SYMPHONY Board to consider Sub-division of equity shares     


     Symphony Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on October 18, 2011, inter alia, to take on record unaudited financial results of the Company for the first Quarter ended on September 30, 2011, and also to consider split (sub-division) of its equity shares having existing face value of Rs. 10/- (ten only).

IDBI capital has come with a buy report:
http://myiris.com/shares/research/brokResMain.php?icode=SYMCOMSY&cSelect=4

The report also has other TED favorites - Hawkins & TTK.

Happened to see Symphony coolers at Harmony House in Kolkata. Was surprised since Kolkata weather is humid for an air cooler to function. The sales guy indicated that small shop owners buy these coolers as these serve an alternative to ACs/ fans when space is not there.

Conference Call      
          Symphony
The Company expects 500 crore top line for FY'12


Symphony ltd announced financial results for the quarter ended September 2011 and held conference call on 18th October 2011 to discuss the results and its future growth strategies. The key takeaways of the call are as follows

Highlights of the Call:
On standalone basis, net sales grew by 24% to Rs 28.78 crore for the quarter ended September 2011. Further, it reported 85% growth in net profit to Rs 4.41 crore.
Revenues from domestic business grew by 20% to Rs 24.79 crore for the quarter ended September 2011, contributing 86% to the total sales. In addition, Export business witnessed robust 57% growth to Rs 3.99 crore for the same period contributing 14% to total sales.
The Company continues to be focused on the Air cooler business, as it is strong area since the longtime. Interestingly, 95% of revenues come from the Air cooler business. The rest comes from the heaters business, which witnessed decline in the volumes during the quarter.
The air cooler industry is growing at 30% and expects the company will grow at same level going forward. Its market share in air cooler business is about 70% for the quarter ended September 2011.
The total air cooler sales volume grew by 40% to 58800 units for the quarter ended September 2011. The domestic sales volume is at 48000 for the same period as against 35000 in the corresponding previous period. Further, the export sales volume is at 10,800 for the same period as against 6900 in the corresponding previous period.
It has reported forex gain Rs 2.51 crore for the quarter ended September 2011 as against forex loss of Rs 1.04 crore in the corresponding previous period. The forex gain during the quarter is mainly contributed from the loans and advances (70%) and the rest is from the net export receivables (30%).
The Company about to introduce two new air cooler models – With the MRP Rs 12000 air cooler covers 700 square feet and Rs 15000 air cooler to covers area of 1000 square feet and already bookings have been stated.
The q1&q2 are the off-season for the company businesses and the 80% revenues will be come in the q3 and q4 (On Season). The working capital requirement will be peak in the Jan-July period (before the start of the season to end of the season). The accounting year for the company is from the July-June.
On Standalone basis, the inventory is at Rs 33 crore as on September 30th 2011 compared to Rs 42 crore as on June 30th 2011. On Consolidated basis, the inventory is at 70 crore as on June 30th 2011.
The production is already started from the new SEZ unit and it expected to substantially increase by November 2011and currently producing 500 units per day. Further, going forward the 60% of total exports expected to be contributed from the new SEZ unit and this expected to result in tax reduction going forward.
In domestic market 30% of revenues comes from the Tier-1 cities and the rest are being from the Tier 2,3,4 cities. Further, it insisted that export and import margins are almost same.
The Company done with the most of the recruitments in the domestic market. Further, it expected to add few in the international business.
On Consolidated basis, The Company expects 500 crore top line for the FY'12 with margins being maintained at the same level.

Attended the AGM, they did a detailed presentation.

The organized air cooler mkt is 900 cr. and growing at 30% CAGR, the industrial cooler segment is growing at 15%. They indicated that they should do a 30% CAGR for next couple of years. In Q1 earnings calls they had indicated to do 500 cr. by FY13. From my sense this is a conservative estimate specially considering that this time a good summer would have ensured them crossing 340 cr. The summer obviously can play spoilsport in which case anyways the targets might not be met.(There is an Anand Rathi report out on 3rd Nov which indicates 28 % CAGR Sales and 30%+ CAGR in profits, the synopsis is in this report - http://www.dsij.in/productattachment/BrokerRecommendation/Symphony_Buy_Anandrathi_3Nov2011.pdf)

They have got an order for cooling Walmart stores in c. America and talks on with others for industrial coolers in India.

They have spent 13 cr. for buying land where the new office and factory will be consolidated (similar to Bajaj Corp). This would ensure that operational efficiency improves due to proximity. They were also clear that they would not like to incur any heavy capex in future where the returns do not get covered in one year.

Some sculltlebutt:
- There is a photo in latest India Today where the Sumo model is visible as out of focus in a photo of Karunanidhi.:)

- There are couple of players in industrial cooling in India like HMX Systems(http://www.hmx.biz/index.php/latestnewsletters/9-vol5e3), Breezair(http://www.breezairindia.com/client-list).

- Breezair has a significant presence globally. The parent Seely also owns Convair which is for consumer air coolers.
EcoCooling is another interesting player in UK which caters to industrial coolers and has done project for Marks & Spencer in Sri Lanka.

- There are few brands in US/Mexico like Cool-Space, Essick, Champion, Phoenix, Munters, Port-a-cool etc. etc.

- There have been quiet some interest in evaporative coolers from Govts in western world e.g. there are studies in California state.

- Xcelenergy gives rebates for using evaporative coolers - http://www.xcelenergy.com/staticfiles/xe/Marketing/Files/NM-Res-Evaporative-Cooling-Prequalified-Equipment.pdf. Symphony is listed here.

- There are countries in Europe also which give discounts on coolers as energy efficient products. I was talking to a friend and in Switzerland it gets fairly warm in summer. For installing ACs you need to take Govt permissions and most houses do not have ACs. For such places air coolers can have a ready market. Similar is the case as mgmt indicated in Russia & Siberia where for the people a 30-deg Celsius temp feels hot. In places like Alaska there are tower fans used and this can be a big potential mkt.

- A UN report from 1999 indicates that India was around 50% of the market, US around 20% and rest is taken up by South Africa, Australia, Pakistan, Saudi Arabia. This report also mentioned that there were 40 buses in US and more than 1200 in Australia that used evaporative cooling in buses.

- I have seen the Symphony dealer presentation and they compare Chinese products to Symphony. Most Chinese products have complex electronic controls which fail due to to humidity, and the air delivery typically is lesser and some of them also have heaters .

Symphony looks to be in a good spot and probably can expand this market globally if they play right. The competitors outside India do not seem to be focussed e.g. Seely has other products/brands, EcoCooling is focussed in Europe, most of the US/Mexico players also concentrate locally.