greaves and Polar were multi-product companies. Moreover, air cooler sales were dependent on a hot summer and Symphony needed a range of all- weather products, they opined. Seeing reason in the argument, Bakeri started diversifying his product range in 1995 making, among other things, geysers and washing machines. However, he had underestimated the competition in these categories. The next 14 years were the toughest in his life as he witnessed the net worth of his company erode. Compared to a profit of3.5 crore in 1994-95, the
company posted losses of `5.16 crore
in 2000-01. As Bakeri told Forbes
India in a 2015 story, “We spent seven
40 | forbes india August 4, 2017
india’sSuper 50 companies
years digging a hole and then seven
years getting out of it.” In 2002-03,
the company filed for bankruptcy and
approached the Board for Industrial
and Financial Reconstruction (BIFR),
the government agency that assists in
the revival of sick industrial units.
Having burnt its fingers trying to
diversify, Symphony now decided
to focus only on air coolers. It
emerged from BIFR in 2009 to
create Symphony 2.0 with a single-
product strategy. The move came up
trumps and eventually catapulted it
to the position of market leader in air
coolers. The battle-scarred Bakeri is
candid in admitting that without the
experience of seeing his company
crumble, he would probably not have
created the `9,400 crore company
(by market capitalisation as on July
11, 2017) that Symphony is today. And
with the phoenix-like resurrection
near complete, he is now expanding
the global footprint, in what is
Symphony’s third, and possibly
most exciting, phase of growth.W
hile Symphony went
about expanding in the
domestic market, it is its
two international acquisitions that
provide further insight into the mind
of Bakeri. Even as a global player, he
retained the same asset-light model.
In 2008, the company acquired
International Metal Products
Company (Impco), which was started
by Adam Goettl, who patented the first
ever air cooler in 1930. After a series of
ownership changes, the company had
ended up in the hands of American
private equity group Castle Harlan
that was looking to sell. Symphony
paid $650,000 (`2.6 crore then) to
acquire the company along with a
debt of $25 million. The debt helped
it get a tax write-off and the $650,000
Symphony paid was recovered
within six months of operations.
“Their respect for capital is
phenomenal and this shows in
the [low] price they have paid
for their overseas acquisitions,”
says Nilesh Shah of Envision