Eureka Forbes Ltd, known for its water purifiers, is planning to expand its distribution network and introduce new products as part of a major overhaul of its product lineup, according to a top executive at the company, which is backed by private equity firm Advent International.
In the past two years, the company has streamlined its portfolio, cut costs, and reduced staff after years of stagnant market share.
“We aim to double our distribution. Currently, we are in over 22,000 general trade outlets. The goal is to expand our presence in general trade. We are also in over 3,000 modern trade outlets,” said Pratik Pota, managing director and CEO of Eureka Forbes, in an interview with Mint.
Modern trade refers to large retail stores that sell products from various brands, while general trade refers to traditional retail, including standalone stores and neighborhood shops.
In 2021, Advent International acquired a majority stake in Eureka Forbes from the Shapoorji Pallonji Group, valuing the company at ₹4,400 crore. Eureka Forbes sells water purifiers under the Aquaguard brand, as well as vacuum cleaners and air purifiers.
Pota, hired in July 2022, has been tasked with transforming the legacy business, which had seen its market share decline due to increased competition.
“While the business had strong foundations, it needed a complete reinvention. It wasn’t just about improving growth or margins; it was about completely rethinking the business,” Pota said.
Revamped Strategy Amid Market Growth
As part of the overhaul, Pota hired a new team and introduced new products for both the premium and budget ends of the market. For example, 80% of the company’s top management are new hires. The company also reduced its headcount by 36% between March 2022 and March 2024 and reinvested in developing capabilities. This was part of the first phase of its transformation, as detailed in the company’s investor day presentation in June. Last fiscal year, the company cut other expenses and doubled its capital expenditure in FY24. It also reduced the number of water purifier models from 200 to just over 80.
“Last year, we increased our capex to almost two and a half times our historical amount; in FY25 it will stay about the same,” Pota added. “This investment goes into funding innovations and digital technology. Now that we have positive cash flow, we can invest in anything that drives growth,” he said.
In FY24, Eureka Forbes’ revenue from operations rose 5.2% to ₹2,189.2 crore. Profit after tax increased more than fivefold to ₹91.5 crore from ₹17.1 crore in FY23. The company also turned net cash positive with a surplus of ₹108 crore, compared to a net debt of ₹50 crore in FY23, driven by cash generation of ₹194 crore during the year.
India’s water purifier market was valued at ₹4,350 crore in FY23 and is expected to grow to ₹10,200 crore by FY30. However, category penetration remains low at 6% compared to refrigerators, which stand at 43%.
Eureka Forbes Eyes Growth Opportunities
Eureka Forbes has about 40% of the water purifier market in India, a market it entered in 1984 and once dominated.
“A big part of increasing penetration is expanding distribution, especially in small towns. We need to appoint more distributors there, improve distribution infrastructure, and cover more outlets,” Pota said. The company’s sales are evenly split between retail, online, and direct sales, making it a balanced omni-channel company. Eureka Forbes competes with Kent Ro Systems Ltd and A.O. Smith in the Indian market.
In the near term, Eureka Forbes will continue to focus on its current categories but remains open to new opportunities. “For now, we are excited about the categories we are in. They all have high growth potential. We have exciting plans for each category and are building the foundation in research, digital capabilities, and distribution to leverage these trends over a larger portfolio in the future,” Pota added.
Pota said the company is open to both organic and inorganic growth opportunities. “We are very hungry to grow, so we are open to anything that allows us to grow, whether organically or otherwise,” he added.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
