August 4, 2017 forbes india | 41Capital, a value investing firm
and a Symphony shareholder.
With Impco, Symphony lost no
time in converting it into a low-cost
operation. The company was put
through the Mexican equivalent of
Chapter 11 (a form of bankruptcy that
involves restructuring a company’s
debts and assets) and creditors
were paid off a fourth of what they
were owed. Real estate was sold and
manufacturing was discontinued
(coolers were supplied from India).
Impco was a pioneer in industrial
cooling and Symphony brought the
product to India where it has been
installed in places like yoga guru Baba
Ramdev’s ashram in Haridwar, an L&T
factory in south Gujarat, Decathlon
stores in Ahmedabad and Ludhiana,
a Hitachi factory in Ahmedabad and
parts of the railway station in Kota.
Bakeri says the market for industrial
cooling is largely untapped and the
growth potential is huge. “We have to
create a market from scratch,” he says.
“Many factories in India are very hot
bakeri is now expanding the
company’s global footprint,
in what is its third and most
exciting phase of growthSymphonyduring summers. While installing air
conditioning would be very expensive,
we tell customers that air cooling is
not only cost-effective but would also
improve the productivity of workers.”
Even as the synergies with Impco
were playing out, Symphony, in 2016,
completed the acquisition of Chinese
air cooling company Munters Keruilai.
It paid `1.55 crore for the company
that had a thriving industrial cooling
business. As Bakeri explains, “The
market in China for air coolers is
20 times that in India but also very
fragmented. So even a small slice
of a large pie is a lot,” he says. Since
the acquisition, Symphony has made
China its base for industrial coolers,
from where they are manufactured
and shipped all over the world.
Importantly, even though Keruilai
was acquired for a song, it had no debt
and the book value of the company
was higher than what Symphony
paid. Bakeri quips that the promoters
would have “given it for free”, giventhat it was a loss-making venture.
Keruilai’s turnaround is still a work
in progress and Symphony hopes
to make it profitable by 2018.
For now, Symphony is also
focusing on the export market. It sells
across most of Europe, the Middle
East, eastern Africa, Southeast Asia
and Latin America. At present, 22
percent of its revenues come from
overseas sales. Demand for air
coolers as well as the recognition
of the Symphony brand name
have risen steadily abroad.
As the company has grown, Bakeri
has also had to grapple with thechallenges that entrepreneurs take
while expanding. These include
everything from installing enterprise
resource planning software to getting
the right people to work for him.
Bakeri says this has proved to be less
of a challenge than he expected. As
the company has grown, they have
found it much easier to attract the
right type of talent. In any case, most
of his top team has been the same
since the company started in 1988.
For his foreign subsidiaries,
Bakeri has kept the managements
local. Indians do visit frequently but
operations on the ground are left to
those who understand them best. “All
we ask for is vegetarian food when we
visit,” says a company presentation.
Symphony’s business is largely on
autopilot. The company continues
to spend on advertising—`41 crore
in 2016-17, 32 percent higher than
the previous year. And there is
scope to grow. “Out of an estimated
250 million homes in India, only25 million have air coolers, 10
million have air conditioners, and
60 million have fans,” says Bakeri.
Shah of Envision Capital says he
was attracted to the business due
to its long growth runway. “For
the next 10-20 years, growth in
this business is a given,” he says.
So is there anything that gives
Bakeri sleepless nights? “Yes, the
weather. That is the only thing
we have no control over. A bolt
of thunder in April can send our
sales plummeting,” he says.
As for the rest, he seems to
have his plans sorted.The market for
industrial cooling is
largely untapped and
Symphony is looking
to grow from scratch