Whirlpool Corporation is the world's leading global manufacturer and marketer of major home appliances, with annual revenues of approximately $19 billion in 2013, 69,000 employees, and 59 manufacturing and technology research centers around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, Bauknecht and other major brand names to consumers in nearly every country around the world.

Whirlpool of India's ability to leverage on its parent's product and marketing expertise to launch new products / undertake innovations on existing products in the Indian market puts it in an advantageous position.

September 2014 quarter results

For the quarter ended September 2014, it registered a good 21% rise in sales to Rs 744.57 crore. OPM improved 330 basis points to 8.6% which saw OP rising 98% to Rs 64.24 crore.

Other income jumped 51% to Rs 9.20 crore and interest cost fell 35% to Rs 17 lakh. Depreciation fell 6% to Rs 14.84 crore.

Thus, PBT soared 160% to Rs 58.43 crore.

Tax grew 197% to Rs 17.71 crore after which PAT jumped 146% to Rs 40.72 crore.

Six months results

For the six months ended September 2014, sales grew 20% rise to Rs 1796.81 crore. OPM improved 310 basis points to 10.8% which saw OP rising 69% to Rs 194.16 crore.

Other income jumped 51% to Rs 17.64 crore and interest cost fell 26% to Rs 42 lakh. As depreciation fell 7% to Rs 29.36 crore, PBT soared 92% to Rs 182.02 crore.

Tax grew 104% to Rs 58.30 crore after which PAT jumped 87% to Rs 132.72 crore.

Change in depreciation policy

Pursuant to the requirements of Schedule II to the Companies Act 2013, with effect from April 1, 2014 management has reassessed the useful life of all fixed assets based on detailed technical evaluation. Depreciation for the current quarter and six months has been provided based on life as prescribed under Schedule II to the Companies Act 2013 except where the useful life estimated by management is lesser than the prescribed life. Consequently, depreciation charge to the statement of profit and loss for the current quarter and six months ended September 2014, is lower by Rs 4.62 crore and Rs 6.16 crore respectively..

Further, based on transitional provisions provided in Note 7(b) of Schedule II of the Companies Act 2013 the carrying value of fixed assets, where the remaining useful life was nil as at April 1, 2014, amounting to Rs. 3,478.49 lacs (net of deferred tax of Rs. 1,791.15 lacs) has been adjusted with retained earnings.

Focus on cost effectiveness is paying off

The company has, since the past two years, focused on cost control and as a result it enjoys the highest margins in the industry and also within Whirlpool operations globally, despite high inflation and intense competition.

Whirlpool is also focused on improvement in margin by improving product-mix and maximizing fixed cost absorption and productivity gains through economies of scale.

Valuation

The share price trades at Rs 494.