See 20-25% CAGR growth over medium-term: Symphony

Impact on sales for the company is only related to weather conditions and not due to macros  said Shah. March sales saw an impact due to unseasonal rains.

Below is the transcript of Nrupesh Shah's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: Your volume growth this time around came in at about 13.3 percent. You have been doing better volume growth in the past. So, tell us about what the first half of the new fiscal looks like in terms of demand and how much volume growth you can eke out?A: March 31 is our third quarter. In the last quarter, we have registered a volume growth of about 13 percent but in 9 months as a whole, volume growth has been about 24 percent.Firstly, this is on account of our continuous strategy to move from low-value products to high-value products.Secondly, on account of some unseasonal rains and hailstorms for a couple of days and few weeks in some parts of the country, partially business was affected in the month of March.Latha: What we are trying to understand is what the nature of the market is? Are you seeing a consumer down trading, in the sense is economic growth not picking up? Is there too much of rural distress; is there a macro factor hurting sales?A: I don’t think for air cooler industry that has any impact. If at all, there maybe an impact of the weather, the reason is air cooler is a low-ticket item. More than 90 percent of the end consumption takes place from the saving and whenever there is a severe summer or heat, consumers intend to buy it. There are very positive sentiments whether it is in the trade or at a consumer level for air cooler.Sonia: I was asking you about the growth that you expect to see in volumes. What will you do in the next quarter and also for FY16, what is the growth? Do you think that you can match up for this 24 percent growth that you did in the first nine months of FY15?A: We don’t give the guidance or forecast for quarter-to-quarter or yearly basis but our medium-term to long-term guidance is on a consolidated basis. We are confident to achieve compounded annual growth rate (CAGR) growth of about 20-25 percent by maintaining current level of operating margin and profitability. Having said that, in some quarters there maybe higher growth and in some others there maybe lower growth but 20-25 percent medium-term to long-term, we are confident.

Latha: Your EBITDA margins are likely to remain at 30 percent or will you do even better?A: It should remain around same level because a couple of factors have helped us. Firstly, it is the pricing power due to the branding. Secondly, launch of new models. Thirdly, it is softening of the raw material prices and lastly it is economy of the scale. So we feel that by and large we should be in a position to maintain this margin.Sonia: In your conference call you mentioned that export demand was mix this time with markets like Egypt continuing to witness weaker growth because of political issues. Can you tell us how much as a percentage of your overall revenues come from exports and how much do you expect exports to grow?A: On a standalone level, close to 17 percent of the sale is from exports on annual basis and on a consolidated basis, it is about 25 percent.As far as some of the Middle East countries are concerned including Egypt, Syria etc on account of political turmoil, some of the exports, which are taking place over there have been affected.Latha: Is the rupee a big factor in exports? There are complaints that it has remained stable while currencies have fallen; is that a bother?A: At current exchange rate, we are quite comfortable. At operating level and also at PAT level our export is equally profitable if not more. So we are quite comfortable.Latha: Is your market share increasing? I understand you are 20 percent of the branded market itself. Are you increasing your market share?A: Organised sector is about 20 percent of the total market and out of organised market, we are having about 50 percent market share. So, despite many new players entering in last couple of years, we have been in a position to keep on increasing the market share, even though size of the market itself is increasing.Sonia: Compared to some of the other players like a Kenstar or Usha or Bajaj Electricals, how much of a pricing premium do you enjoy and on pricing itself, do you plan to take any price hikes etc?A: Symphony’s models are priced at a premium ranging from 5-12 percent vis-à-vis other organised players on account of better feature, better performance, better design, service after sales etc. Symphony is a premium product, the better product; value for money and so that premium will continue.