‘Our goal is to become $1 bn firm by 2020’

American appliances major Whirlpool is pushing aggressively in the Indian market at a time when the Chinese durables wave is growing.

SUNIL D’SOUZA, managing director, Whirlpool of India, shares his plans and challenges in an interaction with Arnab Dutta. Edited excerpts:

In the last few quarters, Whirlpool has seen doubledigit topline growth, closing the 2017-18 financial year with revenues in excess of ~49 billion. Please highlight your future business strategy?

After initial glitches following the roll-out of the goods and services tax, business has been smooth. We saw over 20 per cent topline growth in the December quarter. Now, we are aggressively working towards expanding our product portfolio and retail reach. We are strengthening our portfolio in the premium and mass segments.

We are planning to leverage our excess capacity in China to cater to the premium market here. We have almost doubled the number of branch offices to 40 in India, got more field personnel in place, and roped in more distributors to push our products.

What is your revenue target and investment plans?

Our long-term goal is to become a $1 billion (~67 billion) company by 2020 and for that we would need to grow in double digits every year. We have ~4.3 billion in investment lined up for the next five years to cover capacity expansion and new product development. In the next two months, expansion of our Puducherry plant will be completed, which requires ~600-700 million. Another ~3.6 billion would go for expansion of our Pune plant in two phases.

Do you see any signs of revival in the domestic consumer market?

In recent quarters, India’s GDP growth rate has remained around 7 per cent. Traditionally, the 7 per cent number has helped increase discretionary spending in India. This is a positive sign for the consumer durables market here. While urban areas are not growing as fast as we had anticipated earlier, Tier-II and -III towns as well as rural areas have shown better growth in the last few months. Also, states that are dependent on agriculture rather than industrial activity have actually delivered better numbers in terms of growth (for the market).

Is there any pressure on costs and what are the chances of price hikes in the durables market?

Increasing oil prices are a danger as freight costs go up. Eventually, the inflationary spiral grows, which is not good for business.

Being a US-based company, the rupee depreciation is another sign of worry for us as most components are still imported into the country. Already, the industry has taken two rounds of price hikes – one after the implementation of GST (in July) and the second one in the December (2017) quarter. Now several commodities like resin and plastic have begun to pinch our pockets again. Steel is in short supply, which is a headache. If these trends continue, we may have to go in for a third round of price hikes shortly.

The GST rate for appliances has not been slashed and the government has not announced any new incentive packages under MSIPS. Will this impact business?

Yes, the GST rate continues to be at 28 per cent and the industry is constantly presenting its case to the government to bring it down to 18 per cent. Today, the co-relation between India’s per-capita income and price of durables is negatively skewed.

Also, India is at least 10-12 years behind China when it comes to domestic manufacturing of electronics and appliances.

The Chinese government’s big push for local manufacturing not only helped players set up large units there, but also encouraged ancillary industries to come up. Make in India is nice as a slogan, but a lot remains to be done. We need to figure out the talent pool to support it, streamline logistics and set up an ancillary ecosystem.