Target 20-25% CAGR revenue growth ahead: Symphony

Reema: Could you tell us what the volume growth was in Q1 and also what the growth was in your domestic business a well as exports?

A: Volume growth in Q1 has been about 38 percent. In Q1 of FY13-FY14, we had ended up with about 1,19,000 units. In current quarter, it has been 1,64,000 and there has been about 40 percent volume growth in domestic business and about 32 percent volume growth in international business. Having said that on centralised air cooling (CAC) even though absolute value is still small but that has also registered a very decent growth.

Ekta: There has been a strong jump up in your EBITDA margins by 390 bps on a year-on-year basis to 23.2 percent this quarter. What led to the improvement, anything specific or was it just a revenue beat and hence there was some operating cost that you managed to control and also are these margins sustainable?

A: We launched some new models. They have been received well and new models are offering better margins.

Secondly, even further better mix of sales and thirdly, on account of economy of scale even in respect of fixed overrates, it has given us leverage and as per Symphony’s business model even in respect of the variable cost, we have succeeded to maintain it under tight control.

We are confident to maintain this kind of margin in a year to come.

Reema: So margins can be maintained around this 24 percent mark that you have clocked in Q2, right?

A: Yes.

Reema: How much of this quarter did you get the benefit on the back of festive season and will second half of the year be as strong as what you have seen in the first half?

A: Yes, we did get some benefit of extended season. In fact, for the first time it happened that even consumers bought large number of air coolers especially in the month of July but on top of it, so far we had succeeded in breaking the seasonality at our distributor level but in the current year, we succeeded in breaking seasonality further one level below that. That is almost more than 2,000 retail dealers also bought coolers from the distributors.

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Ekta: I know it is too early to talk about your full year guidance since it is only your Q1 but considering that your Q1 has started off on such a strong note plus in your FY14 you did a profit jump of 76 percent and a revenue jump of 41 percent, what is this year looking like in terms of your total sales and profits, do you think you will manage to even better it based on the fact that you are already working on a higher base for FY14?

A: No, considering Q2 order booking, which has started and buoyancy, I can say that Q2 is going to be and likely to be very strong. As far as our medium-term to long-term guidance is concerned, it remained at about 20-25 percentage in terms of topline by maintaining the profitability but having said that, it is possible that some year -- as it happened last year -- it may show quite buoyant topline and bottomline growth but giving guidance is difficult for the year.

Reema: So long-term revenue growth guidance would be 20-25 percent?

A: Compounded annual growth rate (CAGR) growth.

Reema: Air coolers is a fiercely competitive space so we all watch for what the ad spends will be for various companies. For Symphony, could you tell us what you are targeting by way of ad spends for the full year?

A: Last year on standalone operations, we spent about Rs 21 crore on advertisement and sales promotion, which was about Rs 9 crore two years before. So that kind of growth will continue in the current year and down the line. By and large, it is about 4-5 percentage of our topline.

Reema: No plans to increase that?

A: Percentagewise it will remain the same by and large but in absolute amount, it will see a good jump, which is sufficient to take care of our ambitious business growth plan.

Ekta: What is your market share right now in the domestic market?

A: In domestic market, we have about 50 percentage market share in organized market but when it comes to off season that is Q1 and Q2, our market share crosses more than 80 percentage because virtually other organized players are unable to sell anything in Q1 and Q2.