In an interview to CNBC-TV18, Achal Bakeri, CMD of Symphony said that summer is expected to be harsh this year.
"We had great summer last year. We were sold out; most of the industry was sold out. So expectations are that this is going to be a good summer", he said.
Confident that margins will be sustainable at current levels, said Bakeri.
Below is the transcript of the interview:
Anuj: What are the early feelings you are getting about the season. Do you get a sense that this one would be better than last year?
A: The season is expected to be good although it's little delayed. The temperature by now should have been a few degrees higher than it is now, but once the heat builds up, it is going to be relentless. So the season is going to be pretty good for the industry.
Latha: You may already be getting a feel from your stockists and wholesalers and retailers. Do you get a sense that this is looking like a better season?
A: The threshold which triggers air conditioners, air coolers sale is yet to be seen. We had great summer last year. We were sold out; most of the industry was sold out. So expectations are that this is going to be a good summer.
Anuj: You are seeing some competition as well, of course you still remain the pioneer but in terms of margins do you think you will be able to sustain 38 percent kind of margins in air coolers and overall margin of 50-53 percent that you have been delivering?
A: The competition that we witness now is not new. There is more intensity now but we have had such spells in the past and even in early '90s we had many manufacturers who got into the business and then didn't quite sustain.
However, we are very certain that our margins are sustainable and that is primarily because of internal issues and not external issues. Internal issues because our business model is such that it allows us to enjoy high margins and the market or consumer give premium for symphony because of the quality, the level of service, innovation, design etc, so it is actually more because of internal reasons that we have the margins rather than any external reasons.
Latha: My sense of competition was beyond air conditioners. It is the logical next step for a growing, aspiring country, power situation is improving. Would you see bigger challenges from the AC market in the years to come? Incrementally is that a problem?
A: Not really. If I were to draw an analogy from the vehicle market; you have cycles, two-wheelers and cars. People do not graduate directly from a cycle to a car and despite car prices coming down, the two-wheeler market is booming. Therefore, we really feel that our product has compelling advantage over both fan and air conditioner, in fact more air coolers are sold every year than air conditioners sold in the country and that is going to continue.
Anuj: Are you interested in buying Kenstar?
A: It's been in the news so it's a hypothetical question. We haven't heard anything about it from them or other than what has been reported. So it's very academic and hypothetical. I have no answer to that.
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