Whirlpool of India Limited has taken a major step in restructuring its operations and reinforcing its strategic alignment with its global parent, Whirlpool Corporation. The company announced the signing of five critical agreements with Whirlpool Corporation and its affiliates, alongside amendments to its Articles of Association, signaling potential shifts in ownership structure while ensuring long-term operational stability.
The agreements encompass:
- Brand License Agreement (BLA): A 30-year license with Whirlpool Properties, Inc., granting exclusive rights to the Whirlpool brand in India and neighboring markets. Royalty rates are set at 1% of net sales for the first five years, rising to 1.5% thereafter, with a guaranteed minimum royalty of USD 6 million annually for the first decade, increasing to USD 12 million in years 21-30.
- Technology License Agreement (TLA): Provides exclusive access to Whirlpool’s technical intellectual property. Royalty obligations start at 0.6% of quarterly net sales until March 31, 2029, increasing to 0.65% thereafter.
- Services Agreement: Engages Whirlpool Asia LLP to provide engineering and technical support, with an 18% markup on actual costs and minimum service charges based on a reference amount of INR 186 crore.
- Transitional Services Agreement (TSA): Ensures smooth business continuity during any ownership changes, with annual payments of USD 3 million from 2026 to 2029.
- Intellectual Property Assignment: Whirlpool Corporation has transferred 24 Indian patents and 8 designs to Whirlpool of India for a nominal amount, securing critical technological assets for future operations.
In parallel, Whirlpool of India has amended its Articles of Association, removing clauses that required Whirlpool Corporation to maintain at least a 51% shareholding. This move signals potential flexibility in ownership, giving the company room for strategic investments or divestments while maintaining access to global technology and brand equity.
Market Implications: The agreements provide Whirlpool of India with a robust operational framework, guaranteeing access to essential technology and brand support for decades. While the financial commitments through royalties and service charges are substantial, they secure continuity and long-term growth potential in India’s competitive home appliance market.
Outlook: These strategic agreements position Whirlpool of India for more independent operations, with the ability to leverage global expertise while exploring new opportunities in the rapidly expanding Indian appliance sector. Analysts view the move as a positive step towards sustaining competitiveness and innovation while potentially diversifying ownership in the future.
Summary: Whirlpool of India has signed five key agreements with its parent company, Whirlpool Corporation, including long-term brand and technology licenses, marking a strategic restructuring. The company has also amended its Articles of Association, hinting at potential changes in ownership, while securing access to essential intellectual property and operational support for decades.