Star MNC: Home appliances major Whirlpool makes a strong comeback

By expanding its product portfolio, adding new markets and widening its retail footprint, the home appliances major has emerged a clear winner

American home appliances major Whirlpool has been doing business in India for over three decades but early in the last decade, its sales suffered. As Korean and Chinese majors like Samsung, LG and Haier went aggressive with above-the-line activities, industry analysts wondered whether a company that was once a household name had lost the plot.

Since 2017, however, Whirlpool of India’s has been a classic turnaround story. That year, the firm’s local management targetted a yearly turnover of $1 billion by 2020-21. At the time, the target seemed steep, as annual sales were around Rs 4,500 crore ($610 million), and reaching the milestone required increasing the topline at a compounded annual growth rate (CAGR) of 13 per cent. Sunil D’Souza, the then managing director (MD) of Whirlpool of India, was confident, even though industry experts remained sceptical. D’Souza stepped down on April 3, 2020 and was replaced by the current MD, Vishal Bhola.

Whirlpool entered India 34 years ago with its global range of compact washers in search of new markets. It started out in India in partnership with Madurai-based TVS Group and later set up a local subsidiary in 1996 after acquiring refrigerator maker Kelvinator India. While it managed to become a household name, Asian rivals like Samsung and LG, which entered the market in the mid-1990s, went well past it, riding on their wider range of products.

D’Souza was betting heavily against the odds. Larger players like Samsung and LG had the advantage of wider retail networks, bigger field forces and deep pockets to promote their products and brands — crucial factors in the game. Whirlpool, on the other hand, was banking on expanding its portfolio, especially in the premium segment that was growing much faster than the mass-market categories. Further, expanding its market presence by adding new territories and retail outlets would be important, D’Souza knew.

In support of its plan, Whirlpool rolled out a capacity expansion programme that involved ramping up production at its two plants — in Puducherry and Pune — with an investment of Rs 430 crore. Also, it began to leverage the excess capacity in China to cater to the premium market in India. It doubled the number of branch offices in India, and added more field personnel and distributors to push its products. Between 2016 and 2018, Whirlpool covered all the 50,000-odd large format electronics retail stores in India, increasing its retail footprint by 20 per cent.

Three years later, Whirlpool emerged as a clear winner, reaching the stated objective of $1 billion in revenues a year ahead of the plan. In 2019-20, Whirlpool’s net sales jumped to Rs 7,266 crore after growing at a CAGR of 15 per cent over the previous three years. The firm’s topline performance also beat its long-time rivals — Samsung and LG.

In 2019-20, Samsung’s air conditioner, washing machine, refrigerator and microwave businesses grew 6 per cent year-on-year and LG’s revenue remained flat, while Whirlpool’s net sales surged 11.5 per cent. The firm, which was once half the size of Samsung’s home appliances business, closed in on the Korean chaebol’s Rs 7,832-crore revenue from the segment in 2019-20. Unlike its two peers, Whirlpool does not have a consumer electronics business.

Apart from its renewed aggression in the field, Whirlpool’s recent success can be attributed to some of its latest deals. In mid-2018, it acquired a 49 per cent stake in Elica PB India, a company dealing in built-in kitchen appliances, for about Rs 170 crore. Whirlpool Corporation — the American parent of the local subsidiary — held a 12.5 per cent stake in Elica PB India’s Italian parent company Elica SpA. The move could have been aimed at tightening the global firm’s grip over the Italian entity.

However, there was more to it. Elica PB India, which used to sell a range of premium kitchen appliances such as hoods, hobs, built-in ovens and microwaves, refrigerators and dishwashers, had revenues of Rs 138 crore in 2016-17. And, Elica PB had been growing by over 20 per cent annually before the acquisition, versus the 30 per cent growth for the Rs 4,000 crore-plus premium built-in appliances space in India.

Whirlpool’s investments were directed towards a segment that continues to grow in the high double digits at a time when there was a lull in other appliance categories like standalone refrigerators and washing machines, which were growing at 6 to 9 per cent annually.