Deepening and widening the pool

Rajalakshmi Nirmal | Updated on January 20, 2018 Published on June 19, 2016

Whirlpool of India will cater to both mass and premium segments with products offering tangible consumer benefits, says its MD

Sunil D’Souza, who took over as Managing Director at Whirlpool of India in June 2015, has ambitious plans for the company. In an interview with BusinessLine, he shared his views on the industry and also spoke of Whirlpool’s growth plans over the next one year to re-gain market share. Excerpts from the interview:

Have you seen any improvement in consumer buying of late? What is the scene at the ground level?

In the December and the March quarters, we have seen some signs of improvement in the business. The overall macros are helping demand, along with the start of the summer season. But I don’t think fundamentally things have changed all that much in the rural markets and for that I think a normal monsoon, which everyone is predicting, is going to be very critical. If there is a normal monsoon, I think demand in the rural markets will come back. Urban demand is already holding up and could start accelerating if all the GDP indicators start moving up. Looking into the future, say, September-December quarter onwards, we should see demand coming back strongly.

The company has lost market share in some of its core products like refrigerators. What have you done or intend to do to regain lost ground?

In the last three-four quarters we have been maintaining our share and have also been able to increase it to some extent. We are seeing a steady trend in which the distribution reach is also improving. We want to keep increasing our share at a steady pace. In this industry it is very easy to gain share and distribution in a month, but we want to grow it steadily and profitably. We have opportunities to improve our market share in all the categories that we are present in.

We are immensely focused on driving innovation and go-to-market execution, which includes both reach in terms of numbers as well improving shop floor extraction — same store sales. We are making sure that we have enough products in our portfolio and new launches.

Over the past year, we have taken a lot of effort to make sure that we are extremely focused on the consumer, and putting out products which have tangible consumer benefits for which they are willing to pay a certain value. In air-conditioners this year, we were probably one of the few players to launch both purification as well as cooling feature and we are concentrating on improving our reach and execution.

Is it because the company is not very comfortable bringing down margins that it is finding it difficult to grow volumes?

If you look at the last quarter, our factory margins were up by a percentage point versus last year but the operating margin was up by 1.8 percentage points. So, profits have gone up because of all other cost factors being under control. Now when you are talking about our portfolio, we are expanding our portfolio both in the mass range as well as in the premium range.

Do you have any targets set for this year for your distribution and reach?

We are focused on double-digit profitable volume growth and we are targeting aggressive market share growth. India is one of the big focus markets for Whirlpool globally. We have set ourselves this target and right now we are on track to deliver it.

Higher market share, volume and profitability, how do you plan to bring all the three together?

We see opportunities in all categories across our portfolio, both at the premium and the mass range. The key is to balance it right on both sides — mass will give you scale and volume and premium segment will give you profitability and brand image. We are also planning to expand into new categories and you would see a bit of aggression on that. We are focused on air treatment, water, and our built-in range of appliances, going forward. By the end of this year, we should also be launching our kitchen-aid brand, which is a super premium brand. We will be launching in the built-in range here.

When you move from large products to small consumer items, say, kitchen appliances, don’t you think you are trying to take a bite into a large pie, because of the intense competition there?

When we talk of expansion, we don’t mean just for expansion’s sake. We play in certain categories and we have certain strengths. Now when we are looking at expanding, we are looking to expand into adjacencies which are profitable, where we can bring some competitive advantage. Without that there is no point of jumping into any category. So unless we have a clear plan to differentiate and build advantage and make profits, we will not expand.

Now, that the focus is on innovation, how much do you plan to invest on it?

Despite a soft industry, we have grown our capex investment over the last fiscal year and you will see substantial increases in capex investments going forward. Capex goes into, one, innovation and the other, maintenance of the business and capacity expansion. We are doing measured capacity expansions in certain places but a large portion of our capex goes into innovation for the consumer.

What kind of revenues do you make from the online business? What is your take on the regulatory restrictions on online portals? Do you see any risks to your business now?

India is fast on track to become the largest online market around the world, so it is obviously important that we have presence in the online space while making sure we strengthen our offline presence also because online is not going to replace the brick-and-mortar stores any time soon.

So the critical piece in online is to make sure that you have the right partners to engage with because you have a brand image to maintain and you have to balance online and offline stores..

So we are focused on making sure that we build the partnerships and right now we see very aggressive growth in the online space. I can only say that the business will continue to grow. How fast, that’s tough to say.

That said, we have not seen a slowdown in our offtake with whatever regulation has come in, but, it is hard to take a view on the future.

All I can say is that the segment is poised for growth and we are making sure that we are both internally resourced in terms of people and structure as well as making sure that we have the products to play in the online space.

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