Shares of Voltas and Whirlpool surged up to 5% on Thursday, June 26, after reports emerged that Panasonic Holdings is exiting the washing machine and refrigerator segments in India, markets where it has struggled to build a significant presence.

According to The Economic Times, citing industry executives, the Japanese electronics giant is restructuring its India operations by pulling out of loss-making categories where it holds a negligible share. As part of this move, Panasonic is shutting down the production line for these appliances at its Jhajjar factory in Haryana, which currently serves as a contract manufacturing hub for other brands.

Also Read: Panasonic pulls plug on washing machines, refrigerators in India

While the Indian arm is still evaluating the number of workers that will be laid off due to the restructuring exercise, the executives said it will be in high double digits, as the company is trying to relocate some workforce, including in the factory.

Following the revamp, Panasonic will operate in two major electronic categories in India – televisions and air-conditioners.

A Panasonic India spokesperson confirmed the decision to discontinue the washing machine and refrigerator categories, and sharpening of focus on residential and commercial ACs, and TVs.”In line with our global strategy and evolving market dynamics, Panasonic in India is rebuilding operations to focus on future-ready growth segments such as home automation, heating, ventilation & cooling (AC), B2B solutions, electricals and energy solutions,” the spokesperson said. “Panasonic will support dealers in inventory liquidation and continue providing full customer service, including parts and warranty coverage.”The spokesperson said Panasonic is informing all partner companies sourcing products from its Haryana plant to give them a sufficient runway for transition.

On layoffs, the spokesperson said it is a “difficult but necessary step” and that the company is “fully committed to supporting them (employees affected) through this transition and is actively providing necessary assistance to ensure they are equipped for their next opportunity.”

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Industry executives said Panasonic failed to garner more than 1-3% market shares in refrigerators and washing machines due to cutthroat competition from Korean brands LG and Samsung, and Chinese brands like Haier.

There is also pressure on its Japanese parent to restructure the business across geographies and exit loss-making ventures.

An industry executive, citing market share data from sales researcher NielsenIQ, said Panasonic’s recent share is 1.8% in washing machines and around 0.8% in refrigerators.

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MUMBAI – Whirlpool of India’s foreign promoter, Whirlpool Corporation, is looking to sell up to 24% stake in the company through block deals in a transaction worth around $450 million, according to news reports.

The floor price for the sale has been set at Rs 1,230 a share, which is at a discount of nearly 8% to the current market price of the stock. On Monday, Whirlpool shares closed nearly flat on the BSE at Rs 1,332.

According to reports, the base size of the deal could be 15% with a greenshoe option to sell 9% more if the demand looks strong, reports said.

Goldman Sachs is advising the American promoter on the stake sale.

As of December end, Whirlpool Corporation, through subsidiary Whirlpool Mauritius, held 75% stake in the consumer durable goods manufacturer.

In January, Whirlpool Corporation said that it intends to sell up to 24% stake in the Indian unit, while retaining majority interest. The share sale is part of the American multinational’s plan to deleverage its balance sheet. “Commitment is on improving debt leverage through strong free cash flow and India share sale,” it said last month. Whirlpool Corporation expects to reduce the debt by over $1 billion in 2024 versus 2022.

Whirlpool shares have been a major underperformer in the last three months, giving negative returns of over 16%. In the last one year, the stock has given a moderate 3.5% returns.

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