BOARD' REPORT

It is our pleasure to present 28th Annual Report of the Company for the financial year ended on June 30, 2015.  

B) Key Financials as on June 30, 2015

Consolidated Financial Results

Your Company, with its subsidiaries, has a global presence. In order to provide an overall view of the comprehensive performance of the group, the Company has prepared consolidated accounts of the holding company and all its subsidiaries, in accordance with the accounting standards that are applicable. The consolidated gross revenue stood at Rs.61,088 lac which grew by 11 % as compared to the consolidated total revenue of previous year. The profit after tax touched to Rs.11,591 lac as compared to Rs.10,572 lac in the previous year recording an increase of 10%.

There was no material change and commitment affecting the financial position which occurred between end of financial year to the date of this report.

2] Dividend

The Board has recommended final dividend of Rs.10 (500%) per equity share having face value of Rs.2 each subject to approval of members at ensuing annual general meeting for the financial year ended on June 30, 2015,. Your Board of Directors had declared interim dividend of Rs.4 (200%) per equity share having face value of Rs.2 each. Thus aggregate dividend for the financial year ended on June 30, 2015 on approval at ensuing annual general meeting would be Rs.14 (700%) per share as against Rs.13 (650%) for the previous year. The total payout including final dividend for the financial year 2014-15 (including dividend distribution tax) would be Rs.5,889 lac (previous year Rs.5,320 lac) translating into a dividend payout of 51% (previous year 50%) on consolidated net profit which is consistent with Dividend Policy of the Company.

Dividend Policy

Symphony believes in maintaining a fair balance between dividend distribution and cash retention. Symphony has been conscious of the  need to sustain stability in its dividend payout. Symphony has decided to have a dividend payout of atleast 50% of profits (including dividend distribution tax) subject to business contingency or unforeseen cash requirements. Cash retention is required for future growth, probable acquisitions and to meet any unforeseen contingency. The Company has also practice of paying interim dividend since previous year.

3] Operations Review

During the year under review, your Company on standalone basis registered a gross turnover of Rs.51,531 lac in 2014-15, a growth of 14% over  Rs.45,124 lac in 2013-14. During the year 2014­15, your Company continued to expand its domestic presence by widening its marketing network of distributors and dealers throughout the country with adequate warehousing infrastructure in all strategic locations in various parts of the country. Your Company has taken steps to revitalise the organisational structure of the marketing function to enable better penetration into the local market. Your Company has also initiated steps to strengthen its after sales service by appointing service franchisees and introducing a single nationwide customer care number. This will enable prompt and efficient provision of after sales service, particularly to strategic locations in the country.

Your Company strengthened its leadership position in the air cooler industry through a consistent focus on new product development and innovation, making it possible to offer a wide range of air coolers with a variety of new features. Nearly 11 new models of air coolers with variety of features were introduced during the year. As a result of these measures, your Company now offers 40 models of air coolers to meet the requirements of a variety of customers.

To stimulate demand, your Company introduced aggressive advertisement and promotional campaigns over print, electronic and digital media. The intensity of the campaign can be seen from the 56% increase in the advertising spend over the previous year. The campaign aimed at bringing in new set of consumers who are currently fan users. This year's television campaigns generated 81% share of voice to Symphony in air cooler category. Your Company accounted for 69% of share of expenditure in print media in the air cooler category. Apart from this, the Company carried out successful radio campaign in around 40 cities in India, in-shop branding activities on a pan India basis in around 5000 retail outlets and deputed in-shop demonstrators in key retail outlets across the country. In addition, your Company also conducted 23 dealer meets across the country. As a result of these initiatives, the visibility of Symphony in retail stores in the domestic market increased significantly.

Consequently, your Company was able to consolidate its leadership position by  registering impressive growth both in terms of volumes and value of sales. Your Company continues to evaluate options to enlarge its capacity at present locations and also by tying up with new original equipment manufacturers at strategic locations in order to keep pace with growing demand. R & D initiatives are continued as an on-going process by your Company for introducing improved and new models with added features. Your Company together with its subsidiaries offers a complete range of air cooling solutions for all segments of customers.

Modern Trade

During the year under review, your Company continued to be aggressive in top line products sales through large format stores, retail chains, e-commerce portals and TV shopping channels. Your Company could maintain its number one position in modern trade, registering a healthy growth.

Your Company presented distinct range of models for e-commerce to have greater focus on this emerging sales channel and also to avoid any kind of model conflict between traditional trade and e-commerce. Your Company continued to widen its modern trade market network to enter with better space. Your Company now enjoys a significant portion of the sales through structured retail chain in the country.

Your Company believes that the Modern trade is increasing at a faster clip and is eager to exploit its potential.

Central Air Cooling Solutions

The Central Air Cooling Solutions business has been successfully established through a focus on adequate representation by inducting the required manpower into this division and efforts to build a nation-wide dealer network.

During 2014-15, your Company has expanded dealer network and conducted a series of training programs. Your Company successfully bagged and executed orders at numerous sites including prestigious orders from Decathlon, Bharat Forge, Tata Motors, Phoenix Healthcare, etc. and continued to develop its prominent clientele covering different customer segments like auto industry, packaging, places of worship, FMCG, paint industry, logistics, warehouses, hospitals, distilleries and railways. Several customers have placed repeat orders demonstrating the trust that your Company and its products have been able to establish with them. Your Company continues to make inroads into this segment with approvals from some key opinion makers like HVAC consultants and big HVAC contractors. During the year under review, your Company initiated many business development activities through newspapers, journals, TV channels and participation in exhibitions.

The year also saw the launch of Packaged Air Coolers, which was the first of its kind in India. These compact, easy-to-install air coolers, meant for mid-size spaces such as commercial, industrial and residential areas, have been received very well in the market.

To accelerate the central air cooling business, your Company invested in a media campaign and launched a TV commercial in April, 2015. The campaign has been very well received and has resulted an increased awareness of Central Air Cooling Solutions vertical. Your Company  hopes to encash the benefits in the years to come.

Air Coolers - Overseas Business

Revenues from overseas business during the year under review remained at Rs.5372 lac as against Rs.5663 lac in previous year. The overall marginal de-growth in overseas business of the Company during the year under review over previous year was largely due to political turmoil in some of the key countries like Iraq, Syria, Egypt, Sudan etc. Your Company innovated and launched a new model "Silver" exclusively for international market. During the year under review, the Company successfully penetrated into newer markets like Nigeria, Uganda, Kenya and Ghana. Your Company registered good growth in business in the markets of U.K., South Africa, Qatar, Mauritania, Kuwait and Sri Lanka and foresees further openings and opportunities that are waiting to be tapped.

Your Company continued its focus on strategic and select markets including its focus on exports largely to MENA region, Latin America etc. Your Company continues to have several international quality certifications like CE, SASO, NOM, KuCAS, etc. which contribute access to other countries as well.

SEZ Units

During the year under review, the Company set up a new SEZ unit at Kandla Special Economic Zone, Gandhidham, Kutch, Gujarat. The Company has set up this unit in view of the bright prospects for growth in export business. The unit commenced its operations from April 22, 2015. The operations at the SEZ unit at Sachin near Surat, Gujarat remain satisfactory. It may be noted that the SEZ units enjoy a number of benefits both from direct and indirect tax perspective including benefits under new foreign trade policy.

Branch at UAE

The Company has been exporting to various countries including Middle East and North Africa (MENA Region). To enhance its presence in MENA Region, the Company had last year opened a branch in United Arab Emirates (UAE) which has enabled the Company to increase its penetration in the region. However, the Company has now reached a stage in which such business can be handled in an effective manner directly from India. In view of the above, the Company has decided not to apply for renewal of the license of the branch in UAE. The exports to the said region remain unaffected.

Overseas Operations - Impco S. de R. L. de C.V, Mexico

Impco S. de R. L. de C. V., Mexico, (Subsidiary Company of Symphony Limited) manufactures and markets a variety of coolers. For the period under review, Impco suffered de-growth in sales and operations. This is mainly on account of delayed summer. However, the sales in July 2015 were substantially higher than the sales in corresponding period of 2014. Impco is exploring the possibility of introducing lean manufacturing operations. This is being explored to achieve the following objectives:

1. To have a capital light and asset light business model in line with Symphony's Indian operations.

2. Impco can focus more on sales and marketing, business development, research  and development, product innovation, etc.

3. To improve operational performance and provide flexibility in operations.

4. As a result, by monetising surplus assets, to become even internal-debt-free Company, (by paying off the parent Company's loans) and also further improving the profitability by savings on interest, depreciation, foreign exchange fluctuation and of other overheads.

This will happen over a period of time in phases.

4] Overseas Acquisition in China

Your Company has signed an Equity Transfer Agreement (ETA) with a Swedish Company Munters AB ("Munters"), shareholders of Munters Keruilai Air Treatment Equipment (Guangdong) Co. Ltd. (MKE), China, to acquire 100% of the equity share capital of MKE at a consideration of RMB 1.5 M (equivalent to approximately  Rs.1.55 Cr).

MKE is a market leading brand in China, producing energy-saving and environment-friendly evaporative air coolers under brand Keruilai having following strength:

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

Premium Products: MKE comprises a wide range of premium commercial air coolers in addition to household air coolers.

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

Manufacturing Facility: 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.

Knowledge Pool: MKE employs more than 140 competent and experienced employees, with its sales and marketing functions spread across several countries.

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

Business Model: 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.

The acquisition will facilitate Symphony's access into China, among the largest air-cooler markets in the world after India. China has created a robust customer pull. Since China enjoys Free Trade Agreements with most ASEAN countries, the MKE acquisition will provide Symphony with better international access. MKE enjoys a strong R&D advantage. Its robust range of premium air coolers with commercial applications enjoys attractive international prospects. MKE's is an asset-free and debt-free business built around good governance and processes, similar to Symphony's business model. 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.

Your Board is optimistic of turning around

MKE operations in the medium to long-term following the infusion of working capital beginning with H15 crores and peaking at H35 crores (including loss funding). The proposed turnaround strategy will focus around market penetration (China and global) as well as cost optimization (product, operational and overheads).

5] Awards & Recognitions

Year after year, your Company continues to receive recognition for its products and performance. During the year under review, your Company has been bestowed with Best Innovative Company Award in NavGujarat Business Awards (NavGujarat Samay, Gujarati Daily) of the Times of India Group.

6] Management Discussion and Analysis Report

Pursuant to clause 49 of the Listing Agreement, Management Discussion and Analysis Report for the financial year ended on June 30, 2015 is annexed to this annual report.

7] Corporate Governance

Your Company has instilled a strong culture of values, morals and integrity and has continuously sustained a cohesive way of thinking and commitment to action. The Company endeavors to be a sustainable and reliable organisation as it trusts that unrelenting governance is the cornerstone in building and upholding relations with all its stakeholders. The Company's association with its investors is a key factor of Corporate Governance. An enduring communication with investors and shared information about the Company in a regular and trustworthy way supports to form a transparent relationship. It precisely chases a policy of 100% compliance with all statutory requirements and has a strong system to evaluate them. Your Directors contemplate in upholding the highest standards of answerability and intensely participate in overseeing risk and strategic management. The Board completely supports and endorses Corporate Governance practices in accordance with the provisions of clause 49 of the Listing Agreement and the report on Corporate Governance, as required under clause 49 of the Listing Agreement is annexed.

8] Subsidiaries

Your Company continues to have four subsidiary companies, i) Sylvan Holdings Pte. Ltd., Singapore, ii) Symphony Air Coolers Inc. USA, iii) Impco S. de R. L. de C.V, Mexico. (Impco) iv) Symphony USA Inc., USA. There is no material change in the nature of business of subsidiaries.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and its subsidiary companies, which is forming part of the Annual Report. Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. The statement also provides the details of performance and financial position of the subsidiaries of the Company.

The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of the Company during business hours on all days except Sundays and public holidays  up to the date of the Annual General Meeting as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of the Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of the Company (www.symphonylimited.com

9] Auditors

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Company can appoint or re-appoint an audit firm as Auditor for two terms of five consecutive years. M/s. Shah & Dalal has been an Auditor of the Company for more than 10 years and therefore the Company is required to appoint another Auditor in their place by March 31, 2017.

The Board of Directors at its meeting held on August 13, 2015 has recommended appointment of M/s. Deloitte Haskins & Sells as an Auditor of the Company from conclusion of ensuing annual general meeting until the conclusion of thirty third annual general meeting of the Company, subject to ratification by the Members at every Annual General Meeting.

The Company has received a consent letter along with certificates from Auditor under provisions of the Companies Act, 2013, to the effect that their appointment, if made, would be within the prescribed limits and are not disqualified for appointment and further they are independent of management.

The Auditors' report does not contain any qualification, reservation or adverse remark and is self-explanatory and thus does not require any further clarifications/comments.

10] Cost Auditors

During the year, the Company was not required to appoint cost auditor.

The cost compliance report for financial year 2013-14 was filed by the Company on December 25, 2014 within prescribed time limit.

11] Corporate Social Responsibility

The annual report on Corporate Social Responsibility is enclosed as Annexure 1 pursuant to the Companies (Corporate Social Responsibility Policy) Rules, 2014. The Policy is displayed on website of the Company.

12] Secretarial Audit Report

As required under Section 204 of the Companies Act, 2013, the Board of Directors of your Company had appointed Mr. Ashwin Shah, practicing Company secretary, to conduct Secretarial Audit. The Secretarial Audit Report for the financial year ended on June 30, 2015 is annexed to Boards' Report as Annexure 2. The Secretarial Auditors' report does not contain any qualification, reservation or adverse remark and is self-explanatory and thus does not require any further clarifications/comments.

13] Directors

The Nomination & Remuneration Committee and the Board of Directors of the Company at their respective meetings held on August 13,  2015 have appointed Mr. Naishadh Parikh and Mr. Darshan Patel as additional directors and they shall hold office till the ensuing annual general meeting of the Company and in respect of whom, the Company has received notices in writing from member of the Company proposing their candidature as Directors of the Company, is recommended for appointment at the ensuing Annual General Meeting as Non-Executive Independent Directors for five consecutive years commencing from August 13, 2015 and they shall not be liable to retire by rotation.

Ms. Jonaki Bakeri, the Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for re-appointment. Brief profile of aforesaid Directors, as required under clause 49 of the Listing Agreement, is annexed to the notice convening the 28th Annual General Meeting, which forms part of this Annual Report. Your directors recommend appointment/re-appointment of all above Directors.

14] Extract of Annual Return

As provided under Section 92(3) of the Companies Act, 2013, the extract of Annual Return in prescribed Form MGT - 9 is annexed herewith as Annexure 3.

15] Change of Financial Year and Shifting of Registered Office Change of Financial Year Pursuant to Section 2(41) and any other applicable provisions of the Companies Act, 2013, your Directors have decided to change financial year of the Company to end on 31st March of every year and accordingly, the current financial year of the Company will consist of nine months i.e. from July 1, 2015 to March 31, 2016.

Shifting of Registered Office

During the year under review, the Registered Office of the Company has been shifted to Symphony House, Third Floor, FP-12, TP-50, Off S.G. Highway, Bodakdev, Ahmedabad - 380 054. This new office has brought all functions of the Company at one location so as to enhance operational efficiencies, cost effectiveness and better synergies. This building is a highly functional building and has been designed as per the highest standards of energy efficiency in accordance with the Company's ethos of environmental sustainability.

16] Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors of the Company hereby state and confirm that:

(a) in the preparation of the annual accounts for the financial year ended on June 30, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 read with Rules made there under for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17] Meetings of the Board

Eight Meetings of the Board of Directors of the Company were held during the year under review. The details of meeting of Board are reported under Corporate Governance Report which is annexed to Board's Report.

18] Declaration by Independent Directors

Mr. Dipak Palkar, Mr. Himanshu Shah, Mr. Satyen Kothari, Mr. Naishadh Parikh and Mr. Darshan Patel being independent directors, have submitted their declarations stating that they meet the criteria of independence as specified under Section 149(6) of the Companies Act,  2013.

19] Nomination & Remuneration Policy

The Company has framed Nomination & Remuneration Policy for appointment of  directors and senior management personnel, their remuneration and evaluation of directors and Board. The details of said policy is reported under Corporate Governance Report.

21] Particulars of contracts or arrangements with related parties:

The particulars of contracts or arrangements with related parties as per Section 188(1) of the Companies Act, 2013, in prescribed in Form AOC-2 is given as Annexure 4 to the Annual Report.

22] Risk Management

The Company is aware of the risks associated with its business. It regularly analyses and takes corrective actions for managing / mitigating the same. Periodically, the Company reviews  its process for identifying, minimizing and mitigating risks. The Board of Directors of the Company have framed a risk management policy and same is being adhered to by the Company. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

23] Annual Performance Evaluation

Pursuant to provisions of the Companies Act, 2013, the Board of Directors has carried out annual performance evaluation of its own performance, its committees and all directors of the Company. The Nomination and Remuneration Committee has also reviewed performance of Board and all directors of the Company as required under the Companies Act, 2013 and the Listing Agreement.

Criteria for evaluation of Board and Committee

Broadly covers composition & quality, meeting procedures, strategy, management relations, succession planning, functions, duties, etc.

Criteria for evaluation of Directors

Broadly covers participation at meetings, knowledge & skill, personal attributes, leadership & quality, strategy, formulation and execution, planning & execution, human resource management/relations, product/ service knowledge and so on.

24] Audit Committee

The Company has already constituted Audit Committee comprising Mr. Dipak Palkar, Chairman, Mr. Himanshu Shah and Mr. Nrupesh Shah, Members. As per section 177(8) of the Companies Act, 2013, the Board has accepted all the recommendations of the Audit Committee during the financial year 2014-15.

25] Vigil Mechanism

The Company has already established vigil mechanism to provide adequate safeguard against victimization and to direct access to Chairman of Audit Committee in appropriate case. This mechanism is available on website of Company.

26] Details of significant and material orders passed by the regulators or courts or tribunals

During the year under review, there was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

27] Particulars of Employees

In pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, information of directors/employees of the Company are set out as Annexure 5 to the Board' Report.  28] Internal Financial Controls and its adequacy

The Company has devised an internal control system across the various functions of the Company and the same is reviewed by the Statutory Auditor and Internal Auditor at regular intervals.

There is a centralized ERP system with user rights given on "need-to-know" basis and there are "maker-checker" concept in each transaction entered in the system. All payments are subject to pre-authorisation as well pre-audit.

29] Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)  Act, 2013

Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

There were no complaints received during the year.

30] Deposit

The Company has not accepted any deposit during the year under review and no unclaimed deposits or interest was outstanding as on June  30, 2015.

The insurable interests of the Company including building, plant & machinery, stocks, vehicles, and other insurable interests like loss of profits, directors & officers' liability etc. are adequately covered.

32] Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo  As required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies  (Accounts) Rules, 2014, details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given as Annexure 6.

33] Acknowledgments

Your Directors wish to express their appreciation of the committed services by employees at all levels. Your Directors also wish to place on record their deep sense of appreciation for the valued support & co-operation by OEMs, distributors, dealers, service franchisees, suppliers, C&FAs, bankers and all other stakeholders of the Company and look forward to their continued association with the Company. The Company will make every effort to meet the aspirations of its Shareholders.

For and on behalf of the Board

Achal Bakeri

Chairman and

Managing Director

DIN - 00397573

Date : August 13, 2015

 Place : Ahmedabad