Symphony Plans Stake Sale in Australian, Mexican Subsidiaries to Boost Capital Efficiency

Air-cooling solutions provider Symphony Ltd. has announced that its Board of Directors is exploring the divestment and monetisation of its stakes in subsidiaries Climate Technologies in Australia and IMPCO in Mexico. The move is aimed at enhancing capital efficiency and reallocating management focus towards higher-growth opportunities in India and international markets, according to Nrupesh Shah, Managing Director – Corporate Affairs, Symphony.

As of December 31, 2024, Climate Technologies had over Rs 350 crore in deployed funds, including equity capital invested, loans granted, and borrowings. Despite this sizable investment, the business remains Ebitda-negative. “Considering the capital employed, it does not make sense for us, as it overall tracks down the capital efficacy,” Shah told NDTV Profit.

In contrast, IMPCO Mexico has been performing well, with Rs 87 crore in capital employed and a trailing 12-month Ebitda of nearly Rs 24 crore as of December 31, 2024.

 “As far as IMPCO Mexico is concerned, in the last 3 years we have launched a series of products; they have been received well, the company has grown very well, and we believe that this is the right time to monetise the stake at a decent evaluation,” he said.

The decision also reflects Symphony’s strategic intent to reallocate resources. “Both companies take a decent amount of time as well as management bandwidth, which we wish to redeploy on much higher growth-orientated and profitable opportunities as available in India as well as direct exports from Symphony to international markets, including taking advantage of the current geopolitical situation,” Shah added.

Shah clarified that divesting from these subsidiaries does not equate to exiting the respective markets. The new owners could continue sourcing products from Symphony India, and there is scope for potential brand licensing.

 “Even for a new buyer, it may make a lot of economic sense and viability if they continue buying the products from Symphony, India, and secondly, in some of the products, they are sold under the Symphony brand, and there is a possibility whereby we enter into Symphony brand licensing also,” he noted.

The company is eyeing substantial export growth, particularly in the United States, where ongoing geopolitical shifts have created favourable conditions, he mentioned.

 “In the US or other international markets, our main competitors are Chinese players. We give them a fair competition and are doing decently well. However, if the tariff continues as it currently is at 145% or whatever it comes to, they will not have any scope in terms of the pricing, and that opens up huge avenues in the US in particular, which is a large market,” Shah said.

Symphony is also streamlining its internal financial structure. GSK China, its Chinese subsidiary, has sold proprietary technology and nine intellectual property rights—specifically developed for IMPCO Mexico—to the latter for Rs 43 crore, or approximately $5.1 million. IMPCO will fund this transaction through internal accruals. Shah explained that GSK China had previously borrowed Rs 60 crore from Symphony India, of which Rs 13.5 crore has already been repaid.

“As of now, the outstanding amount, including interest accrued, is close to Rs 49 crore. From this sale transaction, we expect GSK to repay Rs 38 to Rs 40 crore net of expenses and taxes. The balance of Rs 8 to 10 crore we expect GSK China to repay entirely in the ensuing quarters purely out of its internal accruals. So, post this sale transaction, the loan will come down to close to Rs 10 crore, and in the next 12 months or so, it should be zero,” he said.

Shares of Symphony ended Tuesday's trade higher at Rs 1,165.00 on the NSE, while the benchmark Nifty50 was 2.19% higher at 23,328.55 points.