Analyzing...
ROOPALI SINGH
2025.02.10 14:40:25 +05'30'
Whirlpool India Limited Q3 & FY25 Earnings Conference Call February 07, 2025 Ladies and gentlemen, good day, and welcome to Earnings Conference Call of Whirlpool of India Limited. Wewishtoinformyouthatallparticipantlineswillbeinthelisten-onlymode.And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance duringthisconferencecall,pleasesignal an moderator by pressing “*”,then“0”onyourtouchtonephone.Pleasenotethat this conference is being recorded. InowhandtheconferenceovertoMs.RoopaliSingh,CompanySecretary.Thankyou and over to you, ma'am. Thank you, Neerav. Good evening, ladies and gentlemen. We welcome you to Whirlpool India's quarter three earnings conference call. IwillstartbyintroducingWhirlpoolIndia'smanagementteam.IhavewithmeMr. NarasimhanEswar,ManagingDirector;andMr.AdityaJain,ChiefFinancialOfficer.As communicated earlier, we also have with us Mr. James Peters, Executive Vice President and Chief Financial and AdministrativeOfficerofWhirlpoolCorporation. He joins us today to respond to questions on the anticipated sell-downs. A presentation on the business and the financial reserves of Whirlpool India is availableonthewebsiteofthecompany,aswellasthisstockexchange.Beforewe moveforward,Iwouldliketoremindyouofthecautionarystatementthatformspart of the presentation. During this call, the management will make certain forward-looking statements. These forward-looking statements are based on certainexpectations,assumptions,andotherfactorswhichmayaffectthebusiness results. Attention is also drawn to the cautionary statement made by Whirlpool Corporation in regard to the anticipated sell-down which is captured in the presentation. Please read the cautionary statements carefully, and thecontentof this call should be interpreted accordingly. With that, I would now like to hand it over to Mr. Eswar. Page1of30
Thank you. Thank you, Roopali. Good evening, ladies and gentlemen. This is NarasimhanEswar,theManagingDirectorforWhirlpoolofIndiaLimited.AndIhave with me Mr. Aditya Jain, the CFO of Whirlpool of India. I would like to start by presenting to you thebusinessoverviewandwalkingyou through the strategic imperatives and the progress we have made against that. Following which, I will hand it over to Mr. Aditya Jain to talk aboutthefinancial performance of the company. So, as I start with the business overview,whatIwantedtosaywasthatIwillbe talking about the period between April to December, asthequarterlyresultsare with you for October to December. And Iamsureyouhavehadtheopportunityto studyit.Wewillalsotakeanyquestionsonitlater.ButIreallywanttotalkabout themomentumthatwehavecreatedthroughtheendoflastyearandintothisyear, and how we are sustaining this momentum through April to December. What do I mean by momentum? The revenue growth in April to December for Whirlpool is17%growthversuslastyear.Wehavenotonlygrowntherevenue,we have had a pretty good success in the cost take-out program, what we call the ProductivityforGrowthprogram.Thishasledtoagrossmarginimprovementof220 basis points versus last year. We are quite proud that thePBTgrowthofthecompanyisabout100%versuslast year, and this PBT improvement is about 210 basispointsversusayearago.That meansthelinesinbetweengrossmarginandPBThavealsobeenmanagedquite strongly.Weareveryhappywiththefactthatthesharegainhasbeenverygood.The market share gains that we have had on volume market share has been in triple-digitbasispointsoverallthreequartersversuslastyear,inbothrefrigerators and washers, which make up 90% of the business that we play in. Mostofthesehavestemmedfromstrongpositiveresultsthatwehavegotfromour ROI-based investments that we have done, which we have talked to you about before. I am also pleased to report that working capital, which is an important parameter of how the company is working, we have also seen some substantial progress. Versus the 5% of sales working capital in September 2023, we have published earlier minus 3% in September 2024, and the company continues to generate healthy cash as we go along. Next slide, please. Letusstartwiththerevenueandtheprofitsforasecond.Wewouldliketosaythat thereisaclearturnaroundofthebusinessinthe'24-'25fiscalyearwithstrongprofit growth accompanying it. Let me draw your attention to the left side of the chart, where we show the standalone revenue from operations growth. Page2of30
In2021,'21-'22and'22-'23,wewereoperatingbetweenminus1.6%andplus3.6%,so betweenslightdeclinetolow-single-digits.Inthefirsthalfof'23-'24,asyouknow, we still had a difficult time. It wasminus4.3%,butthingswerebeginningtoturn around.Inthesecondhalf,whichwasadifferentstory,wegrewthebusinessnearly 10%versusthepreviousyear.AndIamgladtoreportthatintheseninemonthswe havegrownby17.2%.Thatisabout15monthsofcontinuousrevenuegrowth,which makes us feel that we have done the jobintermsofturningaroundtherevenue situation. But is it just revenue? If you go to the right side of the screen, you have the standaloneprofitbeforetaxabsolutegrowthpercentversuslastyear.Frombetween a minus 20% to a minus 30% up to the first half of '23-'24, in the second halfof '23-'24,wedeliveredagrowthof58%onprofit.Andintheninemonthsof'24-'25,we have delivered 101% growth versus a year ago. So both revenue and profit have turned around, and that is why we said it is a turnaround. Now,howhavewedoneonmarketshares?Nextslide,please.Thisisslidenumber nineIamreferringto.Thislineatthebottomisbasicallythevolumemarketshare year-on-year combined for refrigeratorsandwashersfrommulti-brandoutlets,the offline. As you can see, the market has been growing somewhere between mid-single-digits, just once went to double-digits, low-double-digits, and then came back toaboutmid-single-digitsorflat.That'sbeenthekindofprofileofthe ref and washer market for the last, let's say, in the two calendar years. OurWhirlpoolvolumemarketsharewhichwasdowntriple-digitbasispoints,from Jan to March '23, we were able to start moving in the right direction in April to September '23. Inthosesixmonths,whilethemarketwasflattish,wehadalready takeninthefirstquarterof,whenIsaythefirstquarter,ImeanJantoMarch'23of thecalendaryear,wehadtakensomepricecorrectionsandweintroducedournew direct cool ranges. We then stepped up our execution, and we launched our frost-free range upgrades with great claims in April to September '23. As you can see, thesharestartedmovingintherightdirection,thoughitwasstill negative double-digit basis points. October '23 to March '24, we started turning around the share significantly. There was a lot of focus on sales execution and capability,serviceexecutionandcapability.Therewasalotoffocusonthefrontline anddrivingourbusiness,drivingourconsumption,aswellasdrivingpremiumness through the mix. FromApril'24toDecember'24,everyquarterwehavegrowntriple-digitsversusthe year ago in terms of market share. We have done that through a combinationof many things, two or three things per quarter. We have brought in new products, Page3of30
whether it is a glass door, or whether it is a dynamix detergent dispenser in semi-automaticwashingmachines,webroughtinmuchstrongerexecutionalfocus, increasing that as we go along. We took some of our great products that we have in washers and launched extended warranty on those, offering more value to the consumer. We broughtin additional retail executives to drive ourconsumption,didseveralpromotionsthat wereattherightpromotionsattherighttime,includingatthefestivalseason.And at the end of the calendar year thisyear,wehavealsolaunchedournewair-con ranges. All of that is resulting in share growth year-on-year. Now, what is very interesting to see on the next slideisthequestionthatwould comethen,thenextquestionis,isitjustoneortwocategoriesthataredrivingthis growth, or is it happening as broad-based growth across categories?Let'stakea lookatthisvery,verycomplexchart,whichisChartNumber10.AndIapologizethat it is so detailed, but I did want to give a lot of color to you. The first row is basically the direct cool refrigerators. The second row is no-frost refrigerators. The third rowisSA,whichissemi-automaticwashingmachines.The fourth is vertical-axis or top-load washing machines. And the fifth row is the front-loadwashingmachines.Thesearebasicallythemarketsharesinbpsversusa year ago, basis points versus a year ago. Just to take direct cool for example, we were having a triple-digit market share declineinJanuarytoMarch2023.Withtherightpricingandwiththenewranges,we started to turn that aroundwithmuchbetterincreasedsalesexecutioninAprilto September '23. And after that, from October '23 onwards, we have been growing triple-digitsversusayearagointhedirectcoolrefrigerator.Allofyouwouldknow that direct cool isalsothestrongestpartofourportfolio,historically.Wearevery happythatwewereabletoturnthataroundandstartgettingthatintogrowthasa flagship business for our company. Ifyoulookatno-frost,wehadacoupleoftoughquartersinthebeginning.It'snot justJantoMarch'23,butApriltoSeptemberaswell,whichisdeclining.Westarted correcting that with our new ranges and sales execution focus and several other things. InOctobertoMarch,wewerestilldeclining,startingtomovetherightway. Asyoucansee,inApriltoJunewewenttodouble-digitbasispointsgrowthversus a year ago. July to September, the same thing. I am very happy to report that in October to December we have actually moved totriple-digitsbasispointsgrowth versusayearago,therebyshowingthatwearefullycapableofdrivingthepremium end of our business as well. Page4of30
Semi-automatic was quite a challenge, primarily because there were a lot of competition,whichwasadvantagedonprice,onthepricethattheywereworkingon inthemarket.Itdidtakeuslongertoturnthataround.Butasyoucansee,withthe rightsetofactions,includingwarrantyandrightpricingactions,wehavebeenable to start growing the business from July to September, and we had a strong double-digit growth in October to December. On the top-loading machines, similar to the DC, the direct cool refrigerators, we startedgrowingtriple-digits.Fromadecliningbusinessonmarketshare,westarted growing triple-digits, and we have continued to do that from October '23 right through to December '24. Andlastlyonfront-loading,obviouslythereisgrowthversusayearago,prettygood growth,butthat'sbecausethebaseforourfront-loadingwashingmachineisquite small. And we see significant opportunities on that going forward. So net-net, all our categories have been in strong growth, not just for the last quarter, but for the last two, three quarters. This is the same if you look across regionsaswell,twodifferentextents,butallourregions,whetherit'snorth,south, east or west, is growing as well. Forme,whatthisactuallytellsus,andthisiswhatmakesusveryhappyaboutthe results thatwehaveisthatit'snotjustaboutthenumbers,butthequalityofthe number,thatit'sgrowingineverydirection.Andforme,thatdoesnotmeanthatit's just about one or two categories, it's about consistent growth across categories, consistent growth across geographies, that augurs wellfortwothings.Oneisthe Whirlpool brandname,andIthinkWhirlpoolisback.Andthesecondthingisour organization, and absolutelyourorganizationseemstobeperformingatthelevel that we'd love to see it perform in the future as well. Next slide, please. Let'smoveonnowtogrossmargin,SlideNumber11.In2021,'21-'22and2022-'23,we were declining gross margin versus thepreviousyearbyareasonablysubstantial amount. The correction started in '23-'24 in the firsthalfoftheyear,withourcost productivity programs fully in place. And you can now see that over the last 15 months wehavegrownourmarginversuslastyearbymorethan220basispoints, which is leading us to the profit growth. Next slide, please. We are also very happy with the work we have been able to dooninventory,on payablesandreceivables,becauseworkingcapitalisaverygoodindicationofhow operationally strong we are. We can see in March and September '22 we were operating at a positive net workingcapitalasapercentageofnetrevenue.These areallpublishednumbers.March'23andSeptember'23aswell,verysimilar.Butin Page5of30
March '24 and September '24, you can see the substantially lower net working capitalthatwehavebeenabletobringin,whichalsohelpsusfromacashpointof view.Andalsofromageneraloperationalpointofview,italsokindofhintstoyou, andIcantellyouthatinventoryisalsoanimportantpartofthis,italsohintstoyou at the work we have been able to do on demand forecasting, and being ableto come up with much better operational efficiency. Next slide, please. So that is one of the business thatIwantedtogiveyouaperspective.Iwillnow move on to the strategic imperatives. Slide Number 14, please. Our strategic imperativesare;inspiregenerationswithourbrands,winwithproductleadership, excellence in execution, building a competitive and resilient supply chain, and growing a consumer direct business. Let us take a look at it one by one. Starting with inspiring with our brands, you are free to click on the link that is embeddedinyourpresentations.Thisisourfrostfreetelevisioncampaignthatwe have aired in select states. I would really request you to take a look at this campaign.Weareveryhappywithit.Weareveryproudofthecampaign.Andweare also happy with the initial results that we are getting out of it. Next slide, please. Butitisnotjustrefrigeratorsthatwehavebeenabletodosomegoodstuffonthe brand'swork,itisalsoonwashingmachines.Asyouknow,weworktogetherwith one of the great consumer companies of India, Unilever, to come up with a penetration driving campaign which drives penetration of washing machinesand liquid detergents going forward. And there is joint marketing associated with it, whichincludestheTVcampaign,sampling,andon-packendorsement.Andthishas startedaswell.Again,thelinkisthereinthepresentationforyoutohavealookat. Andthiscopy,thisTVcommercialcommunicationhasbeenonairsincethemiddle of last year. But thatisnotallwehavedoneoninspiringwithbrands.Movetothenextslide, please.Onslidenumber17,wearesoconfidentoftheproductsthatwehavethat onsemi-automaticwashingmachineswedecidedtogiveafouryearcomprehensive warranty on semi-automatic washing machines which gives us a good advantage overmanybrandsinthemarket.Weareabletodothisbecausewestronglybelieve in the product quality that we deliver. On the success of the semi-automatic washing machine warranty, we were able to extend this to the front-load fully automatic washers, offering afive-yearcomprehensivewarrantyonthesewashers. Alltheseinspiretrustwithourbrands,andmaketheWhirlpoolnameevenstronger in the market. Next slide, please. Page6of30
Moving on to product leadership, slide number 18. We havelaunchednewdirect coolglassdoorrange.Asyoucanseethere,thereisourbeautifuldesign,theylook absolutely beautiful in the market, appreciatedbyconsumers,appreciatedbythe trade. We are very proud of thefactthattheserangesarefullytheglassdoorfor this was happenedafterthenewregulatoryregimewasintroduced.Andallthese glassdoorsarecompletelymadeinIndia.Andthisispartofourcontributiontothe wholeAtmanirbarBharat,MakeinIndia,developinIndiaanddoinIndia.Andwe areveryproudofthefactthattheseglassdoorshavebeendevelopedinIndiaand brought into the market by us. And we look forward to these glass door ranges giving us a lot of good solid ground in 2025. Next slide, please. If you look at slide number 19, the other example of something that we have brought in which is arealinnovationistheintroductionofthedynamixdetergent dispenserinthesemi-automaticwashingmachines.Typically,peoplewouldlookat semi-automaticwashingmachinesandsay,notmuchinnovationcanhappeninthis segment, it is not very high technology compared to front-load,orfullyautomatic top-load washing machines. Well, wehavebroughtinsomegoodtechnologyinto this. This dynamix technology that we have brought has hydrodynamic fins inthe washing machine that mixthepowderdetergentthatisusedwithwaterbeforeit goes on to the clothes so efficiently that no detergent coagulation happens.And therefore, you end up with zero detergent patches, not 0.1, but zero detergent patches.Andthatissomethingwearevery,veryproudof.Watchoutformoreonthis place. Next slide, please. We move on to the third parameter, excellence in execution and creating a consumer-centricserviceorganization.OuraimasIsaidbeforehasbeenalwaysto win every day in every store with every consumer. We have invested significant amounts in the front-end capability and capacity, be it serviceorbeitsales.We have put in a lot of work to ensure great execution, driving our premiumization goals,includingensuringmuchstrongervisibilityofourpremiumlinesandournew ranges. We have made sure that we are dynamically always looking at the right pricingstrategy,especiallyonourpremiumlines;butwherenecessary,evenonour popular masslines.Andwecontinuetoleverageourgreatcustomerrelationships built by decades of giants over the last three to four decades. IfItakeyourattentiontotherightsideofthescreen,weareveryhappythattheNet Promoter Score on service continues to see an improvement. You can see in that graphNetPromoterScorestartingfrommiddleof2021toliterallytoday,andyoucan seethatgraphisgoinginonedirection.Atsomepointintime,Iguess,thisisnot goingtogoupanymorebecausethislooksprettycloseto100,nottoofaraway.But we are quite happy about that, jokes apart, with the way we have been able to Page7of30
inspire trust in our consumers, inourtradecolleagues,withourservicepartners, and so on and so forth. Next slide, please. Andthen,ofcourse,theProductivityforGrowthprogramthatImentioned.Thishas been key to driving improvement in our margins. First, theProductivityforGrowth programisahugeexercisethatwedo.It'saregularsystematicprogramthatcovers all lines of the P&L. And we have had significant step-up in the material cost productivity actions, but also in several non-material cost productivity actions, driving overall efficiency in the P&L. We are also delighted to announce that we achievedaSilverWCM,WorldClassManufacturingStandards,inourfactoryinPune. AndourothertwositesarealreadyatBronzeforWorldClassManufacturing,which are the sites in Faridabad and in Puducherry. Next slide, please. With that, I would like to hand over to Mr. Aditya Jain for the financial performance. Thank you, Mr. Eswar. My name is Aditya Jain, and I will talk about thefinancial performanceofthecompany.IamonSlide23.Onthisslide,wewilltalkaboutwhat are three financials on a standalone basis. In this quarter, our revenue grew by 12%.Thedouble-digitgrowthinrevenuewas driven by multiple factors. The first and the foremost one was the strong market share improvement which we have witnessed in ref and washers. Mr. Eswar has alreadyexplainedthefactorwhichhasdriventhismarketshareimprovement,soI will not delve again into it. Thesecondfactoristherelativelybetterindustrygrowthwhichwehaveseenduring the festival months of October and November.Andthethirdfactoristhesegment premiumization,thatisacontinuousfocusondrivingpremiumsideofthebusiness and ensuring that our revenue grows ahead of the volume growth. Inthisquarter,wehavedeliveredanEBITDAofRs.44crores,that'sagrowthof13.5% versus a year ago. In this quarter, we had taken a provision of Rs. 15 crores on accountofadditionale-wasteexpense.Thisistoaccountforthenewe-wastecredit rates which have been notified by thenewE-WasteRegulations.Andwithoutthis additionalimpactofRs.15crores,ouroperationalEBITDAgrewby52%versusayear ago. On PBT, we delivered a PBT of Rs. 36.5 crores in this quarter. That represents a handsomegrowthof65%versusayearago.ThePBTimprovementwasdrivenbythe strong top-line growth whichaddstotheDCM.Thecostproductivityactionsacross technical projects as well as commercial negotiations resulting into an improved gross-margin of 200 plus basis points, better pricing, and improved mix. I spoke Page8of30
about the additional provisionsonaccountofe-waste,andwithouttheimpactof thatadditionalprovisionofRs.15crores,ourPBTgrewby132%versusayearagoin this quarter. OnSlide24,thisslidetalksabouttheconsolidatedperformanceforquarterthree. On consolidated level, again, we saw a top-line growth of 11%, which was a double-digit top-line growth. Our EBITDA came in at Rs. 69 crores which was a growth of 11% versus a year ago. But without the additional impact of e-waste accruals,ourEBITDAgrewby35%versusayearago.AndPBTcameinatRs.59crores which represents a growth of 40% versus a year ago. And without the additional impact of e-waste, our PBT grew by 77% versusayearago.OnElica,thebusiness continues to do well, and deliver a healthy double-digit profit margin. The next two slides are Slide 25 and Slide 26, thosetwocoverstheninemonths financialperformanceonstandaloneandconsolidatedbasis.Mr.Eswarhasalready explainedandspokenabouttheninemonthsresults,soIwillnotrepeatthesame, butIwillpauseontheslidesforacoupleofminutesforyoutohavealookatthe numbers. With this, we have also received one question, and the question was about the increase in employee cost over the last two quarters. Andtheansweristhatthe increase in employee cost is on account of two factors. The first one is the investment in retail executives, that is thefront-endcapacityandcapabilitybuild whichwehavedonetoaugmentourofftakes,andwhichhastranslatedtoamarket share gain. This isafinancialROI-baseddecisionandwetracktheproductivityof these decisions on a monthly andquarterlybasis.Andthesecondreasonforthe increase in employee cost is the higher bonus accruals on account of the significantly improved financial performance versus last year. With this, I will hand it over to Mr. Peters. Hello.ThisisJimPeters,CFOofWhirlpoolCorporation.Andgoodevening,everyone. And before we openthecalltoquestions,Ijustwantedtoshareafewcomments with our investors. We view this anticipated sell-down as a win-win for Whirlpool of India and Whirlpool Corporation. It provides Whirlpool of India with increased flexibility, enabling it to focus on accelerated growth and delivering initiatives to drive long-term sustained growth, at the same time while Whirlpool Corporation maintainsitsfocusonmarginexpansion.Theproposedsell-downisnotexpected to have any impact on Whirlpool of India's business continuity, as we intend to Page9of30
enter into long-term brand and tech agreements with Whirlpool of India, in addition to transition commitments. Furthermore, Whirlpool of India can more independently utilize its well-funded businesstomakestrategicinvestmentsthatfuelitslong-termgrowthpotential,in which Whirlpool Corporation has very high confidence. With that, I am happy to answer any questions you may have. Thankyou,Mr.Eswar,Mr.Jain,andMr.Peters.Iwouldnowrequestthemoderatorto please open up the Q&A session. Thankyouverymuch.WewillnowstartwiththeQ&Asession.Thefirstquestionis from Naushad Chaudhary from Aditya Birla Sun Life. Please go ahead. Yes.Hi,thankyousomuchfortheopportunity,andIcongratulatetheIndiateamfor what we have achieved in the last one year. Now with all the efforts we have re-energizedthebusiness,wearegrowingandgainingmarketshareinIndia.The productivity improvement is reflecting at the gross margin expansion level. But belowthat,wehaveaconcern,bywhendoyouthinktheproductivityinitiativewhich youhavetakenshouldfallbelowgrossmarginaswellbecausethereareothertwo lineitems,yourstaffcostsandotherexpenses.Theinefficiency,ifIcompareitwith theIndiapeers,aremeaningfullyhigh,especiallyonthestaffcosts.So,whatdoyou think on this and how willyouimproveonthesetwocostlinestogetthemargin back at EBITDA level? Thankyouverymuchforyourquestions.Imean,onepointIjustwantedtohighlight is that we have just talked about where we are investing our monies. We are investingitintothingsthataredrivingROIwithintheyear.Soifyoutakealookat the financials, we have improved our gross margin by 220 basis points. At the bottom line level, the PBT has increased by 210 basis points. Whilesomeofthecostsareincreased,thatcostisactuallyreflecteddirectlyinthe marketsharegains.Themarketsharegainsandthepremiumizationisbeingdriven bythosecostincreases.That'swhatisactuallyleadingtothemarketsharegrowth. Andaswegetmoreandmorescale,thatshouldstartlookingbetterandbetterfor us. So,bywhenandatwhatscaledoyouthinkyouwouldcomeatparofIndia,other peers' efficiency on our, staff cost? Page10of30
That'salittledifficultformetojudgeandthereasonisbecauseasIlookatother reporteddataofthepastthathasbeenreported,Idonotseethesamenecessarily progressioninallplayersoverreportednumbers.Insomecases,thesalesgrowth can be higher. The profit growth is lower. In some cases, the sales growthisnot much higher but the profit growth can be a little higher. So wearefollowingour strategy. We are following our strategy which is making sure that we are adding value to the top-line andmakingsurethatthebottomlineisalsoprogressingat the same time. If you take a look at the profitincreaseoverthelastyear,likeIsaidforthenine monthsendedDecember31,2024,wehavegrownPBTby100%versuslastyear.SoI wouldlovetoget,ifpossible,somecoloronexactlywhattheconcernwouldbeor whattheexpectationwouldbe,orwhatisinyourmindwhenyousaypeersbecause I am not able to follow the detail behind the question. So,typically,formostofthedurablecompanies,ifyoulookattheirstaffcostversus revenue,itfallsbetween6.5%to8%.SoalotofourEBITDAmargin,Ithink,goesinto staffcost.Sothereisaclearcutwehaveinefficiencyintermsoftheoverallstaffcost load. IthinkIwouldurgeyoutolookathowpeersareoperatingonthiscostline item. That should, I think, help us to understand where are we lacking from an inefficiency point of view, especially on the staff cost? Allright,wecancertainlytakealookatit.Ijustwanttoreinforcethenumbersfor April to December. The revenuegrowthis17%,andthePBTgrowthis100%,witha grossmarginimprovementof220basispointsversuslastyear.AndlikeIsaid,we areusingourstaffcostsinsuchawayastodrivethetop-lineinthemarketshare. Please do keep in mind that we are so far concentrated on refrigerators and washing machines. This is amarketthathasgrowninsingle-digitsonaveragein these nine months. If youtakethetotalnumber,itwillbeinsingle-digits.Sowe have grown 17%, which means we have substantially improved our market share position.Idonotwanttogotoomuchintothemarketshare,butIamsure,sir,you haveaccesstothemarketshares.Youcantakealookatwhathashappenedtoour positions and market shares in multiple categories, direct cool refrigerators, for example,top-loadwashingmachines.Andthathascomethroughvery,Iwouldsay, efficientdeploymentofresources.Theseresourcesarethereforustocontinueour scale. This is what, part of what has basically driven our momentum. Andjusttogiveyouthereassurance,wetrackthisperformanceona,actuallyona dailybasis,wegetthereportsofhowit'sdoingintermsofofftake,intermsofifI putinabuck,howmuchIamgettingoutofit.Wethenlookatitconsolidatedona monthlybasis,onaquarterlybasis,onayearlybasis.Sojusttoreiterate,wetakea look at what you are seeing and then maybe for nexttimewecanhaveafurther Page11of30
detailedanalysisonthis.Butourintentishowwearedrivingourbusinessisthat we have got a revenue growth of 17% with significant market share gains in triple-digits continuously over the last three quarters. All the while delivering a profit growth of 100% versus a year ago. Naushad Chaudhary: Sure sir. However I am utilizing, how I utilize that, so longaswearedeliveringthatprofit growthiswhatwearereallyfocusedon.Butwecan,forthenexttime,maybeand forthenextsixmonths,takealookatevendeeperdiveintopeercomparisons,et cetera, if there is any point to be examined there. Naushad Chaudhary: Sure, sir. Hi, Chanchal here, our colleague. Congratulations on a good set of numbersand congratulations on gaining market share. As the third largest shareholder of Whirlpool, the team is very impressed, andwewouldliketocongratulateyouon what performance you have delivered in the last six to 12 months. My question is to the global CFO. Now, India being a market where we are the largestpopulationoftheworld,wearetheyoungestpopulationoftheworld,andin India, Whirlpool is a strong brand. You are saying by selling 30%, you retain the flexibility,andIndianteamwillhavemoreflexibilitytodowhattheywant.Wejust want to question here, I mean, by selling 30%, how can you retainthemaximum shareholding rights of our Indian entity? Because the money whichyouwillgain from this, you will use the money for your global needs. Your global fund may requiremoney,butthenbysellingdown30%,whereareyourcommitmenttoIndian market? Because if you are committed to Indian population, toIndianmarket,to Indiangrowth,whywillyou,foryourglobalrequirement,sell30%moreandwantto retain a strategic stake? Yes, no, and I appreciate the question. And, first off, we believe that Whirlpool Corporation,movingfromamajorityownershiptoameaningfulminoritybestserves WhirlpoolofIndia.Asyoumentionedinthere,inthattheproposedsell-downdoes increase the flexibility for Whirlpool of India to continue to adjust to the ever-evolvingindustryandbusinessthere.Atthesametime,WhirlpoolofIndiawill have a long-term brand and licensing, technology licensing agreement with Whirlpool that will benefit the business there, and wewillremaincommittedto that. I think the thing that's most important tounderstandhereisthattheIndiastock market is focused on rewardinggrowth,astheyshouldbe,andspecificallywithin Page12of30
consumer-focusedsectorslikehouseholdappliances,andgiventhefuture,asyou highlighted,thefutureappliancepenetrationexpectationsandthepotentialofthis business togrowandexpandshare.WhirlpoolCorporationU.S.shareholdersview the appliance business through aU.S.lensasamatureindustry,andthat'sgiven the high household penetration in other parts of the world. Atthistime,wereallydobelievetherightpathisforWhirlpoolofIndiatofocuson growthandWhirlpoolCorporationtofocusonmarginexpansion.Again,webelieve inthelong-termprospectsofthisbusinessatthistime,butalso,asyoutalkabout, what we would do with the proceeds in that, listen, this business, as we have talked about and you have heard in the call here, the financial health of this business is very strong, and that's the thing that also Sorry to interrupt you, ifImay.WhatkindofflexibilitywillIndianteamget,which theydonothavewhenyouretainthe50%?Andthesecondthingisyourlong-term commitment gets diluted when you are selling 30%? Yes. SotheflexibilitythattheIndianteamhasistheabilitytomakedecisionson where best to invest and when to investandwhatgrowthinitiativestheywantto 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 U.S. shareholders and Indian shareholders with Whirlpool Corporation being more focusedonmarginexpansion.AsIsaidourremainingcommitmentofthe20%still very meaningful. But we will remain committed longer term with brand and licensing agreements. Sorry, just to complete this. We do not think that with 20% your commitment to Indian market remains,andtheflexibilitywehaveseenwithmanymultinationals listed in India, Indian team iftheyaregivenmoreflexibilitytheycandeliver,and it's a huge market. That's what we wanted to state. You can move tothesecond question, thank you. Thank you very much. Next question is from line of Ankur Sharma from HDFCLife Insurance. Please go ahead. Yesgoodevening.Thanksforyourtime.Sotwoquestions.OnetoEswar.Soclearlya great job on marketsharegains,andthat'squiteevidentinthewayyourtop-line hasgrownandIgobacktothemarginquestionespeciallyattheEBITDAlevel.The lasttimewhenwehadasell-downfromtheparent,wemetyouandyousaidhigh single-digit,maybearoundthat8%,9%marginattheEBITDAlevelissomethingthat you probably will kind of be at. So how much timebeforewegetthere?EvenifI Page13of30
adjustforthisprovision,yoursecondquartermarginsareatabout3.5%.Sowhendo you think we get back to these high single-digit EBITDA margins? ThankyouforyourquestionMr.Sharma.Yes,wehadsetourlongtermgoal.Thisis what we had said, long termgoal,andwehadsetittobeamulti-yeargoal,very clearly at that point in time as well. We said we would like to progress. Just to remindyou,everyoneonthecall,wehadsethighsingle-digitgrowthinrevenues. And long term margins which would be in the high single-digit. Ithinkwecould onlydothingsonestepatatime.Ifyoucanjustappreciatewewereinasituation where our revenues were not growing, our revenues wereactuallyflat,ourprofits were declining significantly, and our market share was going down significantly, amongst other things. As I said, it takes time to turn ship around. I think the ship has clearly turned around now. We should start seeing hopefully consistent revenue growth inline with what we have said now. There's also a factor that is the market, obviously dependsonthemarket,ifthemarketstartsgrowingfantasticallythenwearegoing tobenefitfromthat.Ourfocusfirstlyisondrivingthemarketsharebecausethatis something completely in our control. The market is in control to the extent of seasonality. Wehaveafantastichotseason,thenithelpsus,therefrigeratorand air conditioner markets a lot. Refrigerators we play in a very significant way, air conditionerssofarnotsomuch.However,wewilltrytocontinuetodriveourmarket sharesstronglyupwards.Wehavealsodemonstratedtoyouveryclearly,Ihope,that we have made improvements on every aspect of the line of the P&L. Allcostsarebeingcontrolledverytightlyandanycoststhatarebeingincurred,we are making sure there is a very strongROI,whichiswhyyouareseeingtheprofit growthandtherevenuegrowthhappeningsimultaneously,notoneattheexpense of the other. So what we are driving for as a strategy is profitable market share growth. That is whatwearedriving.Idonothaveatimeframetogiveyouatthis point in timeastowhenwewillgettothat,butourintentistoprogresssteadily and strongly towards that goal. I do nothaveatimeframetogiveyouthat.Ihad said multi-year and that still continues to be the guidance. Okay,fair.Andjustafeedback/questiontotheparent,theCFOwhoisthereonthe callontheparentstakesell-down.Becausewhenwesolditdownlasttimearound and we brought it down to 51%, I think the general understanding was that the parentwouldprobablykeepitthere,andnotselldownfurther.Soobviouslygoing to 20% was a little bitofasurpriseforus.Butmoreimportantly,howexactlywill thatbedone?Istheparentalsolookingatastrategicsaletoafinancialinvestor, given you need to obviously sell almost $0.5billionofstockhere,andabsorbing thatkindofsupplyisgoingtobevery,verydifficultifyousellitinthemarket.Soare Page14of30
youalsoexploringastrategicsaletoafinancialpartner?Isthatalsoonthetable? And how do we get confidence that Whirlpool does not completely sell out eventually? I think those are two questions I have. Yes,no,andIappreciate.Andwhilewehavenot,wehavenotfinalizedthedetails ofthis,wewillcontinuetoassessalloptionsinthesell-downprocess,ensurethat we proceed with what we expect to be the best value creating opportunity for WhirlpoolCorporationandWhirlpoolofIndia.Inthelastsell-down,wedidexecute it via a block trade transaction, and that approach worked well and we were pleasedwiththeoutcome.Butagain,wewillkeepallouroptionsopeninfinalizing thisoverthecomingmonths.Andthen,toyourquestion,again,weintend,notjust through our significant remaining ownership stake but also through long-term ongoing brand and technology licensing agreements as well as any transition agreements to support and continue to be invested in Whirlpool India and the growth of Whirlpool India. Okay,andsorry,justafollow-uptherewouldbe,weshouldnotexpectanyincrease inlicensing/royaltyarrangements,right,versuswhatwehaveasofnow,giventhat our stake has come down below 51%. Would that be a reasonable assumption? RightnowIcannotcommentspecificallyonit,thatwouldbesomethingmorewith management. Ankur Sharma: Okay. Thank you. Thankyouverymuch.NextquestionisfromBhavinVithlani,SBIMutualFund.Please go ahead. Yes. So this question is to Jim. You mentioned that the sell-down will givemore autonomy to the India management, and I want to understand this a bit more, becausetheIndiamanagementdecidedtoplowbackthebenefitofgrossmargins in terms of higher employee expenseswhichisintherightinterestofthelonger term,compromisingneartermforthebetterlongterm.Theydecidedtoexpandthe capacity when the utilization is 60%, which again I understand is in the good interestofthelongerrun,andanewplantoffront-loadwashingmachine.Sowhat is the greater autonomy that the India management gets beyond this while the Whirlpool global parent reduces the stake from51%to20%?Ifailtounderstand. Please help us. Yes. As I highlighted before, and again, I can only expand to a certain extent because this is also, things that will be executed by the Whirlpool of India Management. But as I highlighted this will allow the Whirlpool of India Page15of30
Management team and company to make strategic decisions as quickly as they possiblycan,tomakestrategicinvestmentsinlinewithwhattheybelieveisinthe best interest of the Whirlpool of India shareholders, and theWhirlpoolofIndia business. Wedobelievethatastheydonothavetobeasconcernedwithoverall Whirlpool global processes, or Whirlpool margin requirements, this will allow them to continue to make investments likeyoujusthighlighted,andfocusonthe growthlongertermofthisbusiness,whichwebelieveistherightapproach,butit's different from the approach that Whirlpool Corporation shareholders expect. Iamsorry,maybe,again,thissamequestiontoEswar,ifyoucanoverthelastyearor so that you have been,canyougiveusinstanceswhereyouwantedtoinvest,but you were not, because of the global balance sheet, or process constraints? Yes.ThankyouMr.Vithlani.TobehonestIcannotgetintothatlevelofdetail.What Icantellyouisthatthereareseveralthingswhichmaynotseemverybigtomany people, but therewillbeseveralsmallthings,thereisHRrelatedthingsorother areaswhereaglobalcorporationhascertainwaysofoperation.Andyougenerally, in any multinational, end up having to do some of those because it's part of a formula. And so I thinkwhatisbeingalludedtoispotentially,andIthinkthatis something that we have got to work out over the next few weeks and months, because we are also, as you canimagine,quitenewtotheinformation,likeyou. And therefore, we need to work through which are the areas in which we can actually be enabled to move much quicker. Certainly, I think, going forward,myguessisthatwewillbepresentingdirectlyto the India Board and then getting the approval and carrying on, and that is absolutely whatwewillcontinuedoing,aswehavedonesofar.AndIthinkthere are probably many areas in which we can get that kind ofadvantage,butatthis pointintime,tosaythisiswhatitisorthatiswhatisverydifficultformetokindof comment on this. Okay,thesecondpartiswhenthesell-downfromtwo,sell-downofthe24%stake wasannouncedinFebruarylastyear.AndaspartoftheIndiapressrelease,there wasan8Kfilingoftheparent.Andthatwas,thisisItemNumber8.01,whichreads that after the sell-down of the 24% outstanding of the publicly listed Whirlpool India,youwillretainmajorityinterest,majorityintheIndia.Andonasimilarbasis, the conference call, which was hosted, and this is, I am just reading from the transcript that one partofitis,theideaisWhirlpoolCorporationwillcontinueto hold majority interest in the company. Now,whenthisassurancewasgiven,justwanttounderstandwhatisthesanctityof theseassurancesthatbeinggivennowwillalsohold,becauseit'snotevenayear Page16of30
whenthesearepartofthepubliclyannounced,thetranscriptsorthe8Kfilings.And also,whydoyouwanttokeep,andalsothenwhydoyouwanttokeep20%?Whynot then completely exit out to the strategic investor? Again,asIsaidbefore,aswelookedat,rightnowaswelookatalloptions,wedo believe this is the best option. If you look atwhereweare,andagain,wemake continuousassessmentsofwhereweareinvested,etcetera,andsoIamnotgoing togointoanyofthosedetails.WhatIwouldsayislookingintermsatastrategic buyer at this time, we do believe that with the long-term technology and brand licensing agreement that we will provide, which is again back to a long-term agreement, which is probably the most important thing to support this, that Whirlpool Corporation can do to support this business. With that in place, we believe that a strategic transaction with anotherplayerwouldnotmakesenseat 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. Bhavin Vithlani: Okay. Thanks. These were all my questions. Thank you.NextquestionisfromthelineofSiddhantfromMiraeAsset.Pleasego ahead. SiddhantChhabria: Yes, hi. So just similar questions I had, which was asked previously, and just reiterating the same thought process where we do not believe that 20% sort of shareholdingwouldmeanthatthereisskininthegameofthemanagement,and ultimately, this risk execution in India business impacting employeemorale,and theconcerncouldbethatgivenhowcompetitivelandscapeitis,eventuallytherisk on market share. So eventually it does not give investors the comfort that a 20% shareholdingandwhythecurrentparentwouldnoteventuallyexitoveraperiodof time. So just wanted to share that message again. James Peters: Okay. I have no additional commentsother than what I have said. SiddhantChhabria: Sure. Sojustsecondly,Iwouldsuggestsincewearenowstartingtohostbiannual concalls,Iwouldrequest,stronglysuggestifwecandoaquarterlyconcallbecause clearlycommunicationhasbeenachallenge.SothatisthefeedbackIwouldliketo give. Thank you. Thank you. Yourpointisdulynoted.IthinkMr.Peterhasrespondedtomajorityof thequestionsontheanticipatedsell-downandthereareseveralrepeatquestions. So with that, we would take one lastquestionforMr.Peter,andthenrequestthe participants to please askquestionsonthebusinesstotheIndiamanagementif Page17of30
you have any. Yes. Thank you. Operator, back to you to invitethenextparticipant, please. Thank you very much. Next question is from Prolin Nandu from Edelweiss Public Alternatives. Please go ahead. ProlinNandu: Yes.Thankyouforgivingmethisopportunity.Twoquestions,oneistoMr.Eswar.So again,thisisonmarginandwhileyouhaveelaboratedquitealotontheanswerto the previous question, I justwantedtounderstandqualitativelyintermsofheavy liftingofexpensesandfeetonstreet,isitfairtosaythatmaybelastfewquarters you have done some heavy liftingintermsofcostandputtingfeetonstreet?And noweveryincrementalRs.1ofrevenueshouldideallycomeataveryloworlesser incrementalcost.Isthatfairunderstanding,ordoyouthinkyoustillneedtoinvest inbrandatthesamepacewhatyouhavedoneinthepastfewquarterstomaintain the market share gain momentum that you have reported so far? Thank you for that question. I just want to clarify something and maybe itisnot clear, so I would like to take thisopportunitytoclarify.Ifthereisanassumption that we just put people in salesonthestreet,andthatiswhatisleadingtothe sales increase in market share, that is not true. So I just want to clarify. The significant cost increase, now typically I comefromtheFMCGbackgroundbeforeI joined this company. We used to invest, and that was one of the great areas of investment, in marketing. And marketing is the art of convincing consumerstogo ahead and buy your product and be convinced in that product and become an ambassador for that product, correct? Soeverybodyisveryexcitedwhenyoulookatmarketingpercentageofsalesgoing up because that you know that you areinvestinginthebrand.Iwanttoclarifyto everybody on the call and maybe I should have clarified this earlier. When I am talking about investing in retail executives, I want to help you understand what does a retail executive do? Theseretailexecutivesareontheshopfloor.Theyare our ambassadors forthebrand.Thesearenotpeoplewhoaresellinginvolumes into the store. They are people who speak to customers who are coming to buy theseproducts.Standontheshopfloor,convincecustomerstobuyourproductsand guaranteethatthesalehappensfromtheoutlet.That'swhereweputinquiteabit of our focus in terms of our operating costs. Sothat'swhatImeantwhenIsaidthatthesecostsaregivingROIwithintheyear.It isnotaguess,ora‘maybe’itisdrivingit.Itisa'guaranteed'itisdrivingit.Sothis isnothingforme.Asamarketer,howdoIcreatedemand?Therearemultipleways to create demand. OneofthemistodoexactlywhatIexplainednow.Sowehave notputin500people,salespeopletogoandsellintothestores.That'swhatwe Page18of30
havenotdone.Whatwehavedoneisincreasethenumberofbrandambassadors attheshopfloorwhospeaktoconsumers,whoexplainthebenefitofourproducts to consumers, who tell consumers whyourdirectcoolrefrigeratorsareafantastic product. Why our front-load machine withozonetechnologyisgreat.Convincethe consumers to buy the products with excellent rationale. There is a huge training program that we put behind it. There is a huge monitoring that we do of these people.AndIdaresaythatwehaveamongstthebestretailexecutiveforcesinthe country. Andthatiswhatweputourfocusbehind.WhatmighthelpalotisthewayIlookat thisisanythingthatdrivesdemandismarketing.Soitmightcomeintoalinecalled staffcostorwhatever.Butwhatwearereallydoingwiththisisdrivingdemandfor ourproducts.Andthat'swhyit'sadirectimpact.It'snottheonlything.Thereare25 things we have done basically. But one of the things what is driving that cost line-upisthisinvestmentonbrandambassadorsinthestoretodriveourbusiness. ItisnotonmorepeopleinthemarketingdepartmentintheheadofficeorintheHR department, or in the finance departmentoranyotherdepartment.Thefocushas been on driving consumer demand. And like I have explained beforeindifferent forum,solongasIamgettingaverystrongROIfromthat,thisyearandyear-on-year, it behooves us to do that for our shareholders because that is sustainable and consistent growth. Now having answered that, aswegoforward,wewillcontinuetoleveragethisin other areas of demandgenerationbecauseItrulybelievethatifyoudrivemarket sharestherightway,withtherightROIinvestmentmentality,thatistheonewayin whichyoucanguaranteeirrespectiveofwhatthemarketdoes,showrevenuegrowth andshowprofitgrowthaheadofrevenuegrowth.Andifyoutakealookatthedata that I have showed you for the last 15 months, that's what we have been consistently doing. So just to kind of reassure everybody onthecallbecausenowIunderstandwhat exactlytheconcernis,youcouldlookatitasthestaffcost,oryoucouldlookatitas a significant proportion being invested in driving actual demand, which meansa personcomesintothestore,andwalksoutwithaWhirlpoolrefrigerator.Nowwhat is better marketing than that? Because the purpose of marketing is to create demand for the consumer. Long lasting demand. And because our products are good,wehonestlybelievethatconsumersgoandrecommendourproducttoother people as well. SoIhopeIhavegiventhatclarity,andIthinkmaybeIapologizebecauseImightnot haveclarifiedthatupfront.Sometimesthetermsthatweusemaynotbeobviousto everybodyintheindustry.Sothankyouforpointingthatout.ButIhopethisisvery Page19of30
clearthatwhatwearedoingisusingmanydifferenttoolsandyouareonlyseeing this tool. There are so many otherdifferenttoolsthatweuse,whetherit'se-com ROAS,returnonadvertisementsales,orwhetherit'ssalesfundamentalincrease,or whether it's display share increase in the stores, or whether it's increasing in certainareasinpromotion.Sowehavedonealltherightthingsthatgivereturnon investment within the year, within the quarter. And that is what is driving the business. I hope that makes sense. ProlinNandu: No, that makessense,Eswar.That'sitfrommyside.Thanksalot,andallthevery best. Thank you so much for your question. Thathelpedclarify,Ithink,frommysideto everybody. And I hope even the previous questions where I was asked now,Ido understand.Iapologize,Idounderstandtheintentbehindthequestion,andIhope Ihaveanswereditveryclearly.Wehavebeeninvestingindemandgeneration,full stop. That's what we have been doing. Sure. Thank you, Mr. Eswar. Before we move to the next question, I would liketo invite Mr. Peters for his closing remarks. After that, we would continue the Q&A session with the India management team. Thank you, Roopali. And again, thank you, everybody, for inviting me to join this evening.Inclosing,Ijustwanttoreinforcemyconfidencethatnowistherighttime for Whirlpool of India to operate more independently. Today, we have the right leadership team in place to deliver on the continued growth plans, whichIfully anticipate will create long-term value to its shareholders, including Whirlpool Corporation. We have made a lotoftherightproductinvestmentsinWhirlpoolof India, and doing well in the marketplace. Additionally, I just want to reinforce that Whirlpool Corporation andWhirlpoolof India will continue to support each other via brand, technology, and transition agreementstoensurebusinesscontinuity.Andinclosing,IwouldsayIdonottake this decision lightly. Having managed Whirlpool of India since2022onbehalfof Whirlpool Corporation, I know the business potential here, andIknowwhatthis teamiscapableof,andIfullyexpectWhirlpoolofIndiatoaccelerateshareholder value creation with greater independence. And again, I just want to close with saying thank you. Thankyou,Mr.Peters.Withthat,Iwouldrequesttheoperatortopleaseputthenext participant for the Q&A session. Page20of30
Thank you very much. Next questionisfromlineofRahulfromHaitongSecurities. Please go ahead. RahulGajare: Yes,hi.Thanksfortheopportunity.AndIthinkontheIndiabusiness,Ijusthadone question. Whirlpool is very strong in refrigerators and washers, and in other products you have limited presence. So from here on,whenwearetalkingabout moreautonomy,aretheresomeroadmapsthatyouhaveplannedintermsofmore product introduction, or would you rather stick to the strongholds of refrigerators and washers, and ramp up business and market share in that category? Thank you. Fantasticquestion.Mr.Rahul,thankyouforthatquestion.Myanswerisboth.Soto be very honest with you, as I would also metandspokenwithmanypeoplelast year in the last call that we had virtually. The first job that wereallyhadwasto makesurethatourbusinessgetsbackontrack,andgetsbackonmomentum.Itruly believe that if you do not get your base business back on momentum, to start pouring into 10 different areas confuses the organization, and makes a mess of everything. Right now I would say not tobecocksureatall,becauseit'saverytoughmarket, verytoughcompetitivesituation,alotofchallengesasalways.ButIthinkwehave managed to turn the shiparound.Wewillcontinuetodrivethisbusiness.Ithink thereisnodoubtaboutwhatoureventualambitionis.Idonotwanttostateit,but Ithinkyoucanguesswhatitis.Onrefrigeratorsandwashers,wewouldreallylike todomuchbetterthanwearedoingevennow.AndIthinkoverthenextfewyears, we should be able todothatifweputourrightthinkingandstrategiesinplace, but at least what we have now works. Goingforward,therearealsoopportunitiesinotherareaslikeyouhaveaskedthe question. And I wanted to make sure in the first 12 to18monthsthatwegetour base absolutely in shape. I think we are in reasonable shapenow.Soarethere opportunities to be looking at in other areas? Definitely. Would I want to name them? Absolutely not, sir, becauseit'saverycompetitiveworld,andIcertainlydo notwanttobediscussingwhatthosecategoriesare.Itiscertainlyofgoodinterest to us. And I think hopefully you will start seeing some results in another six months. Rahul Gajare: Sure. Thank you very much, and all thevery best. Thank you. Thank you, Mr. Rahul. Thank you. Next question is from NatashaJain from PhillipCapital. Please go ahead. Page21of30
Thank you fortheopportunity,andgoodevening,gentlemen.Myquestionisfirstly onthequarterlynumbers.Soyourpresentationandyoualsocitedinyouropening remarks that there wasaverystrongvesteddemand,whichledtovolumegrowth. That'sappreciatedbecausethemarketshareclearlyshowsthat.Myquestionis,if there was such a strong growth, why is there a gross margin decline on a Q-o-Q basis? Yes.Sothanks,Ms.Jain,foryourquestion.ThegrossmargindeclineonQ-o-Qbasis is on account of seasonality, so. And October to Decemberhadtheimpactofthe festivalpromotions.Diwalifallsunderthisperiodandthesignificantrelativetothe prior quarter, sequentially, the promotions are higher in the festival period, and hence you seeasequentialdropingrossmargins.Andthetrendissimilartothe last year. If youlookatthesametrendinthesetwoquarterslastyear,youwould haveseenadeclineinmargins.Butthedeclinethisyearislower,whichindicates that year-over-year we have significantly improved our gross margins. To summarize, like it's basically on account of higher promotions during festival seasons which happens in this quarter relative toJulytoSeptemberquarter,and henceyouseeasequentialdropofmarginswhichisanormaltrendalsoreflected last year as well. Understood.Somysecondquestionis,soduringDiwaliseasonwesawoneofyour competitors facing a factory strike because of which products were not sold out. Nowthattheplayerhascomebackinfullforcewithalotofaggressiontogetback the market share. This in conjunction with the fact that fourth quarter is not a washersquarterandwashersisahighmarginbusiness.Sointheneartermwhat kind of challenges are you anticipating from this shift? Iwilltakethatquestion,ma'am.Sothankyouforthequestion.Tobehonest,there issomethingortheotherhappeningwithcompetitionallthetimeandwithusas well.Somethingortheotherkeepshappening.AndIthinktheseareallpartofthe game.Thathappenstoallofus,itcanhappentomethisquarter,itcanhappento someoneelse.Idonotthinkthereisanyimpactonwhatwedo,orwhatweplanto do. Tobeveryhonest,wehaveaveryclearsetofstrategies,wehaveaveryclearsetof principlesthatweoperateonthathasledustoadecentsetofresultsacrosstime. We plan to continuedoingitinthesamespirit.Thedetailoftheexecutionmight vary depending on what we need to do going forward but the strategiesthatwe talked about, the imperatives,whetheritisfocusingontheconsumer,itinspiring consumers with our products, inspiring consumers with our marketing, inspiring consumerwithourstoriesatthepointatwhichtheconsumerisbuyingtheproduct Page22of30
through our retail executives that I mentioned where we haveincreasedthestaff cost, that will continue. Similarly,ourfocusongrossmargins,andIthinkAdityaexplaineditverywellinthe last question, but I was a newcomer just two years ago to thisindustry.SoIjust wanttohighlight,thesimplewaythatIwouldlookatthisindustryis,alwayslook atthisindustryyear-on-year.Quarter-on-quarteritvariesalot,andIamnottalking about us, I am talkingabouteverycompany,right?Itisaveryseasonalbusiness. Refrigerators sell more in the summer, air conditioners sell moreinthesummer, washing machines sell more after the monsoons basically. So it's very tricky to compare quarter-on-quarter and what you should always do with refrigerator business is track with the, sorry, with the durablesbusinessislookyear-on-year because it is a seasonal business. So we will continue to drive the things that we know will giveusgreatermarket share, but profitable market share, and that is our sole focus. All our effort is focusedonthat.Tobehonest,wedonotgetdistractedbycompetition.Wetakenote of what the competition does. We respect competition very much, which is very healthy,butatthesametime,wereallyaremostlyfocusedonwhatweneedtodo, and our whole organization focus has been whatever we say we will do, arewe doingthattothebestofourability?Ifwearedoingthattothebestofourability, that's the best that we can do. So long as our strategies are right, but more importantly, our execution is bang on. And that is what Whirlpool of India is focused on for the last couple of years. Understood,sir.SirifImayjustdroponefeedback.Soonmychannelcheckrounds, whatIfoundwaswhiletheproductqualityhasdefinitelyimprovedinthelastone year's time frame, we did hear a lot of complaints in terms ofthepackaging.So apparently the packaging quality has reduced, as areasonofwhichtheproducts getdamagedintransit.Sohaveyoureceivedthisfeedbackfromchannel?Andifso, where are we in terms of addressing that? Thank you, and all the very best. Thank you,ma'am.It'sactuallyaverygoodinsightthatyoupickedup.Yes,whenI was in the marketwithcustomersayearago,somepeopletalkedaboutthat.We always benchmark our quality percent basically using standard techniques. We have invested significantlyonthepackagingqualityalready.Anditwasnotthatit wasbadbefore,itwasprettygoodbefore,butnowit'sgoingtobemuchbetter.And when I say now, I mean literally now as we speak. So those changes have happenedbetweenFebruaryof2024toDecemberof2024.Quiteafewofthemare engineering changes which takes a lot ofinvestment,timeandeffort,butWeare absolutely wanting to be in our minds at least the best on quality in the marketplace.Secondbestdoesnotworkforus.Soweareokay.Wewereokaybeing Page23of30
atthekindoftopparity,butwewanttomovetobethebest.Andthat'saveryastute observation. Yes,Ididpickitupfromcustomervisits.Andyes,wehaveactedonit.Andyes,the new products are in the store. And I cantellyouthatournumbersare,whichwe track extremely closely, are going absolutely in the right direction, month-after-month for the last few months. Thank you. Natasha Jain: Great to hear that, sir. Thank you somuch. Thank you. Next question is from NirranshJain from BNP Paribas. Please go ahead. Yes,hi.Thankyoufortheopportunity.Sofirstly,congratulationstotheIndiateamon the business turnaround. Sir firstly, I want to check that with the increase inthe autonomy for Whirlpool India and the decision-making flexibility that we are talking about after the proposed stake sale, how are we planning to utilize the surplus cash that we have on the balance sheet? I mean, which is currently at around 15% to 16% of the market cap. So do we have any plans to increase the dividends or do buybacks in order to enhance the shareholders' value? Thank you very much for that question, sir. Yes, we are rather proud of our cash-generating ability. And I think hopefully sometime in the near future, we'd also be proud of our fullcashdeploymentabilityaswell.Sowhatwehavebeen able to do,forexample,andIwilljustgiveyouasmallexample,iswehave,and this has been something that we have shared with SEBI as well, so it's public knowledge. We are now augmentingsignificantlycertainrefrigerationcapacitiesandproducts. And we are investing a very handsome amount of money for that. And that is somethingthatwillenableustocompeteevenstrongerinthemarketplaceinthe coming months and quarters. That's just one example. So we had, in fact, a few yearsago,partacquiredtheElicabrand.Wecontinuetoincreaseourstakeinthat brandasitcontinuestoperformreallywell,addingbeautifullytoourprofitmargins. In a nice burgeoningindustry,aswelookintothenextsay,10to20years,wesee that particularmarketsegmentgrowing,despitekindofcurrentmarketchallenges intermsofgrowth.Butweseethatsegmentgrowingbecausethepenetrationofthe segmentisverylow.Sowedoseequiteafewopportunities.Wewillnotbeableto utilize allofitatonetime,butwehavevery,veryclearplans,basically,whichare standardized plans. Welookatwhetheritscapacityaugmentationisrequiredofcertainlines,whether itisaddingnewlineswhichareproducingcompletelynewproducts,brilliantnew Page24of30
productsthatwillservetheIndianconsumerevenbetter,orwhetherWearelooking at further investments in different areasofbusinesses.Or,forexample,wecould evenlookatoptionsofinorganicgrowth,whichinthelasttwoyears,tobehonest, wedidnotdobecauseItoldyouwehadashiptoturnaround,andthat'swhatour focus was on. But going forward, can we look at other ships? It's always a lovely thought, a temptingthought.Maybenotintheimmediatefuturebecause,asyoucanimagine, we have a lot on our plate. We need to keep our business growing with strong momentumaswehavenow.Weneedtomakesurethatwearealsonavigatingthe change that we have across the next months, and keep everything going on that keel. But then going forward, there will be further opportunitiesforustolookat cash and see how best it can serve Whirlpool of India and its shareholders. Sure,sir.Sir,secondly,likeasMr.JamesalsomentionedthatWhirlpoolCorporation is looking to get into a long-term licensing and tech agreement as part of this transition.Sojustwantedtocheckwhatistheprobabilitythattheroyaltyfeescan berevisedfurther,asin,like,increasedfurtherfromtheselevels?So,andincase, like, it gets increased, soshouldn'tthisactuallygetloweredconsideringthatthe stake has come down from 75% to 20% now? So justwantedtogetyourthoughts whetherweshouldlookatitasafurtherriskintermsofroyaltygettingincreased from here on? Sir,Iwouldnotatallbeabletocommentonthisbecausethatisnotformetosay.I am,asyouknowverywell,aWhirlpoolofIndiaLimitedManagingDirector.Icannot speak for the Whirlpool Corporation. And I am so sorry, but I will notbeableto really give you any sensible answer to this question. I think the answer was provided by Mr. Peters, and what hesaidiswhatstands. Becausethat'smoreaWhirlpoolofCorporationthoughtprocess.Andifthereisany thoughtprocessthatthencomes,thenwewillgothroughthenormal,usual,proper process, as far astheWhirlpoolofIndiaLimitedCompanyisconcerned,whichis, there is a very good, strong Board that we have, which helps us take the right decisions. And of course, if there is any further consultation to be done, the WhirlpoolofIndiaBoardwilladviseustodothat,andwewilldotherightprocess. So I am so sorry, but I am not able to answer the question because I do not genuinely know how to answer this. Sure, sir, understood. Lastly, on my part, so I wanted to check on the trade discounting. So generallyinFY'24,Ithinktradediscountinghadremainedsimilar versus last year. So I wanted to check how has the trendbeensofarinthenine months, in terms of trade discounting as percentage of sales? Page25of30
We have kept our trade discounting percentage roughly at the same levels. That number has not significantly changed. The endeavor is to keep the tradespends more or less flat. We have been investing a lot of money, as Mr. Eswar has explained, in termsofdemandgeneration.Thatiswheremostoftheinvestments have gone, but trade spends have largely remained the same. Nirransh Jain: Sure, sir. That is it from my sideand all the best. Thank you, Mr. Nirransh. Thank you. Next question is from the line of Umang MehtafromKotakSecurities. Please go ahead. UmangMehta: Yes.Hi.Thanksfortheopportunity.Ijustneededsome,ifyoucansharesomething factual, as in your terms, current terms or agreement on royalty and technical know-how,aretheyrevisedannuallyorwhenarethenextrenewaldates?Ifyoucan share, this is a factual question. Sir,Ithink,Ijustneedtocheck,butIthinkwhateveritis,theroyaltyandtechnical fees et cetera is published in the last annual report, if I am correct? Yes.Sothecurrentagreementsareobviouslyinplaceandtheamountsthatweare payingoutaredulyrecordedinthefinancialstatements.Modifications,ifany,that wouldcomein,iftheycomein,wouldobviously,likeMr.Eswarjustpointedout,go through the governance framework and the mechanism that is there, that Audit Committee kind of reviews it, and goestotheBoardofDirectors.Andifwhatever necessary approvals are required to be obtained, would be obtained, and the details that are required to be shared out would be shared out. UmangMehta: Okay. Got it. Andthesecondquestionwasonmargins.Soaswestandtoday,spot pricesweretoremainwheretheyare,andthethrustyouareseeingatthepremium and continue. Would you be confident that grossmarginswillcontinuetoexpand liketheyhavethisyear?Sowhenwethinkaboutnextyear,wouldyousaythat'sa fair statement? Sir, I think it's a verygoodquestion.However,Iwouldlovetoknowtheanswerto thisquestionmyself.AndwhatImeanbythatis,asyouknowverywell,it'snotjust about premiumization. There's a lot of other things that are happening.Thereis commodity priceincreasesthatcouldhappenordecreasesthatcouldhappen.Oil pricescouldgouporitcouldgodown.Thedollarmovementisalsoanotherthing. WhathappenswithothercurrencieswithrespecttotheIndianrupee,withrespect to component costs and detailed stuff that we buy. So there is a ton of things. Page26of30
WhatIcanassureyouisthatthisorganizationisspendingallitstimefiguringout how to optimize every cost to ourproductivityforgrowthprogram.Andobviously,I willtellyouthegoldenrulethatIwouldliketofollowisrevenuegrowth,whichis good.Profitgrowth,whichisaheadofrevenuegrowth.Andtheprofitgrowthisdriven bymarketsharegrowth.Andthatisdoneprofitably.Thisisthekindofformulathat we like to do. AndItrulybelievethatgrossmarginimprovementissomethingthat'satthecorner ofthisstrategy.That'show,frankly,Igrewuprunningbusiness.Growyourrevenues. Growyourgrossmargins.Takesomeofyourgrossmargins,putitintowhatwecall marketing, what here wecallstaffcost,butit'sactuallymarketing.Putitintostuff thatdrivesyourdemand,andputsomeofitbackintoprofit.Andthatissimplythe formulathatwearefollowing.SowillIbefocusedongrossmargin?Absolutely,like a hawk. Can I guarantee the gross margin will be this or that? Absolutely not, because it's so difficult tofigureoutwhat'shappeningnextmonth,letalonenext quarter, next year. So I can assure you, our investors and ourshareholdersandourfutureinvestors, thatweareonit.You'veseenthedata.TheonlythingIcanletisletthedatadothe talking. 15 months, we have grown the gross margin by220basispointsversusa year ago. That's the data infrontofyou.AnythingelseIsayisirrelevantbecause you can look at that and say, answer yourself, maybe do these people have the capability to drive the margin? I hope I answered your question. Thank you. So the line for the participant dropped. We move on to the next participant. Next question is from line of Shrinidhi from HSBC. Please go ahead. Hi.Thankyoufortheopportunity.Andapologiesforyetanotherquestionrelatedto sell-down. Sir, may I ask, was this decision taken in consultation with India management team, or it was a largely parent's decision? No,sir.ItabsolutelywasnottakeninlinewithIndia.Itisnotpossible,actually,if you can imagine. Sorry. Maybe I will come in. You will appreciate that the holding company is ultimately a shareholder, and the holding company takes its decision, such decisions on its own without any consultation, obviously, with the India management. Understood. Thank you for clarification. Sir, secondquestionisrelatedtohoware employees at the leadership level, at your level and level below you,aretaking Page27of30
these decisions, and are you seeing incremental attrition at the company at the senior levels? So, see it is a significant change that we are going through, that's a fact. It's a significant change, it's not a minor thing that you can say, oh yes,whatever,let's carry on. So, we will carry on. But having said that, any change goes through a processofchangemanagement.Andwearerightnownotevenfiveorsixdaysfrom the announcement, five working days from the announcement. Our primary focus right now is speaking with our employees first, making sure our employees understand to whatever extent we have the information, understand why the decisionisbeingtaken,andwhatdoesitmeanforus,howwecanbenefit,andso on and so forth. We are speaking to our employees at every level, at many levels I would say personally to people, and making surethatouremployeesare,totheextentthat they can, feeling clear aboutwhatthefuturecouldbe,andwhatthefuturemight holds, with the limited at this point in time amount of information we have regardingthechange.BecauseasyoujustheardfromMr.Peters,manythingsneed to be sorted out, thelong-termlicenseagreement,thelong-termtechagreement, the transition support, all of that stuff. So, firstly, that's whatwehavedonewithouremployees.Wehavedonethesame with trade colleagues thatweworkwith,thebigcustomers,tradepeoplethatwe work with, donethesamewithourservicepartners,wehavedonethesamewith pretty much everybody, including withyounow.So,thisistheprocessthatweare going through, butwiththeemployeesyoucanimagineit'samuchmoreinvolved process, firstly. And secondly, I think what is important is, I would like, and this is what the leadershipteamandIactuallydiscussedis,wewentthroughthislastyear,okay? Notthis,butwewentthroughasalelastyearasanorganization,andIwouldonly ask the investor community and the shareholder community and all our well-wishers to only think of one thing. 25%, 24% stake salehappenedlastyear. Now, that was not a walk in the park either, it was a pretty impressive stake sale. Butlookatwhatwewereabletodoasanorganization,andthatistheimportance ofnotgettingdistracted.Wewereabletogathertogether,workonthegoalsthatwe said we need to work on, keepoureyesfocusedonwhatweneedtodo.Andwe wereabletodeliverinthatsameperiodwhenthatstakesalehappened,Ithinkit happened in February if I am not wrong, February or March. Page28of30
And basically, if you see from April to December, where we should have been theoreticallymostdistractedandmessedup,weendedupdeliveringagrowthlikeI told you of 17% versus the previous year, and 100% in profit versus the previous year. So,Ithinkit'sverysimple,wehavegottostayfocusedonwhatweneedtodo,and that'swhatIthinktheleadershipteamiswantingtodo.AndlikeIsaid,wearein touch with our employees and talking to them, but we can only use the past to hopefully be the predictor of the future. Great.Andsir,thelastone,ifImay.Intermsofmedium-termtargets,whenyousay high single-digit growth EBIT and high single-digit EBITDA margin, I was just wonderingatthemanagementlevel,doyouseethiswholewasher,thisrefrigerator category, including the premiumization tailwind and the penetration tailwind, do you see this industry as a, at the best high single-digit growth industry at India? No,sir,that'snottheintent.LikeIclarifiedbefore,highsingle-digitrevenuegrowth is what we said we'd do. And the reason we say that is because market goes throughupsanddowns.Soifyouseethemarketgrowththisyear,asIshowedyou in one of thecharts,thoughIdidnotsharethenumbersforobviousreasons,but didsharethekindoftrend.Sometimesit'sflattish,sometimesthemarketgrowsby double-digits, and sometimes it grows by single-digits. So onaverage,ifyousee themarketgrowthitself,that'snotrunninginthedouble-digitkindofgrowthfroma volume perspective, right? Then on top of that, what we then add on is themarketsharegrowth.Soatthis point in time, this guidance we had given last year, we may take a look going forward as to whether we want to look at that, keep that, change that. That is somethingthatwewillconsideraswegoforward.Atthispointintime,Iwouldnot be giving any guidance different to the above. Havingsaidthat,Iwanttoclarifyagain,EBITbeinghighsingle-digitconsistentlywe havesaidisalong-termgoal,andIthinkit'snotpossibleforanybodytojustjump fromoneEBITnumbertoanother.Youcandothatifyoudonotcareaboutrevenue andyoujustwanttocutcosts,butIdonotbelievethatamarketlikeIndiaisbest servedbyoperatinglikethat.There'sarightcombinationofrevenuegrowthdriven bymarketsharegrowthandsomeamountofmarketgrowth,hopefully.Atthesame time,margingrowth,whichresultsinprofitgrowth.Andiftheprofitgrowthisahead of the margin growth, then the business is marching intherightdirectionforus. That is what we will be focusing on. Shrinidhi Karlekar: Thank you for answering my questions.All the very best. Page29of30
Thank you, sir. Thank you very much. Ladies and gentlemen, we have come to the end of the allotted time. With this, I now hand the conferenceovertoMs.RoopaliSinghfor closing comments. Thankyou,everyone,forjoiningin.AbigthankyoutoMr.EswarandMr.Jainaswell for providing all thebusinesscontext.Withthat,wewouldcloseoutthemeeting. Thank you once again for joining in today. Thank you verymuch.OnbehalfofWhirlpoolofIndiaLimited,thatconcludesthis conference.Thankyouforjoiningus,andyoumaynowdisconnectyourlines.Thank you. Page30of30