“We didn’t know if we would survive... Closing down the company and moving on to something else—leaving behind a trail of debt—would have been the easiest thing to do. But we didn’t want that.”
Says, Achal Bakeri, the founder of Symphony coolers. This penny stock turned multi-bagger has seen every phase of business and one dark phase was when Bakeri had to quote the above lines. But what was the dark phase? Lets find out today and go through the incredible journey of Achal Bakeri & Symphony.
In the late ’80s, a young MBA graduate, who returned to India from the USA after completing his degree in Real Estate Financing was all set to join his family business.
Achal Bakeri, already had a well established real estate company waiting for him to lead. (Life toh set thi, right?)
Where others seek something like this, Achal’s only problem was- he didn’t want his ‘already’ successful family business, but was in a search of building something of his own from scratch.
But what? It was still a question.
Just a year later the wealthy Bakeri family moved to a new home. It was summer and a bad one! (just think about the month of May in India!) But all thanks to the rough summer, as it was the time, Bakeri was introduced to the Air coolers. But wait!! They were huge & noisy.
(Pro tip: One of the mental models of successful businessmen is- They want to point out problems & fix them with their business.)
The problem with the Air coolers back then was, they were ugly, huge, noisy and whatnot.
So yes, Achal was ready to fix it because he just found out his business idea- The manufacturing of a ‘better’ Air Cooler.
As soon as the idea hit his mind, he began working on it by bringing a few coolers from the market to understand how they worked.
After intense research and working with some professionals a cooler was developed that resembled an AC. That’s how SYMPHONY was born.
But what do I mean when I say- A cooler that resembled AC?
Contrary to popular designs and materials, Symphony’s coolers were made of plastic, were smaller (so, we can conclude that they were not ugly 😋) and were less noisy along with being lightweight & portable.
What a classy product, something new & fresh in the market. Do you think people went crazy over it?
The new product was launched in the year 1998 in Ahmedabad. (Ahmedabad is a warm-warm land, Brownie points for picking the right location for launch tho 😎.) Within a short period of time, YES! People went crazy over it.
The company were caught off-guard with the success that it couldn’t keep up with the demand. Even though Symphony’s coolers were more expensive, a good 10% higher than the traditional ones still, it was a hit!
Well, yeah it was expensive, also it looked like an AC and it operated at a cost that was much lower than an AC. So, this might be one of the reasons it was a hit.
What Happened next?
The scaling game began. Over the next few years, Symphony rapidly scaled up its sales & distribution network across the country. Things were going great!
Past this, they went public in the year 1994.
(Pro tip #2 😎: If a product succeeds, A businessman will want to expand & diversify. But the thing is, it works for some and doesn’t for others.)
Symphony was climbing the success ladder.
Everything was going great, until one day, Achal & the management decided to diversify into other household items.
And by other household items, I mean, water heaters, purifiers, room heaters and what not. Diversifying into these items meant excessive investment and a lot of risks. And the risk was already taken.
The new products began to float in the market. According to Bakeri, Symphony was an innovator in many of these product categories.
Even though they were innovators, their execution was poor.
The product had technical flaws in terms of design, the pricing was uncompetitive and the sales strategy was also weak. Their diversification plan was destined to fail and it did. They began making huge losses and going into huge debts.
The share price of Symphony went as low as Rs. 0.13 per share. The reserves were exhausted. And everything that they built through the years was going downhill.
So here comes the quote from the beginning,
“We didn’t know if we would survive... Closing down the company and moving on to something else—leaving behind a trail of debt—would have been the easiest thing to do. But we didn’t want that.” -Achal Bakeri
There was only one option left, giving their 100%!
It was time to go back to the one product to which they owed their success, Air Coolers. Between 2002-2004 Symphony exited all other categories resuming its focus only on innovating air coolers.
The innovation was, Touchscreen based products, Motion-based control sensors, mosquito repellent & air cleaning technologies.
Along with rebranding, Symphony moved to an asset-light model and closed down its factory and outsourced its manufacturing unit.
In a nutshell, they followed an asset-light, working capital-light, capital expenditure-light business model. Focussing more on innovation, new launches & after-sale services.
And all of this hard work started showing results. (Air coolers are like a blessing for this company 😉).
The market share began to rise along with investors' confidence. All the new changes started showing positive returns. Soon enough the company acquired a Mexican firm called IMPCO and started launching products for the foreign markets.
And since then there was no looking back. They were expanding globally and increasing their profit margins.
All's well that ends well
“The lessons that Failure can teach can never be taught by a lifetime of success”- Achal Bakeri.
Isn’t it funny even when it comes to our stock portfolio we are always advised to diversify to manage the risk better, but as far as Symphony is concerned diversifying became their biggest enemy. And focusing on a single product worked for them like magic.
At present Symphony is the largest manufacturer of air coolers in India. The share price which deteriorated to ₹ 0.13 is now trading at almost ₹1000 per share today.
Recently when Bakeri was asked if he want to diversify again he said,
“There is a lot of untapped potential in the air cooler market. We are conscious of not losing our focus again and taking our eye off the ball”
By the way, just look at the coolers & Achal Bakeri in the image below. 😃