Symphony Ltd Management Discussions.


In 2017, a decade after the global meltdown, a revival was evident: reported 3.8% global growth in 2017, nearly 60 bps higher than the previous year. The one blip was an increase in crude oil prices in 2017 (beginning the year at $54.13 per barrel and closing at $61.02 per barrel, the highest since 2013), which affected oil importing countries where disposable incomes were affected.

Global economic growth
Year 2014 2015 2016 2017 2018 (f) 2019 (f)
Real GDP Growth (%) 3.5 3.2 3.1 3.8 3.9 3.0

[Source: World Economic Outlook, January 2018] f: forecasted]

US entered its ninth straight year of growth in 2017 (2.3% compared to 1.6% in 2016). The Euro zone experienced the upside arising out of cheap money provided by the central bank. In 2017, Euro zone is estimated to grow 2.4% compared with 1.8% in 2016. China grew faster than expected in the fourth quarter (October to December) of 2017 at 6.8%, its first annual growth in seven years. Emerging Asia GDP was estimated at 6.5% in 2017. GCC countries were affected by the oil price decline (~60% since 2013), resulting in macro-economic instability that affected job creation and growth - GDP of 1.8% in 2017. Russia appeared to have exited a two-year recession and was estimated to grow 1.9% following negative growth of 0.6% in 2016 (WEO) and a projected GDP growth of 1.8% in 2018.

[Source: MOMR] Brazil grew at 1.1% in 2017 following a deceleration of 3.5% in 2016, boosted by the agricultural sector which grew by 13%.]


The outlook for advanced economies improved, notably for the Euro area, but in many countries GDP per capita was affected by weak productivity growth and rising old-age dependency ratios. Global growth forecasts for 2018 and 2019 were revised upward by 20 bps to 3.9%.

[Source: WEO, IMF]


After registering a GDP growth of over 7% for the third year in succession in 2016-17, the Indian economy headed for slower growth at 6.7% in 2017-18. The year under review was marked by structural reforms: GST introduction, addressing bank non-performing assets, FDI liberalization, bank recapitalization and privatization of coal mines. Foreign exchange reserves rose to US$ 414 billion as on January 2018.

[Source: CSO, economic survey 2017-18]

FY2017-18 Vs FY 2016-17
2017-18 2016-17
GDP growth 6.7% 7.1%
GVA growth 6.4% 9.0%
Farm growth 3% 9.0%
Manufacturing growth 5.1% 9.3%
Power and gas growth 7.3% 6.5%
Construction growth 4.3% 3.5%
Trade, hotel, transport, telecom growth 8.3% 9.8%
Financials, realty growth 7.2% 9.8%
Per capita income growth 8.3% 9.7%



The World Bank has projected that Indias economic growth will accelerate to 7.3% in 2018-19 driven by strong private consumption and services and adjustment to GST. The recapitalisation package for public sector banks announced by the Government of India is expected to resolve banking sector Balance Sheets, enhance credit availability and spur investment.

[Source: IMF, World Bank]


The Indian consumer electronics market is vast, encompassing a widening range of household appliances and convenience products, forecasted to reach $118.4 billion by 2025. [Source: Grand

View Research, Inc.]. The market has grown at 11% CAGR over FY12-17 and could double over five years catalysed by rising disposable incomes, rapid urbanization, opportunities for innovations, new market categories and ongoing premiumization which are some of the key factors that are expected to catalyse market growth in India (Source: Edelweiss). Much of the optimism is derived from the fact that with an ‘emerging middle class population of more than 500 million and 65% of the countrys population aged 35 or below.

Growing population and GDP growth….

GDP and population growth 2016 –50 (P), billion USD and billion people, respectively

2016 GDP PPP* billion CAGR - GDP PPP, 2016 population CAGR - population
USD (E) 2016–50 (P) estimates, billion (E) 2016–50 (P)
USA 18,562 2.4% 0.3 0.6%
China 21,269 3.5% 1.4 -0.1%
India 8,721 5.0% 1.4 0.7%

* Estimated at 2016 constant prices

[Source: The World in 2050 – summary report, PwC, 2016; OECD]

…could churn the Indian economic pyramid

Population pyramid in India 2010–21 (P), population in millions

Existing (S = 1.19 billion), 2010 Forecast (S = 1.36 billion), 2021 (P)
Upper middle 80 190
Middle 170 300
Emerging middle 470 570
Lower 460 290

Note: Annual Household income levels (INR) assumed: Upper middle (> 8,50,000), Middle (3,00,000–8,50,000), Emerging middle (1,50,000–3,00,000), Lower (1,50,000)

[Source: Profitable growth for the globally emerging middle, PwC, 2012]

…Resulting in higher appliance a_ordability

The Indian ACE market 2017-22(P), INR billion

2017 (Existing) 2022 (Forecasted) CAGR (2017-22)
Smartphones 900 1400 9%
Other Appliances 1150 1750 9%
Total 2050 3150 9%


The Indian air cooler market is one of the most exciting and competitive spaces within Indias cooling segment. The air-cooler market is seen as a step leading to the air-conditioner market and generally seen as the first-time preference of all those needing a room-cooling solution. Over the last couple of decades, the air-cooler market in India has grown on account of growing incomes and aspirations coupled with large non-humid tracts where product suitability is relevant.

The market for air-coolers in India was estimated at around H3,500 crores; and nearly 30% was accounted for by organized players. It is estimated that around 65% of Indias population owned ceiling and table fans, ~14% owned air coolers and 6% owned ACs, presenting a basis for the growth of the air-cooler market. The Indian air cooler market is anticipated to grow at a CAGR of 27%, in value-terms, during the period of 2017-2022, the low market penetration correcting on account of rising incomes, electrification, aspirations and lifestyle convenience. Besides, the emphasis on affordable housing could represent an inflection moment for the air-cooler segment: the larger the sector grows, the faster it could grow.

Despite the growing market for ACs, Indian consumers prefer air coolers for its affordability and efficiency. The benefits of air-coolers comprise:

Low-cost, eco-friendly, and energy-efficient over air-conditioners.

Cools air through evaporation of water.

Operates with maximum efficiency with free-flow of fresh air and adequate ventilation.

Best suited for residences, showrooms, shops and offices where doors are opened and closed frequently.

Consumes significantly less amount of electricity without producing harmful emissions.

The emergence of wall mounted and multi-functional air coolers are gradually contracting the gaps with ACs. While wall-mounted air-coolers are convenient as they do not occupy floor space and can be easily fixed to the wall, they are also characterized by 10x lower consumption of electricity when compared to a split AC. Multi-functional air-coolers offer the benefits of mosquito repellence; Symphonys i-PURE technology comprises bacteria filter that delivers cool and pure air.


Demographic dividend

India represents a demographic goldmine, with the emerging middle class being largely driven by a growing young population coupled with rising incomes and rapid urbanization.

Indias population is expected to grow 21% over the next decade to

570 million, accounting for ~42% of the countrys total population. Indias median population age is 27.3 years. About 12 million people are added annually to the working age population and by 2025, India could account for 20% of the worlds working-age population; by 2020, India could be the youngest country in the world with a median age of 29 years.

(Source: PWC)


Rapid Indian economic growth has helped create a sizable consumption class - 53% of total households by 2025 and 800 mn+ individuals.

Household wealth in India has grown 9.2% annually since 2000, faster than 6% global average while taking into account the population growth of 2.2% per annum. Indias total household wealth increased 10% to $5 trillion by mid-2017

(Source: Credit Suisse).

India accounts for the eighth largest global wealth-gain with a growing affluence of $451 billion. Domestic household wealth is anticipated to grow 7.5% annually, reaching $7.1 trillion by 2022. The spurt in discretionary incomes with easy financing schemes has shortened product replacement cycles. Consumer durables are no longer perceived as luxury but utility, a transition in mindset that makes India one of the largest consumer durable markets.


Indias urban population (33.5% of the countrys population) accounts for 60% of Indias GDP and is expected to contribute nearly 75% of a larger national GDP by 2030.

While we believe that much of Indias air-cooler consumption will be driven by semi-urban and rural India, growing urbanization will drive offtake as well. Consider the realities: 85% of the countrys consumption class lives in urban areas. It is estimated that by 2050, the number of people living in Indian cities could touch 850 million. Enhancing lifestyle convenience would be central to urbanization extending to the use of interiors cooling. According to Census 2011, India comprised 64 cities with a population of a million or more; by 2031, that number is estimated to rise to more than 87 with some likely to emerge as megacities.


The average Indian household size has been steadily shrinking due to rapid urbanization and growing working age population. Census

2011 indicated that about half of Indias households are nuclear. Nuclear families in rural areas jumped 29% as against mere 9% in urban households, creating the basis for a change in consumption and aspirations. Nuclearization itself is expected to add about 6-7 million households annually going ahead.


Indian consumers today are looking to improve their homes and lifestyles through global brands and experiences.

The market opportunity is expected to move from INR1.4tn to ~INR3.0tn over FY17-22 for ACs, air coolers, lighting and pumps.

Richer & younger India driving shift in consumption pattern towards discretionary consumption

F&B Housing Apparel Health Education Others
2017-2025 22 15.5 8 5 3.5 46
2006-2016 31 15 7 4 3 40
1990-2005 45 14 6 3 3 29
[Source: Mckinsey, World Bank Database, Edelweiss research]


As digital access becomes more affordable, consumer spending on home appliances could increase.

The Indian retail industry accounts for over 10% of the countrys GDP and around 8% of employment. Indian retail is witnessing entry of new players at a speed never seen before and is expected to nearly double to US$ 1.3 trillion by 2020 from current US$ 672 billion. Equally fast paced, if not more is the growth trajectory of the Business to Business (B2B) e-commerce market, which is expected to reach US$ 700 billion by 2020, whereas Business to Consumer (B2C) e-commerce market is expected to reach US$ 102 billion by 20202.

Though we have experienced phenomenal growth over the past decade, the share of organized retail still hovers around 8%, while the unorganized sector constitutes 92% of the overall retail industry, retaining its dominance. However, in the coming years, it is expected that organized retail will no more be just an urban phenomenon and tier II and smaller cities will evolve at a fast rate to garner significant share of organized retail.

The Digital wave is further expected to accelerate this growth opening up possibilities for disruptive customer oriented business and operating models.

High Digital In_uence Factor (DIF) across product categories
Electronics 24%
Apparel 24%
Books/ Music/ Entertainment 22%
Furniture/ Home Furnishing/ Home Improvement 21%
Food/ Beverages 21%
Health/ wellness/ Beauty 20%
Automobiles 19%
Baby/ Toddlers 19%
Miscellaneous Supplies 19%

Digital influence factor is the % of in-store retail sales influenced by shoppers use of any digital device(laptops, desktops, smartphones, tablets, wearables) and in-store devices (i.e. kiosk, mobile payment device) There is an increase in the use of consumer appliances, increasing convenience for the home-market and the family, democratising comfort.


Household electrification: The governments push on public infrastructure, primarily housing/Power for All, rail/ road infra, etc. is expected to boost consumer durables growth. Electricity generation grew 7.6% as compared to 5.1%. The government is targeting to complete >90% electrification by 2019 and an additional 26mn households to 350mn households by 2025.

Increasing % of villages electri_ed
Rural electri_cation Urban electri_cation India electri_cation
2001 44 88 56
2011 55 93 67
2017 75 99 83
2019E 90 100 94

Electricity availability has been one of the key facilitators of demand growth for consumer durable & light electrical industry.

[Source: Census Data, Industry, Edelweiss research]

Ease of Doing Business (EoDB): The Government formulated an output-outcome framework to improve Indias ranking on the World Banks Doing Business Survey from 130. The ambitious measures proposed are aimed at helping it climb up 40 places in the world ranking by 2017–18 and another 60 places by 2020-21.

Policy reforms: Recognising the high potential of the sector, the government is creating a more holistic and investor-friendly business environment. Policy reforms such as 100% FDI under the automatic route, no industrial license requirement and no payment of technical know-how fee and royalty for technology transfer under the automatic route have been instrumental in building a conducive investment climate. The government has supported domestic manufacturing with multiple initiatives in the mobile phone and consumer appliances industry.

Growth pillars Key Initiatives
Reducing domestic manufacturing disabilities Modified Special Incentive Package Scheme (M-SIPS)
Differential duty structure through Basic Custom Duty (BCD)
Export Promotion Capital Goods (EPCG) Scheme Preferred Market Access
Promoting innovation and R&D Electronics Development Fund
Centre of Excellence for IoT
Electropreneur Park for start-ups
Developing skills Digital Saksharta Abhiyan (DISHA)
Visvesvaraya PhD Scheme for Electronics & IT
Electronic Sector Skills Council of India (ESSCI)
Enabling domestic ecosystem Electronic Manufacturing Clusters (EMC)
Semiconductor Policy
Electronic product testing/quality control labs
Electronics India B2B Platform
[Source: MeitY]

Impact of GST: Slated to be the biggest ever tax reform in India, the Goods and Services Tax (GST) is expected to create a harmonized taxation system, subsuming a host of indirect taxes. Through the implementation of the GST, the government intends to significantly increase tax compliance and expand the countrys revenue base while providing ample space for Indias expenditure on physical and social infrastructure. GST application will also significantly increase the focus on internal trade of goods which will lead to substantial gains in efficiency.


Growing demand

Demand growth is likely to accelerate with rising disposable incomes and easy access to credit.

Increasing rural electrification and wide usability of online sales could aid demand growth.

Rise in working age population could stimulate demand.


Huge untapped market; currently only 29% of households in India own a refrigerator, 11% own a washing machine and 6% own a computer or a laptop.

Emerging rural areas have a great potential for home appliances.

Policy support

100% FDI allowed in the electronics hardware-manufacturing sector under the automatic route; Approval of 51% in multi-brand would further fuel the growth in this sector.

National Electronic Policy (2012) to boost investment in the sector.

Modified special incentive package scheme (M-SIPS) has been introduced for growth of consumer durable industry.

Increasing investments

The sector has attracted significant investments over the years (even during the global downturn of 2009-10).

US$ 1 billion worth investments in production, distribution and R&D in the next few years.

[Source: DIPP, Aranca Research]


Rising temperatures: Inefficient traditional methods of cooling and expensive cooling options are impacting the demand for air-coolers, especially in the present scenario where the increase in temperatures has made air-cooling devices a ‘necessity. Besides, a research by IIM-Ahmedabad revealed that workers productivity can be enhance 12% by increasing workplace comfort. Research shows that the optimal range of ambient temperature for enhanced workers productivity is about 23-30 degrees celcius, anything higher warranting the use of workplace cooling solutions.


Despite the low cumulative value-addition, the future of the air cooler sector in the growing domestic market remains positive. Personal coolers are no longer used just in dry, hot and arid regions of India but have entered humid, coastal states of Tamil Nadu, West Bengal and Odisha. With growing consumer awareness and strong value-for-money orientation, demand is growing. A vibrant 1.34 billion population makes India attractive for the appliances and consumer electronics industry.


Symphonys _nancial performance

The Companys consolidated gross revenue grew by 5% to H852 crore in 2017-18 following a visible improvement in sales. EBIDTA stood at H273 crores compared to H242 crores in the comparable period of previous year. The Company reported a post-tax profit of H193 crore in 2017-18 compared to a post-tax profit of H166 crore in the comparable period of previous year.

Residential air coolers: The domestic air cooler segment is largely fragmented with about 70-80% of sales accounted by unorganized players. The branded air cooler industry is competitive with the top-four players accounting ~90% of all sales. Symphony is the leading player in the space distantly followed by other players. The Companys air coolers enjoy high demand in areas where it is difficult or impossible to install and use air-conditioners. Symphonys air coolers are relatively inexpensive and can be easily maintained. The result: the Company enjoys about 50% share in the organised segment.

Central air coolers: Central air cooling is an efficient alternative to air conditioning because it is a cost-effective and environmentally-friendly cooling solution designed for various industrial environments. The centralised air cooling market in India is Virgin and beyond any estimation with Symphony being the only branded player in this space. The Symphony range of central air-cooling units are manufactured at IMPCO using cutting-edge technology and enjoy strong offtake in the North American markets.

Realising the potential for these coolers, the Company launched them in India in 2014-15. Symphonys central air cooling units are made from the highest grade of automotive steel with corrosion-resistant coatings to enhance durability. Symphonys central cooling solutions cater to factories, offices, schools, malls, assembly halls, warehouses and metro stations. Symphony is also credited with executing the worlds largest central air cooling project at the Hajj Complex, Saudi Arabia and Indias largest cooling project at the Patanjali Yog Bhawan, Haridwar.

Symphony acquired Munters Keruilai Air Treatment Equipment (Guangdong) Company Limited in China [now known as Guangdong Symphony Keruilai Air Coolers Co. Ltd.] to facilitate the Companys access to the Chinese market (the second-largest air cooler market in the world after India). It is Chinas largest air cooler manufacturing company and one of its oldest, which enhances Symphonys ability to earn international revenues as China enjoys free trade agreements with most ASEAN countries.

Packaged air coolers

Despite having such a wide range, there remained a huge requirement of air cooling for spaces that fall between residential and large commercial spaces. This inspired Symphony to develop and introduce packaged air coolers in India. Packaged air coolers are ready-to fit compact units ideal for a wide range of commercial, industrial and residential uses. These offer numerous advantages over air conditioners – durability, easy installation and value-for-money – and are suited for spaces where conventional air conditioning solutions are inadequate.


The Company has in place robust internal control systems and procedures. The internal controls of the Company are commensurate with the business requirements, its scale of operation and applicable statutes to ensure orderly and efficient conduct of business. These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, safeguarding of resources, prevention and detection of frauds and errors, ensuring operating effectiveness, reliability of financial reporting and compliance with applicable regulations. In addition, internal audits are undertaken to review significant operational areas regularly.

The management believes that strengthening internal controls is a continuous process and it will therefore continue its effort to keep pace with changing business needs and environment.


Symphony, a global company has been constantly investing in to various IT initiatives as part of Digital transformation journey. Our constant focus on enhancement of business process in line with the best business practice of SAP HANA, are known leader ERP software having global scalability All core business functions like finance, supply chain and operation have been tightly integrated through SAP has result into available business information in form of single version of truth on a click.

During the year we have put significant efforts and implemented applications "Servitium -Service CRM" for measuring efficiency of our authorized service partner against customer complain, this will also help us to check turnaround time, nature of complain, cause analysis etc

The implementation of product life cycle management has helped us to strengthen our design capability . This is product is known as "3D Experience" known word wide for PLM has been helping us to monitor complete history of product life cycle starting from idea, design, manufacturing, quality, project management with necessary work flow.

The implementation of software application for Human resource information system with mobility feature has helped us to record complete history of employee from hire to retire. This has also feature like e-recruitment, payroll processing, organization management, personal administration, time management, training etc.

The implementation of analytics & mobility platform have helped us to expedite our decision making process & predictive analysis


Symphony acknowledges the contribution of human resources to organizational effectiveness.

During the year human resource function worked on various projects to enhance the competence of employees through Competency framework project including designing Individual development plans. A fully integrated HRIS is also implemented for managing complete employee life cycle from hire to retirement. As a part of accountability building and aligning individual efforts with organizations goals an initiative ‘Lakshya - Online Goal Setting and Performance Commitment introduced for all managerial employees.

Symphony enjoyed cordial relations with its employees throughout the year.


Product risk root The Companys products may lose their marketplace relevance

Mitigation: The Company has consistently widened its portfolio through the introduction of innovative products (residential, packaged and central air cooling), translating into consumer delight.

Industry risk

A slowdown in downstream sectors could impact offtake

Mitigation: The value of the Indian air cooler market is anticipated to grow at a CAGR of 27%, between 2017 and 2022, ensuring steady offtake.

Geographic risk

Dependence on a specific geography could be a detrimental in the event of a localised downturn

Mitigation: Symphony has de-risked itself by establishing its footprint in >60 countries across five continents, striking a balance between domestic and overseas revenues.

Logistics risk

Lack of efficient distribution channels could impact sales

Mitigation: The Company has around 30,000 dealers and 1,000 distributors which are spread across the length and breadth of the country, ensuring adequate product visibility.

Economic risk

A slowdown in the economy may impact the industry

Mitigation: With the impact of demonetisation and GST implementation fading, the Indian economy is poised to grow at a rate of 7.4% in FY19 and 7.8% in FY20.

Competition risk

Increasing competition may affect the Companys competitiveness

Mitigation: Symphony has carved a niche for itself by launching innovative and environment-friendly products, registering strong sales and launching effective marketing campaigns. Symphonys frugal engineering and qualitative excellence have meant that it has always stayed a step ahead of the competition.


Statements in this Report describing the Companys objectives, projections, estimates and expectations may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.