Symphony hopes to expand its margins via premium products
Symphony is looking to expand its margin by 2 per cent through improving product-mix and newly-launched premium products.
Its higher-priced products would perk up realisations by 5-10 per cent from its current Rs 6,055 per unit for H1FY14. In the past five years, sales of premium products have touched half of its total volume. Symphony commands a price premium of 10-15 per cent.
“We have continuously launched new products as the customer is aspiring to own better air coolers with better technology from our R&D centre,” said Bakeri. “Higher realisation and continued shift of consumers from unorganised to the organised sector would improve our volume, and thereby margins.”
The cumulative size of the air cooler market in India is about Rs2,500 crore, of which 15 per cent is with organised players. Among the organised players, Symphony holds 40 per cent market share by volume, while 30 per cent is with Videocon/Kenstar. “Being the market leader, we can increase prices by 10 per cent every year and are likely to continue with it, given the cost pressure,” said Bakeri. “We are likely to increase ad spend by 30 per cent every year and keep ad expenditure at 4 per cent of sales,” he added.
The company plans to maintain volume growth of 30 per cent CAGR for the next five years, and with improving conditions in Mexico, export sales are expected to gradually pick up. Currently, its export sales contribute 16 per cent of sales, of which 30-35 per cent comes from Mexico. The Mexico plant is currently operating at 40 per cent capacity utilisation.
The biggest risk for the company has been the cyclical nature of its revenue; the first two quarters have almost nil sales and most of the sales come from the last two quarters. But the company has chalked out a strategy to spread out sales throughout the year by giving discounts to dealers -- 30-35 per cent -- to help sales in the lean season. On an weighted average, the discount ranges around 25-27 per cent.
Symphony’s stock closed at Rs521, up 5 per cent, on the BSE on Monday. Financial institutions Mathew International holds 3.07 per cent while Axis MF holds 1.45 per cent in the company.