Nrupesh Shah, Executive Director, Symphony Limited, talks about the major growth drivers for his company in 2021, benefits of import restrictions from China, PLI Scheme and cost increase among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:  

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Q: Do you think the kind of performance that we have seen in this sector and your company will continue in 2021, if yes, what are going to be the major growth drivers for this?

A: First and foremost, 2021 vis-à-vis 2020, there will be degrowth and that too it will be major degrowth because the summers of 2020 was a washout, of course, in Q2Q there was a good improvement. September quarter was good when compared to June quarter and by and large December quarter should be as per the September quarter. However, if summer of 2021 is normal, if it doesn’t turn out to be a villain then we are looking at 2021-22 as a very good year on account of a variety of reasons, like a robust pipeline of the new models. All in all, in the last 12 months, we have launched almost 30 new models across residential cooler category, centralized as well as selected category. And, we have used this COVID-time, the challenging time also for the product rationalization, also for the value engineering and also to an extent optimizing our dealer distribution network.

Q: What opportunity do you see on the import restrictions that we are seeing from China for your company and what role will you play in the government’s production-linked incentive (PLI) scheme?

A: We do not have that much import from China and more than 90% of products are procured locally. So, we will not face any issues related to the supply chain or logistics. Whatever temporary issues related to supply chain and logistics we are facing at present is due to the agitation that is going on in North India. It is a temporary problem. Secondly, considering this PLI scheme, it seems as of now, it is not applicable to air cooler industry; however, we are waiting for the details. And, suppose down the line, if it is applicable in the air cooler industry than we will work on a formula with our supplier that is mutually share the benefit in the outsource model we have. 

See Zee Business Live TV Streaming Below:

Q: Raw material prices are at an all-time high and copper and aluminium are at a multi-year high. Do you think that the rising raw material will put some pressure on the margins and if you want to pass on the pressure than should we expect any price rise going forward from here, if yes, then in what range and by when it will happen?

A: You are absolutely right because metals and plastics are largely used in our products. So across the models and the product, there is a cost increase and in the part of North India gain on account of this agitation, there is also somewhat freight increase. So, varying from model to model, the cost increase is 2-6% of our sales price. In other words, on our raw material cost, the increase is about 4-9%. On average, the total raw material and freight cost will increase by 4-4.50%, however, we are tackling it in various ways (i) we have taken an aggressive value engineering product and to an extent, it is materializing and helping, (ii) our overall business efficiency, operational efficiency and economy subscale will also benefit us in it, and (iii) we have many models in which we don’t face any competition, so we have an opportunity there to increase the price. So, it is going to be a mix and match strategy but end-to-end, it seems as far as our gross profit margin is concerned it will remain unaffected. So, the gross profit margins that stood at 50% in 2019-20 will remain almost the same in the current year and going forward from here.