Peters told analysts in its last week earnings call the Indian stock market is focused on rewarding growth in consumer-focused sectors like household appliances, and given the future appliance penetration and the potential of this business to grow and expand share.
“Whirlpool Corp US shareholders view the appliance business through a US lens as a mature industry (with high penetration) …We really do believe the right path is for Whirlpool India to focus on growth and Whirlpool Corp to focus on margin expansion,” said Peters.
Peters said the flexibility the Indian team will now have is the ability to make decisions on where best to invest, when to invest and what growth initiatives they want to focus on. “And again, this will now put the decision-making completely in their hands without the oversight of Whirlpool that has to balance the needs of US shareholders and Indian shareholders,” he said.
In response to a specific query on shifting support functions to third-party, Whirlpool India said Whirlpool Corp had communicated last year that it is shifting to a more decentralized model with autonomous business units and a strategic corporate center. In order to standardize and expedite support to business units, a business unit services organization has been developed globally that will optimize processes and tools related to standard, recurring activities for a few support functions, it said. “This is a common approach for many businesses who operate on a global scale. We are at an early stage of the process and are updating employees on the status of business unit services and this change will affect a very limited number of positions in India,” the company said.As part of the stake sale process, Whirlpool Corp will enter into long-term brand and tech agreements with Whirlpool India to ensure business continuity for the Indian entity. Peters said due to these agreements, it is unlikely that a “strategic buyer” might be interested in Whirlpool Corp’s shares.
“A strategic transaction with another player would not make sense at this time because it would restrict the ability to use some of those things and would not be as value-creating as it is for us to provide the brand and the technology over the long-term,” said Peters.
Even though Whirlpool was almost the first MNC electronic brand to enter India in late 1980s, it is currently a smaller player by sales as compared to global rivals LG, Samsung and Haier who entered much later, or even home grown companies like Voltas.
“Whirlpool India is trying to reorganize its business for rapid growth,” said an industry executive. “The company has maintained its 17-18% market share in mass segment washing machines and refrigerators with high focus on distribution business in smaller stores. The industry, however, is fast moving to modern and regional retail chains, e-commerce with premiumisation,” he said.
Whirlpool Corp has said it expects to generate net cash proceeds of $550-600 million by the proposed stake sale which should be completed by mid-to-end 2025. In February 2024, Whirlpool Corp had sold 24.7% in the Indian unit through block deals.
