Achal Bakeri, Learning Machine

Posted on by fundooprofessor

Text of a Note I sent to my students at MDI today:

Achal Bakeri, Learning Machine

In July 2015, I delivered a talk in which I profiled Achal Bakeri — founder and CEO of Symphony Limited as a “learning machine.”

Next week, Mr. Bakeri will deliver a talk in your class where he will share with you some of the most important lessons he learned as an entrepreneur.

This talk is not going to be about the valuation of Symphony. Rather, it will be about the journey of a very successful entrepreneur who learnt a few key lessons and who has generously agreed to come to MDI to share them with you.

You should regard Mr. Bakeri as a role model. But to get the maximum out of your interaction with him, you must spend time reading about how, over the course of a few years, he transformed Symphony from an unfocused, asset-heavy, highly leveraged, unprofitable business to an extremely focused, asset-light, debt-free, and one of the highest return on operating assets businesses in India.

There are two methods by which you can do this — the long method and the short method. The long method involves reading the past annual reports of the company slowly while making notes about improvements led by Mr. Bakeri to the company’s business model.

If you use the long method, try to relate business improvements in fundamental operating performance with specific business model changes by focusing on key words like “asset-light,” “debt” and “learning.”

You can get the annual reports from here.

The short method would be to simply read recent media coverage about Mr. Bakeri and Symphony. Here are three links:

1. Economist
2. Business Today
3. Forbes

I urge you to use the long method. It’s a lot of fun to learn directly from source documents than to learn from media coverage where you rarely get to read about success stories before they have been recognized by the world out there. So, clearly, it’s in your interest as an investor to take the long road.

I have never met Mr. Bakeri before and so, like you, I will be meeting him for the first time next week. Together, let’s learn whatever we can from the accumulated wisdom of a learning machine.

Sanjay Bakshi
14 November, 2015

Published by fundooprofessor

I am Distinguished Adjunct Professor at Flame University, Pune. Previosuly, I was Adjunct Professor at MDI, Gurgaon, where I taught MBA students two popular courses titled “Behavioral Finance & Business Valuation"(BFBV) and Forensic Accounting and Corporate Governance (FACG) for many years. I am also Managing Partner at ValueQuest Capital LLP— an investment advisory boutique which helps its clients invest their capital in good quality businesses.

11 thoughts on “Achal Bakeri, Learning Machine”

  3. Sir , Since I won’t be part of this meeting . I had some questions if they can be answered by Mr Bakeri , it will be great.

    Symphony story is same as Asian Paints in its early days , when Choksi & Dani innovated with Distemper & small packet enamels , while Paint MNC focused on Emulsions & Bulk enamel packaging .It worked wonderfully such that Asian paints became market leader in 1960s .

    But the next inflexion point came in 1960s when promoters decided to handed over reins to professional management . The focus was on making company system dependent and not just individual promoter driven .

    1) Can Symphony make this transition from promoter driven to professional management driven ( or does Mr Bakeri feels it is not required ) .

    2) Will Symphony focus on limited product lines or plans to expand scope into larger home comfort solutions in future like Asian paints did ..

  4. What is the supplier base for the company? Do they only depend on 1 or 2 suppliers? Or do they have a diversified supplier base? How closely do they work with the suppliers? What happens if a factory goes on strike?

  5. Dear Sir,

    I have a ‘crazy’ question for Mr Bakeri.

    Air coolers are becoming breeding centres for mosquitoes. What crazy idea does he have to beat the heat and kill/avoid mosquitoes?

    Regards,
    Srikant

  7. Sir, curious to know these two things from Mr. Bakeri.
    1. A lesson from past- Curious to learn (may request to share his experience) how the company has regained and retained their strength/position against incessant competition from unorganised players for long time. What has been the key strategy and factor to make them stand out successfully.
    2. Now on future and bit on their preparedness- Even organised/branded veteran payers are eyeing seriously at air cooler market. They have brand, technology and reach too. In such a situation, how Symphony is prepared and what are the additional steps are being taken to make itself stand out successfully again this time.

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