When it comes to home appliances, it’s a name to reckon with both in India and across the globe. The Dollar Business caught up with Kapil Agarwal, Vice President - Marketing, Whirlpool of India Ltd., to understand what is at the core of company’s global expansion strategy and how it is dealing with challenges unique to a market like India.
Interview by Ahmad Shariq Khan | November 2017 Issue | The Dollar Business
TDB: Whirlpool has been in India for more than two decades now. How do you reflect upon the journey so far?
Kapil Agarwal (KA): When we entered India, at the core of our bond with our consumers, stood our brand vision – ‘Creating Happier Homes’. We have remained committed to the same, offering innovation-led home solutions. Whirlpool in India has gone from strength to strength. The brand has emerged as one of the leading manufacturers and marketers of major home appliances in the country. We are now rated amongst the top three brands that command almost 80-90% of the market share.
TDB: Tell us about Whirlpool’s global scale of operations.
KA: Backed by Whirlpool’s 100-year-old brand legacy, we have our footprint in more than 170 countries. With nearly 15 brands across the world, our major markets comprise the Americas – North and South America. Europe is also another major market where we recently acquired the popular European brand Indesit. With this, we are now the biggest player in the European market. Other regions include Asia and the larger Oceania region. Markets in the Middle East and the emerging markets of Africa also provide for a sizable business.
In India, we cater to customers across the country. We also have three state-of-the-art manufacturing facilities at Faridabad, Pondicherry and Pune. Each of the manufacturing set-ups feature an infrastructure that is a testimonial of Whirlpool’s long-held commitment to provide its consumers with forward-looking home solutions.
TDB: Your thoughts on ‘Make in India’?
KA: More than 95% of what we sell in India is made in India. This shows our commitment to making in India. We are constantly looking at various avenues to further our Indian operations. Going forward, we see growth as a direct result of initiatives the government brings in, especially in the rural sector. With GST in place, we envision a lot of growth in the Indian market, across segments, and as a result, our market penetration is likely to go up. Having said that, in my view, ‘Make in India’ is an initiative that could help us increase productivity. But it is imperative here that we invest in both capacity building and innovation. This will be our mantra for the next three-four years.
TDB: What kind of competition are you facing in the international market?
KA: Globally, Korean manufacturers are our biggest competitors. As of now, Chinese manufacturers, even though they have manufacturing capabilities, are not so much a threat to us as they lag in innovation and consumer understanding, and are yet to become global brands in the space we operate in. On the global stage, we are the leading player in many world markets – including the Americas, both in the north and the south. Worth noting is that we enjoy a market share of more than 40% in both these markets. And in Europe, with our Indesit acquisition, we have now attained the ‘numero uno’ status. On the global level, our two major competitors are LG and Samsung. So, in a sense, the world’s home appliances market is consolidating and is dominated by the three big players – Whirlpool, LG and Samsung.
TDB: How do you plan to maintain your competitive advantage in India?
KA: Our competitive advantage comes from the very fact that all our home appliances are designed with advanced technologies that are intelligent, intuitive and innovative. We offer technology that benefits consumers in their daily lives. So, for example, in India we offer innovations that is suited to the Indian context and consumer sensibilities while still delivering superior performance. I would say that such a strong technology-focussed thrust has so far been synonymous with our identity and has helped us stand tall amongst the competition, both in domestic and global markets.
TDB: What has been at the core of your global expansion strategy? Where do mergers and acquisitions stand in the grand scheme of things?
KA: Over the last two years, we have carried out two acquisitions – both strategic in nature. One is Sanyo appliances in China. This has helped us enter China’s manufacturing hub and further strengthened our China-based manufacturing capabilities. This is going to further consolidate our position in China’s market, which we believe has a great potential. Our second notable acquisition was in Europe of the brand Indesit. This made us the biggest player in our segment in the European market.
Besides, as we go about expanding our global reach, our tie-ups play a major role. Currently, there are two kinds of tie-ups that we do – one being technology-centric development in the specific domain of The Internet of Things (IoT) and connected homes. Globally, we are working with firms on cutting-edge technologies to make Whirlpool IoT ready and offer its benefits to consumers at the earliest. In the second instance we join hands with local manufacturing hubs which can do part manufacturing for us. This helps us in leveraging additional capacity requirements. Going forward, we believe, both these strategically natured differentiators would, over a period of time, consolidate Whirlpool’s capacity in many specific regions, including countries like India, China and some parts of Europe, amongst others. So, strategies like these help us increase our manufacturing and sales footprint.
TDB: What are your thoughts on the impact of Indian FTAs on your sector?
KA: FTAs have helped our sector greatly. For example, there is an FTA with Korea and one with Thailand. I believe a manufacturing base in Thailand can be leveraged to bring in products that have little scale here – like the large refrigerators or side-by-side multi-door refrigerators. Such refrigerators have a small market in India, though it is growing at a rate of almost 100%. But, nobody would like to make such items in India and would rather prefer importing it from manufacturing hubs with which we have an FTA.
TDB: With GST, some have raised concerns regarding working capital woes and IT readiness. Your comments.
KA: While many positives are bound to emanate out of the GST in the long run, in the short term its compliance cost has emerged as a matter of concern. I am of the view that as processes are streamlined, things will change for the better. When it comes to E-way bill and IT readiness of stakeholders, I feel, these are not much of an issue. Almost every manufacturer today is digital-ready. We ourselves don’t have any physical invoicing. Everything is done through SAP and advanced systems. All our global offices and operations are linked and our invoicing system is a globally standardised one. GST is not a problem for us because all our transactions are digitised. I think going digital is the future.
TDB: Going forward, what sectoral challenges do you foresee?
KA: Today, catering to a vast market that India is, we deal with many third-party logistics partners and players that work quite traditionally in many respects, amounting to logistics-related woes. Since most home appliance products are big and bulky, it would help if the existing supply chain operators could be more uniformed and streamlined.
On the regulatory front, I don’t see much concern. The government has been going about it in the right way. Energy rate notifications are important to our planning process as they have an impact on our costs, and the government has done a good job in ensuring that we get the notifications well in advance so that we are able to plan our investment and production cycle in sync with energy regulations and notifications.