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Symphony Ltd buys Chinese manufacturer to enhance international play

SYMPHONYWorld’s largest air cooler company, Symphony Limited has agreed to acquire Munters Keruilai Air Treatment Equipment (Guangdong), China, the Indian company said.

“MKE is a market leading brand in China, producing energy-saving and environment-friendly evaporative air coolers under brand Keruilai,” said Symphony, a household name in India.

MKE came into existence in 2011 as a joint venture merger between Dongguan Keda Electrical and Mechanical Equipment Co. Ltd and a Swedish company Munters AB.

Commenting on the new acquisition in China, Mr. Achal Bakeri, Chairman & MD, Symphony Ltd said, “With this synergistic acquisition we are confident that this will help us in expanding into new markets and geographies similar to our acquisition of IMPCO. We are possibly the only company from India which is selling its product under its own brand name of Symphony in 60 countries. We plan to further expand our reach and significantly increase our sales in the countries where we are already present.”

QUARTERLY RESULTS

Symphony reported a 10% rise in consolidated net profit at Rs 115.91 crore for the financial year ended on June 30, 2015, as against Rs 105.72 crore in the previous fiscal.

Consolidated net sales increased to Rs 578.49 crore for the financial year ended on June 30, 2015 as against Rs 532.42 crore in the previous year registering a 9% growth.

Symphony recommended final dividend of Rs 10- per share. Further an interim dividend of Rs 4 per equity share was paid during the year. EBITDA margin for FY2015 stood at 27% and EPS was at Rs 33.14.

“With continuous innovation, strong branding, robust distribution network and overall sharply focused approach towards the category, we are confident to maintain our growth story and pull off much better results in the times to come,” Bakeri said.

ABOUT MKE

The following details about MKE are provided by Symphony.

MKE owns more than 80 intellectual property rights (including 51 patents) with a large three-year innovation pipeline.

The company comprises a wide range of premium commercial air coolers in addition to household air coolers.

Its Test Center was built in accordance with US and Australian quality standards, the only facility of its kind in Asia.

MKE has 32,850 sq. m leased manufacturing facility in Dongguan city, Wanjiang district, Guangdong Province in Southern China about 2 hours by road from Hong Kong.

The company employs more than 140 competent and experienced employees, with its sales and marketing functions spread across several countries.

Keruilai is the only Chinese air cooler brand enjoying international recognition.

MKE enjoys an asset-light business model with no debt or significant contingent liability. The Swedish owners introduced sound corporate governance, systems, processes and practices.

SYNERGY

Symphony listed the following advantages from the transaction.

Market access – The acquisition will facilitate Symphony’s access into China, among the largest air-cooler markets in the world after India.

Enhanced international access – China has created a robust customer pull. Since China enjoys Free Trade Agreements with most ASEAN countries, the acquisition will provide Symphony with better international access.

Premium products and R & D advantage – MKE enjoys a strong R&D advantage. Its robust range of premium air coolers with commercial applications enjoys attractive international prospects.

Synergy – MKE’s is an asset-free and debt-free business built around good governance and processes, similar to Symphony’s business model.

The deal will also provide a sourcing advantage – A number of components sourced from China are used in Symphony products. With MKE’s knowledge of local sources, Symphony would enjoy the twin benefits of lower cost and enhanced quality.

Established in 1988, Symphony currently sells its air coolers in over 60 countries.

Headquartered in Ahmedabad, Symphony is a publicly traded company in India with a manufacturing base in North America.

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