Will beat mkt with innovation, cost control: Whirlpool

Shantanu Dasgupta, vice-president, corporate affairs and strategy, South Asia, Whirlpool explains to CNBC-TV18 that the company will beat the slowdown in the market with innovation and tight control on cost.

Dasgupta expects the company to end the fiscal on a good note on the hopes of a promising Diwali and a timely summer. One of the measures that he looks forward to is a reduction in rates that will stimulate demand. Below is an edited transcript of the interview on CNBC-TV18. Q: The consumer discretionary sector has definitely slowed down although consumer staples are holding up. Are you being affected by a slowdown or do you expect a lower trajectory in the near future?
A: Going forward, I don't think there will be any change in the pace of demand as witnessed over the last few quarters. Your assumption is correct. Demand has been very soft against the results we posted for the first quarter of this financial year. In the near future, we don’t expect anything drastically different. On of the few measures that could perhaps stimulate demand is reduction in interest rates. Q: Why do you call demand 'soft'? Your first-quarter results are strong and EBITDA margins are up 140 bps compared to year-ago levels. Sales is up 10% and PAT is up 26%..
A: I was referring to the overall situation regarding demand. Yes, when compared to the slowdown in the market, our results have been outstanding. But there has been a decline in demand by of 5-10% in the markets in almost all the categories that we operate in.
The company has grown on the back of innovation and focus on cost. Add to this, that over a period of time we have established very strong credentials in managing our fiscal extremely well. So all aspects of cost, are very tightly controlled and have begun to pay dividends in these trying times. Q: By how much do you expect sales to grow? What is your forecast for the industry?
A: I estimate that by the time this financial year ends, the industry would be flat-to-marginally-declining. On the assumption that Diwali is reasonably rewarding and summer beginning around March, we hope to end the year reasonably well.
Currently, all reported data suggests that the market is declining. As compared to a growth of about 6% posted last quarter, we have recorded a growth of 10% this year and we expect that we will go ahead of the market in the coming quarters.
We have just launched some new products in April and eagerly looking forward to have their affect on our kitty. Based on their performance, other new products will also be launched. So even if the market remains static and doesn’t grow, we believe that we can grow on the back of our innovation and increased distribution. Strict control will be maintained over costs and all funding will come from internal accruals. Q: Is there any headroom for increase in margins?
A: It depends on commodity prices which keep fluctuating and even if there is a correction, the currency rates more than make up for it. So we will have to be ahead of that and part of it is regarding pricing.
I think the results have been outstanding with double-digit EBITDA margins, double-digit PBT margins and at PAT at 7.2% which is the best in the last four quarters. So we expect that we should be able to maintain these margins.