Designation: Chairman and managing director, Symphony Limited
The challenge: To rescue an insolvent company that was once a household name in the air cooling business
How he did it: By getting out of non-allied products like washing machines and water heaters and focusing on his core air cooling business
What he has achieved: Brought the company back to profitability and doubled margins. Symphony also acquired an industrial air cooling business in Mexico, making it the world’s largest air cooling company
My family is in the real estate business and I got into the air cooling business by accident. When we started Symphony in 1988, there was nothing like an air cooler industry. There were only manufacturers in the unorganised sector.
Here’s how it happened. In 1987 we moved into a new house in Ahmedabad, parts of which couldn’t be air conditioned as it had high ceilings and long passages. Our architects suggested that we install air cooling. Till then we had never used an air cooler. The performance was great but the product was an eyesore and we had to camouflage it.
That gave me an idea: Why can’t I make a better air cooler?
The next year I introduced my first air cooler in the market under the Symphony brand name. I made sure it looked exactly like a window air conditioner. Its looks and cooling performance caught the imagination of the market because in the 1980s owning an air conditioner was still a status symbol. But an air conditioner was Rs 35,000 and our air cooler was Rs 4,300, while a normal air cooler was just Rs 2,000. So, despite being twice as expensive, it caught on. In fact, it was a runaway success.
Because it was so successful, in 1989 we expanded distribution to Gujarat and neighbouring states and by 1990 we had expanded to all over the country. We also went on the national television network. This was the first time an air cooler was advertised on TV in India. And so, two years after launch, Symphony had become a national brand and had a sort of national distribution. It was patchy, but at least it covered the whole country.
Thereafter things moved swiftly and in 1994 we had our IPO. By then we had added some more models. We had moved into a larger factory. But once you list, the financial market has its own pulls and pressures. At about the time of the IPO the market was advising us to expand our product range. Customers also wanted us to broaden our product range. Their argument was that we cannot focus on only one product that is very seasonal.
After all, our competitors Crompton Greaves, Usha and Polar were multi-product companies. So we got into products that were either counter-seasonal, like winter products, or products that sold around the year. Water heaters, room heaters, flour mills, water purifiers, air conditioners, washing machines and exhaust fans.
In each of these we attempted to do what we had done in air coolers. Namely, you take each of these products, a commodity product where there has been no innovation for a long time, and you add value through innovation in design, features and performance and elevate a commodity product into a lifestyle product.
None of the other products succeeded. The reasons were different for each product category.
For instance, our water heater was the first of its kind. Till then they had metal cylinders and there was absolute product parity, brand A was the same as brand B was the same as brand C. Symphony designed a water heater that had a nice sculpted form. There were new safety features. But we had some technical glitches and by the time we ironed them out, established players stole our idea and with it our market.
Similarly, we launched a washing machine. We had developed the world’s first all plastic washing machine [except for the motor]. We thought it would be a cheap product so we developed it, but our competitors Videocon saw us coming and they lowered prices. They had a huge volume advantage and better distribution reach. They introduced an entry-level washing machine and we couldn’t compete with them.
In the process of developing these other products, two things happened. First, a lot of money went into development. Second, money went into marketing these products. As none of the products succeeded, there was financial strain. The other thing that happened was that we took our eye off the ball in the air cooler business, so the innovation that we could have done there, the range expansion we could have done didn’t happen. Our competitors, who were snapping at our heels, were growing while we were focussed on other products. So air cooler sales went down and the other ones didn’t succeed.
As a result, by 2001 we had completely eroded our net worth. We became a BIFR [Board for Industrial and Financial Reconstruction] company.
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(This story appears in the 17 August, 2012 issue of Forbes India. To visit our Archives, click here.)
Really a great inspirational business story...hats off to Mr Achal Bakeri for setting up such a great success story which will be talked foreveron Aug 21, 2012
Dear Achal Bakeri, This is a case study, finest example why to climb upon Aug 11, 2012