Eureka Forbes: Purifiers to profit

Disc: Not a buy or sell recommendation, it is purely intended for education. I have no holdings here.

This blog will aim to analyze Eureka Forbes, an iconic company which owns the water purifiers titled :AquaGuard and understand whats changing here with the entry of a new management, and what future potential does it hold! So lets begin.

Company history

Foundation and Early Years (1980s–1990s): Eureka Forbes was established in 1982 as a joint venture between the Tata Group’s Forbes & Company and Sweden’s Electrolux (with 60:40 ownership). The company pioneered direct selling of home appliances in India, introducing one of the country’s first vacuum cleaners and later the iconic “Aquaguard” water purifier. Eureka Forbes became synonymous with door-to-door sales through its “Eurochamp” salesforce – the friendly Eureka Forbes salesman who became a familiar figure in Indian neighborhoods. By the 1990s, Aquaguard had become virtually eponymous with water purifiers in India , and the company had established itself as a household name in health and hygiene appliances.

In 2001, Tata Group exited the venture by selling Forbes & Company to the Shapoorji Pallonji Group. A few years later, in 2005, Electrolux also sold its 40% stake to Forbes & Company, making the Shapoorji Pallonji Group the full owner of Eureka Forbes . Under this new ownership, Eureka Forbes continued to expand. It diversified its portfolio (adding products like air purifiers and home security systems) and pursued global opportunities.

A transformative change came in 2021–22. Eureka Forbes was demerged from its parent (Forbes & Co.) and listed as an independent company on the BSE in 2022 . Soon after listing, global private equity firm Advent International acquired a controlling stake of about 72.5% in Eureka Forbes (through its entity Lunolux) in September 2021 for approximately ₹4,400 crore. This transaction marked the exit of the Shapoorji Pallonji Group from the business

and ushered in a new era of professional ownership. The Advent deal was accompanied by a mandate to revive growth and modernize the company, which had seen intensifying competition. In mid-2022, as part of this transition, long-time CEO Marzin Shroff – who had been with the company since 2006 and CEO since 2017 – stepped down from his role to become a senior advisor to Eureka Forbes and Advent . Advent brought in a new leadership team (detailed in Section 5) to drive a turnaround. This period also coincided with the tail-end of the COVID-19 pandemic, which had underscored the importance of health and hygiene products, potentially providing a fresh growth impetus.

And this is where we stand now, where the new management and their strategy will break the shackles of the company or suffer to the competietive enviornment. Which is what, this blog will analyse.

Industry overview

Water Purifiers in India

Market Growth and Drivers: The water purifier market in India has been on a strong growth trajectory due to the fundamental need for safe drinking water. The market has expanded rapidly and is expected to continue growing in double digits. Various estimates project robust growth where industries are expected to grow at 13%+ CAGR from 2023-2030. Government infrastructure initiatives are indirectly boosting the market: the Jal Jeevan Mission, which has provided 113 million rural households access to tap water since 2019, is expanding the addressable market for purifiers – newly connected homes often invest in point-of-use filters to ensure water potability .

Urban vs Rural Penetration: Penetration of water purifiers in India is low overall, especially in rural areas. As of the late 2010s, fewer than 12% of Indian households had any kind of water purifier (around 8.7% using electric purifiers and an additional ~3.5% using non-electric filters) . This implies nearly 9 out of 10 households still lack a purifier, underscoring immense untapped potential. The penetration is markedly higher in urban centers compared to rural areas. In cities and large towns, a growing middle class has adopted purifiers at higher rates – by some accounts, roughly 20–30% of urban households may use water purifiers (including both electric RO/UV systems and gravity filters). By contrast,rural penetration is in the low single digits, as many rural consumers either trust their local water sources or cannot yet afford modern purifiers. Urban consumers are driven by greater awareness of water contamination and the convenience of on-demand clean water, whereas rural consumers often rely on boiling, cloth filtration, or simply accept suboptimal water due to lack of options. The gap is gradually closing as companies introduce low-cost purifiers and as government programs improve rural water supply. Bridging the urban-rural divide is a key focus for the industry – by improving affordability and distribution reach, firms are converting first-time buyers, as seen in Eureka Forbes’ recent campaigns that targeted households previously using rudimentary methods (like filtering water with a cloth). The success of such efforts is evident from the fact that over 70% of new Eureka Forbes water purifier customers in FY24 were first-time purifier users responding to these awareness drives.

Future Trajectory and Necessity: The necessity of water purifiers in India cannot be overstated. Even as municipal water infrastructure improves, last-mile contamination (in pipelines or storage) and inconsistent water quality mean purifiers will remain essential for ensuring safe drinking water. The long-term trajectory is one of steady growth and deeper penetration. Industry experts expect that as incomes rise and health consciousness spreads to smaller towns and rural areas, the adoption of water purifiers will accelerate. India’s penetration levels (well under 15%) are a far cry from developed countries where 60–80% of households use some form of water treatment, indicating a multi-decade runway for growth. The market is also moving beyond basic filtration to advanced purification technologies (RO, UV, UF, and now RO+UV hybrids, smart IoT-enabled purifiers, etc.), which can drive replacement demand in upmarket consumers. In the near future, expect double-digit annual growth in this sector, fueled by factors like: increasing water pollution, greater awareness of waterborne diseases, higher standards of living, and companies making purifiers more accessible through financing schemes and cheaper models. There exists a unorganized “grey market” which offers low-cost RO systems or replacement filters; this segment captures price-sensitive buyers but often at the cost of quality and service. Established brands are countering this by emphasizing certifications, reliable after-sales service, and launching budget product lines to capture value-conscious consumers

Eureka Forbes’ Position: Eureka Forbes is the market leader in the Indian water purifier segment, leveraging its first-mover advantage and brand legacy. It commands roughly 40–45% market share in water purification systems – a dominant position built on the popularity of its Aquaguard and AquaSure brands. This share, while still leading, has come down slightly over the years with the rise of competitors like Kent and Pureit;

Vacuum Cleaners in India

Market Growth and Characteristics: The vacuum cleaner market in India is relatively new and has historically been much smaller than the water purifier market, largely because vacuuming has not been a traditionally common method of cleaning in Indian households. Culturally, many Indian homes relied on manual brooming, mopping, or domestic help for cleaning tasks, which kept vacuum cleaner adoption low. However, this is rapidly changing in urban India, where lifestyles are becoming busier and nuclear families more common. Particularly over the last 5–7 years, the category has seen double-digit growth in metropolitan areas. The growth is driven by factors such as increasing dust/pollution in cities (necessitating better cleaning), greater awareness of hygiene (especially post-COVID), and the availability of new vacuum technologies (like robotic cleaners) that promise labor-saving benefits. The entry of high-end brands (e.g., Dyson) and of affordable imports online has also expanded consumer interest across price points. Industry estimates suggest the Indian vacuum cleaner market (all segments combined) is growing at a healthy pace – at around 15% CAGR in the coming years, although at a small base. The overall market size is still modest (likely a few hundred crore rupees annually in consumer sales), but every year a larger portion of first-time buyers are coming on board, similar to the trend in water purifiers a decade ago.

Future Outlook: The future trajectory for vacuum cleaners in India is optimistic. As more households experience the convenience and hygiene benefits (especially in a post-pandemic era where cleanliness is paramount), adoption is expected to pick up. The growth is likely to be faster in urban centers – including Tier 2 cities – but gradually trickling into smaller towns. The introduction of innovative products is also stimulating interest; for example, robotic vacuum cleaners that can clean autonomously are attracting tech-savvy consumers, and their prices have started to fall. Similarly, cordless stick vacuums and wet-and-dry multipurpose vacuums address specific consumer needs (like car cleaning, sofa cleaning, etc.) that traditional brooms cannot. These innovations not only attract first-time buyers but also encourage existing users to upgrade. Moreover, factors such as rising dual-income families (less time for chores), shrinking domestic help availability in some areas, and increasing floor space in modern homes all point toward a greater role for vacuum cleaners. Industry growth could further accelerate if companies manage to dispel notions about complexity of use and maintenance – many people still find vacuum cleaners cumbersome or costly to maintain, so efforts at design simplification and lower operating costs (e.g., bagless tech, lower noise, affordable spare parts) will be key. Overall, one can expect the vacuum market to grow strongly (possibly at 20%+ annual growth in the near term in value terms, from a low base), with the potential of becoming a mainstream appliance in urban India in the next decade.

Competitive Landscape and Eureka Forbes’ Position: The Indian vacuum cleaner market, while small, has a mix of domestic and international players. Eureka Forbes is the undisputed market leader in this segment, having introduced the first vacuum cleaners to India in the 1980s and built a formidable direct sales network around it. The company is estimated to hold about 60% market share in vacuum cleaners nationally, which is a commanding lead. Its “Forbes” and “Euroclean” vacuum brands enjoy strong recall, especially for canister vacuum models that were popularized by Eureka Forbes’ door-to-door demonstrations. Other competitors include multinationals like Philips, Black & Decker, and Panasonic (which have some models in India), specialty cleaning brands like Karcher, newer entrants like Dyson (which targets the high-end segment), and a flood of unbranded/Chinese brands sold through online marketplaces. Eureka Forbes has been“premiumizing”its vacuum portfolio – focusing on quality, durability, and advanced features that justify a higher price point and are harder for knock-off brands to replicate. For instance, it has launched products like the Forbes Robo Vac and Mop(robotic vacuum) and Forbes Z Series(next-gen cleaners) to maintain technological leadership. With its ~60% share, Eureka Forbes essentially sets the tone in the Indian vacuum cleaner industry, and its efforts to increase penetration (through marketing and affordable financing offers) are likely critical to growing the overall category.

2.3 Air Purifiers in India

Market Overview and Growth: The air purifier market in India is a relatively new but fast-growing segment. It emerged over the last decade, largely in response to deteriorating air quality in major cities. Severe air pollution episodes – especially in Delhi-NCR with winter smog – have driven affluent consumers to seek indoor air quality solutions. As a result, demand for air purifiers has surged, particularly during pollution season. The Indian air purifier market has been experiencing high double-digit growth in recent years. For example, one industry report noted the market was about $157 million in 2022 and projected to grow at ~28.5% CAGR to reach $1.17 billion by 2030. In rupee terms, another source estimated the market at roughly ₹750–800 crore in 2023 and growing over 50% year-on-year during severe pollution spikes . These figures indicate that while the base is small, growth is very rapid. The key drivers are increasing public awareness of the health hazards of air pollution (linked to respiratory illnesses), a rise in incidence of respiratory allergies/asthma, and greater media attention on air quality indices. Initially, air purifiers were considered a luxury for the ultra-rich, but they are slowly becoming a seasonal necessity in cities like Delhi, Mumbai, Bengaluru, and Kolkata.

Penetration and Awareness: Penetration of air purifiers in India is extremely low, likely well below 1% of households nationwide. Even in the big metros that drive sales, it’s estimated that only a small fraction of homes (perhaps 2–3% in Delhi, for instance) have dedicated air purifiers. For the vast majority of Indians – especially outside polluted city centers – air purifiers are not yet on the radar. Urban consumers are increasingly aware of them; terms like PM2.5, HEPA filter, etc., have entered common parlance in cities due to media coverage of pollution. However, the high cost of good air purifiers and doubts about efficacy have kept penetration low. Rural India essentially has no market for such products as of now. Over time, as prices come down and as air quality concerns spread to more areas (unfortunately, more cities are showing rising pollution trends), penetration is expected to inch up. It’s worth noting that corporate and commercial segments (e.g., offices, hospitals, schools) are also adopting air purifiers, which contributes to overall industry growth even if household penetration is low.

Competitive Landscape: Despite its small size, the air purifier market in India is crowded with numerous players, mostly global brands. Companies like Philips, Sharp, Honeywell, Panasonic, Blue Star, Dyson, Xiaomi, and Kent (among others) all sell air purifiers in India. Many of these brands leverage their international technology or, in the case of Xiaomi, their cost-effective manufacturing, to cater to Indian consumers. There are also niche startups and lesser-known importers selling various models online. The competition is thus intense, ranging from budget purifiers (₹5,000–₹10,000 range, often of Chinese make) to premium ones (₹30,000+ with smart features and high-end aesthetics).

Business segments

Water purifiers

Product Range and Presence: Water purifiers are the flagship segment for Eureka Forbes. The company sells a wide range of purifiers primarily under the Aquaguard brand (its premium line) and the AquaSure brand (its affordable range). These include models with various technologies – RO (Reverse Osmosis) purifiers for areas with high TDS (dissolved solids), UV purifiers for microbiologically unsafe water, and combinations like RO+UV and RO+UV+UF for comprehensive protection. Eureka Forbes prides itself on having solutions for “more than 21 different water conditions” found across India . The Aquaguard line, often sold via direct sales, is known for its higher-end features (e.g., Active Copper technology that adds back trace copper, Mineral Guard to retain natural minerals, UV e-boiling, etc.), while AquaSure (also sometimes just called “Aquaguard Sure” in recent rebranding) is targeted at mass-market retail consumers seeking value for money. The company has also forayed into non-electric purifiers (gravity-based water filters) historically, to cater to rural areas or electricity-scarce regions, though its focus is largely on electric purifiers now. Overall, Eureka Forbes has a product at virtually every price point – from basic ~₹1,500 storage filters to high-end ₹20,000+ IoT-enabled purifiers. This comprehensive portfolio has allowed the company to maintain leadership despite competition.

Affordability + Service + Combatting Grey Market:

The water purifier segment strategy can be summed up as “Grow the base, keep them in the ecosystem.” To grow the user base, Eureka Forbes is making purifiers more affordable (as detailed, ₹6,499 products, easy EMIs, etc.) and expanding distribution so that even in smaller towns, consumers have access. It is also working on awareness – breaking the belief that “boiling water” or “cloth filtering” is enough. The Nal se Kapda campaign (translates to “Cloth from the tap”) specifically targeted consumers who strain tap water with cloth, showing them the limits of that method and pitching Aquaguard as a superior alternative . This educational marketing is converting hesitant consumers. On the other hand, the company is keen on keeping customers loyal once they buy a purifier. That’s where the servicing strategy comes in. By offering affordable AMCs, expanding its service network, and even creating digital service platforms (like an app for service requests, and e-invoices to assure authenticity of parts), Eureka Forbes is ensuring customers continue to replace filters and candles through the official channel . This not only generates steady revenue but also fends off the “grey market” competition, which often manifests as third-party technicians offering cheaper filter replacements or local shops selling counterfeit/spurious filters. In fact, Eureka Forbes launched, for the first time, a campaign on “Genuine Eureka Forbes Service” to educate customers about the dangers of counterfeit filters and unauthorized servicemen . The company even introduced QR-coded packaging for its cartridges and filters so customers can verify they are buying genuine parts . By protecting its huge installed base (over 20 million Aquaguard units installed historically ) from being poached by unorganized players, Eureka Forbes retains the lifetime value of its customers. This is crucial, as grey-market assemblers have been undercutting branded purifiers in India; Eureka’s multi-pronged approach is to compete on price (low-end Aquasure models), quality/service (its brand promise and network), and innovation (features and aesthetics that local players can’t easily match). Additionally, to address specific emerging needs, Eureka Forbes has niche offerings like water purifiers with stainless steel storage tanks (Aquaguard Marvel series with SS tank) to appeal to consumers concerned about plastic, and community water purifiers for institutional sales. All these tactics in the water segment aim to keep Eureka Forbes ahead in a segment that constitutes its bread and butter.

Vacuum cleaners

Vacuum cleaners were the product with which Eureka Forbes started its journey (the first product it sold in 1982 was a vacuum cleaner). Today, the company has one of the most comprehensive ranges of vacuum cleaning solutions in India, sold under its “Forbes” and “Euroclean” brands. The portfolio includes:

Premiumisation and Differentiation vs Competition

Eureka Forbes’ strategy in vacuum cleaners revolves around maintaining its dominance through innovation and reaching customers through multiple channels. A few strategic angles are:

Premiumization: Instead of engaging in a price war with cheap imports or low-end rivals, Eureka Forbes is positioning many of its vacuums as premium, high-quality products. This is evident in its focus on advanced models (robotic, high-suction, cordless) and marketing them as aspirational gadgets. The rationale is that for the segment of customers who are buying vacuums, many are willing to pay for quality (since it’s not yet a commodity product). By offering premium features and reliable service, Eureka can justify a higher price and healthier margins. This also helps distance the brand from the flood of low-cost Chinese vacuum cleaners available online, which might be cheaper but lack durability or service. For example, a customer drawn to a ₹4,000 no-name vacuum might instead consider spending ₹6,000 on a Forbes vacuum that promises better support and longevity.
Channel Expansion – Beyond Direct Sales: Historically, vacuums were sold through direct sales (Eurochamps knocking on doors with demos). While that still continues (and is effective for certain customer segments), Eureka Forbes has in recent years embraced retail and e-commerce for vacuums. You can now find Aquaguard and Forbes products on Amazon, Flipkart, etc., and in multi-brand outlets. The company realizes that many younger consumers prefer to self-educate and buy online rather than invite a salesperson for a demo. Thus, it has adapted by listing detailed specs and videos online, offering online purchase options, and providing customer reviews to build trust. This omnichannel strategy ensures they don’t miss out on digitally savvy buyers.
Competing with Grey Market and Imports: The so-called grey market in vacuums includes both unauthorized low-cost imports and copycat products. While not as rampant as in water purifiers, it exists. Eureka Forbes counters this by leveraging its brand heritage and service – e.g., emphasizing that they have service centers across the country (over 1,800 service centers as per some reports) and that their products come with warranties and a reliable support. Additionally, by continuously upgrading its products (like adding unique features such as the Ayur filter in water or possibly UV disinfection in vacuums for mites), it stays ahead of clones. The company’s wide service network (8,000+ service engineers, covering 99% of pincodes) also handles vacuum maintenance, which is a comfort to buyers compared to off-brand vacuums where one may not find spare parts.
Marketing and Education: Vacuum cleaners still need a bit of selling in India – convincing people of why they need one. Eureka Forbes historically did this through in-home demos. Now, it also does category marketing: for instance, highlighting how vacuuming can remove deep dust that brooming can’t, or how it’s necessary for allergy sufferers. The company’s recent campaigns (like one for its robotic vacuum) not only pitched the product but also sold the idea of modern cleaning convenience. This helps in creating a market where one might not naturally exist.

Air Purifiers

Air Purifiers is an emerging sector for Forbes. Currently, it has a very low share in revenue (about 5-7%) but the company is bullish on the future that this product segment holds. Some of their products are below:

Integrating Air Purifiers into the Health Portfolio: Eureka Forbes’ strategy for air purifiers is to leverage its core strengths (brand trust, service network, health positioning) to carve out a space in a competitive market. Specific strategic points include:

Leveraging Existing Customer Base: The company cross-sells air purifiers to its large customer base of water purifier owners. For instance, during routine service visits for Aquaguard, technicians can introduce an air purifier to the customer, explaining its benefits. Given the customer already trusts Eureka Forbes for water, they are more likely to consider Eureka for air. This kind of direct marketing is a strength that many competitors (who sell via retail shelves only) lack.
Backed by Service and AMC: Interestingly, Eureka Forbes is also offering after-sales service for air purifiers, including filter replacement reminders and plans. While not as elaborate as the water AMC, ensuring customers replace filters on time (typically yearly) is both a revenue stream and a way to keep the product effective (and thus retain customer satisfaction). This approach again differentiates them from import brands where the onus is on the customer to find replacement filters.
Selective Geographic Focus: The company’s distribution for air purifiers is focused on areas of real demand – the metros and Tier-1 cities. It allocates marketing spend to cities like Delhi NCR, Mumbai, Bengaluru, Kolkata, etc., especially during high-pollution periods. We can infer this from its sales pattern (most of the 99% pincode coverage is for water service; for air purifiers, they’re unlikely pushing in all pincodes equally, but rather focusing on hotspots). This targeted strategy ensures resources are used efficiently to generate sales where needed.
Continuous Product Improvement: Eureka Forbes knows this technology is evolving. It keeps R&D active to introduce improvements, for example quieter fans, more accurate air quality sensors, child lock features, and integration with its app ecosystem. The company’s broader digital transformation (“Re-Imagining Eureka Forbes – Driving Digital”) initiative also supports the air segment – they’ve built a unified app where customers can see all their Eureka devices’ status. This kind of ecosystem approach could, in the future, allow bundling services (maybe a subscription that covers water and air filter replacements together, etc.).

Services: Boosting return ratios, longetivity and cash flows.

Eureka Forbes has transformed its after-sales service business into a robust revenue stream and customer retention tool. Annual Maintenance Contracts (AMCs) for its water purifiers and other products provide a recurring annuity income – in FY23, service revenue (AMCs, filters and spares) was about ₹6,284 million (nearly 30% of sales), which are substantially lower than its competitors, showing a lot of room for growth. These AMCs not only drive revenue but also lock in customers for the life of the product, encouraging repeat engagement and brand loyalty. The company’s 8,000+ service technicians maintain over 14 million customer relationships across India, ensuring that customers receive timely maintenance, genuine spare parts, and even product upgrade offers – all of which increase the likelihood that a customer stays with Eureka Forbes for future purchases and referrals.

To expand service reach, Eureka Forbes has introduced more affordable and flexible service plans to capture value-conscious consumers. It launched tiered AMC plans at price points as low as ₹599 per year to lower the entry barrier for first-time service subscribers . These segmented plans allow customers to choose coverage that fits their budget, ensuring even lower-end customers can afford regular maintenance. Furthermore, Eureka Forbes is experimenting with subscription-based models – for example, offering water purifier rental plans starting at ₹599 per month . Under these rental schemes, customers pay a monthly fee that covers “zero installation, zero maintenance, and zero machine costs”, effectively bundling service and product usage into one subscription . Such models attract customers who prefer opex over capex, giving them access to safe water without upfront purchase, while Eureka Forbes earns steady service income.

Tackling Unorganized Service Providers & Counterfeit Parts: A key challenge for Eureka Forbes has been competition from the grey market – independent technicians and counterfeit spare parts that often undercut authorized service. Management acknowledges that “the service market is plagued by several parallel operators who provide spurious filters, thereby putting customer health at risk”. These look-alike filters and untrained servicemen not only eat into Eureka’s service revenue but can also harm the product performance and brand reputation. In response, Eureka Forbes has launched a multi-pronged strategy to win back customers from unorganized players. First, it focused on customer education and awareness: for the first time ever, an advertising campaign on “Genuine Eureka Forbes Service” was rolled out, aimed at educating protecting customers from fake filters and fake AMC sellers.

Eureka Forbes is also using technology and product design to ensure customers use genuine spare parts. In late 2023, the company introduced a new range of replacement filters with a distinctive design and a QR code on each filter . Customers can simply scan the QR code via the app to instantly verify whether it’s a genuine filter or a fake . This innovation makes it easy for consumers to authenticate parts and discourages the use of knock-offs. Additionally, Eureka Forbes tied certain product features and service benefits to genuine parts usage – for instance, only genuine filters will integrate with the app’s filter-life tracker and warranty claims.

The financial importance of services

The service segment is the financial powerhouse of Eureka Forbes’ business model, offering superior margins and stable growth. After-sales services (AMC, spares, etc.) carry much higher profitability than product sales – analysts note that *service revenue generates higher EBITDA margins than product revenue, making increases in service mix margin-accretive . This is because the gross margins on filters and AMCs are very healthy (spare parts have low manufacturing cost but are sold at a premium for the value of clean water/air they provide, and service labor is relatively low-cost). As service share in the mix has risen, the company’s overall EBITDA margin has expanded. For instance, adjusted EBITDA margin reached a record ~11% by Q4 FY24, up from mid-single digits two years prior.

Service revenues are not just high-margin, but also highly cash-generative and stable, which is crucial for Eureka Forbes’ financial health. An AMC is typically paid in advance or in installments, resulting in negative working capital for the service business (money is received before the service obligation is fully delivered) . This model yields a “consistent revenue stream & negative working capital” profile, meaning the company’s service segment actually funds itself and even contributed liquidity to the overall business. The predictability of renewal rates further adds to stability – a large portion of customers renew their contracts annually, smoothing out cash flows compared to the more cyclical product sales. Consequently, Eureka Forbes enjoys strong operating cash flow and has been able to fund investments in R&D and digital infrastructure without straining its balance sheet. Indeed, the company’s integrated annual report emphasizes that its business mix and operating efficiencies enable continuing strong cash flow generation.

Management change: Key catalyst.

In September 2021, Advent International agreed to acquire a 72.56% controlling stake in Eureka Forbes from the Shapoorji Pallonji Group. This was a pivotal moment, as Eureka Forbes shifted from being a family-owned business (part of a 150-year-old conglomerate) to being backed by a global private equity firm. Advent’s involvement signaled an intent to restructure and revitalize the company for accelerated growth and value creation . Following this, a leadership transitionwas set in motion. By mid-2022, it was announced that Mr. Marzin R. Shroff, the Managing Director & CEO, would step down effective August 2022 . Marzin Shroff had been associated with Eureka Forbes for a long time – he joined in 2006 to lead marketing, and became CEO in 2017 . He was credited with building iconic brands like Aquaguard and had steered the company through some challenging years . His stepping down was part of a planned transition; notably, he didn’t completely exit but moved to a new role as a Senior Advisor to both Eureka Forbes and Advent International . This was likely to ensure continuity of his experience while making way for new leadership at the helm. The change was amicable, with Shroff expressing confidence in the company’s market leadership and his willingness to support the new owners in an advisory capacity . To fill the CEO position, Advent brought in Mr. Pratik Pota as the new Managing Director & CEO of Eureka Forbes. Pratik Pota’s appointment was officially announced in mid-2022, and he joined the company on August 16, 2022 for a term of five years. Pota came with an impressive background in the consumer domain – most famously, he was the CEO of Jubilant FoodWorks (which operates Domino’s Pizza in India) from 2017 until mid-2022. Under his leadership, Jubilant saw significant growth and digital transformation, and he was widely respected for his execution skills. Prior to Jubilant, Pota had held senior roles at PepsiCo, Bharti Airtel, and Hindustan Unilever, giving him a rich cross-industry perspective. His appointment at Eureka Forbes was seen as a coup, given his track record of scaling up a consumer service business (Domino’s) in India.

The primary reason for the management overhaul was the need for a fresh strategic direction and professionalization to unlock Eureka Forbes’ potential. Before Advent’s entry, Eureka Forbes had been stagnating in terms of growth. According to CEO Pratik Pota, the company “had not grown for 10 years” – in fact, he bluntly highlighted that Aquaguard sales had been declining for a decade . The business was still profitable, but it was losing market share to competitors (Kent, Pureit in water purifiers; new entrants in vacuums) and hadn’t fully capitalized on new channels (like e-commerce) or product trends. The organization structure had grown unwieldy, with different divisions (direct sales, retail, service) operating in silos, each led by its own mini-CEO, which led to internal turf wars rather than a united fight against competition. Innovation had slowed and the brand was seen as a bit “jaded” or old-fashioned by younger consumers . All these factors contributed to a performance that was below the company’s potential. The Shapoorji Pallonji Group, facing its own financial pressures, likely realized that a specialized investor like Advent could better drive the next phase of growth. Advent, upon taking over, identified that new leadership with a modern, execution-focused mindset was needed to transform Eureka Forbes from a legacy incumbent to a agile, growth-oriented firm. Hence, they brought in a CEO known for turning around and scaling a consumer business (Pota) and complemented him with an experienced chairman and an empowered leadership team. The change was also aimed at cultural transformation – moving Eureka Forbes from a family-run culture to a performance-driven culture with clear accountability.

The new management didn’t take long to chart out a transformation roadmap. Pratik Pota metaphorically described the company he inherited as a “kingdom” with complacent inhabitants living in silos, oblivious to external realities. He set out to jolt the organization into action. The transformation strategy (“Operation Udaan”) comprised several pillars:organizational restructuring, cost rationalization, product innovation, channel expansion, and cultural change.

Key strategic changes and their effects include:

Breaking Silos and Reorganizing Sales: One of the first things Pota did was to unify the previously fragmented verticals. The separate “mini-CEOs” structure (heads of direct sales, retail, service each running their fiefdom) was dismantled. Instead, the company moved to a functional structure where all sales channels report into a common leadership (e.g., the CGO for revenue). This has led to better coordination – for instance, now the direct and retail teams collaborate on lead sharing (if a store lead prefers home demo, direct sales takes over, and vice versa), and there is consistent pricing and promotion across channels to avoid internal competition. The impact is a more coherent go-to-market strategy, which was reflected in FY24 as the company was able to grow in both direct and retail channels without cannibalizing one another. Additionally, Pota instilled a data-driven approach: earlier, decisions might have been intuition-led by silo heads, but now data on customer behavior, lead conversion, etc., is being tracked (he noted that previously data had “no place” in their lives, which he changed). This has improved sales productivity.
Cost Rationalization and Efficiency: Post Advent takeover, the management undertook significant cost optimization. According to a CARE Ratings report, initiatives in marketing spend effectiveness, digitization, and R&D efficiency helped boost margins. Legacy costs were trimmed (such as going digital vs traditional call centers). The result is evident: EBITDA margin improved from around 6% in FY2022-23 to about 9% in FY2023-24, and further to 11% in H1 FY2024-25 . This is a sharp jump in profitability, indicating the new management successfully cut the fat and made operations leaner. The company’s PAT (net profit) also turned around sharply: in FY22, Eureka Forbes had a negligible adjusted PAT (near break-even) , but in FY23, PAT was ₹17 crore, and in FY24 it rose to ₹92 crores . Such an improvement can be attributed to both cost control and revival of sales.
Product Innovation and Portfolio Overhaul: The new leadership pushed for accelerated product development, as described in Section 3. Many new products (Aquaguard Blaze, SlimTech, Z Series, etc.) were launched within a short span. Management recognized that a dated product lineup was part of the stagnation; competitors had caught up or surpassed in features. By H2 FY24, Eureka Forbes was rolling out “several innovations... on the back of targeted investments in R&D” . The impact of this is twofold: it rejuvenates the brand image (making Eureka Forbes appear innovative and modern) and also helps address gaps in the market (like affordable models for low-end, smart models for high-end). Already the impact can be seen in volume growth (water purifier unit sales jumped due to the ₹6,499 models). The company’s ad campaigns around new products (like the ones for robotic vacuums, stainless steel tank purifiers, etc.) have increased its visibility and consumer interest. The brand visibility scaled up massively in FY24 with these campaigns, as noted by the CEO . Thus, innovation under the new management has started translating into market share defense and potentially gains (especially at the lower price segment, where Eureka Forbes had lost ground to cheaper brands earlier).
Aggressive Distribution Expansion: The management changes also brought a more aggressive push to distribution (again, see Section 4). The company added thousands of retail outlets to its network and invested in digital sales capabilities. Financially, this meant some upfront cost (e.g., hiring more salespeople, setting up dealer relationships), but it paid off in reach. One concrete impact is seen in revenue growth returning. After presumably flat revenues for many years, Eureka Forbes’ consolidated revenues jumped to ₹2,084.5 crore in FY23 from a much lower base (the growth was 446% because FY22 reported only ₹381.8 crore due to partial period accounting) . Normalizing that, the company basically achieved ~₹2,000+ crore, which might be its highest ever annual revenue. In FY24, it grew further to ₹2,189 crore (a 5% YoY growth). While 5% may seem modest, it’s significant because it came after a major jump and during a year of heavy internal reorganization – and it outpaced many consumer durable peers in a somewhat soft market. In H1 FY25, revenue growth was 12% YoY, indicating acceleration. So the trajectory has turned positive under the new management.
Cultural and Operational Turnaround: Qualitatively, the impact of the new management is also seen in a more energized and future-ready organization. Employees have been given a new shared vision (“Re-imagining Eureka Forbes”) and have even been given a stake in success (the CEO mentioned an ESOP plan for all managers to align them to the company’s long-term goals). The culture is shifting from complacency (“sab theek hai” or “all is well” attitude, as Pota recounted ) to one that recognizes challenges and strives to overcome them. The CEO took the leadership team to an offsite to frankly confront the reality and galvanize them . This kind of intervention has helped in breaking the inertia. The impact is visible in metrics like improved customer satisfaction – e.g., faster service resolution rates (70% in 1 hour) , higher digital engagement (75% of service requests via app) , etc., which are signs of a company adapting to modern consumer expectations.
Focus on Core Competencies: The new management also appears to be refocusing the company on what it does best and trimming any flab. For example, if there were any loss-making non-core ventures (like too many security system models or unrelated products), they likely de-emphasized those to focus on the main three segments. This is supported by the financial discipline and lack of any major debt-funded diversifications in this period. The result is a more coherent product strategy and better allocation of R&D and marketing spend.

Thesis pointers

Positioned for Future Growth (Management & Tailwinds): Under new leadership and supportive industry tailwinds, Eureka Forbes’ service-centric strategy positions it well for sustainable growth. The management’s growth thesis is that by doubling down on customer service and innovation, Eureka Forbes can reclaim market leadership and expand the category. Industry dynamics are in its favor – water purifier and air purifier penetration in India is still very low (under 5% for water purifiers), while awareness of health and hygiene is rising. This means a long runway for core product sales (more first-time buyers), which in turn expands the serviceable installed base. Eureka Forbes is capitalizing on these tailwinds with a multi-channel approach (direct sales, retail outlets, e-commerce, and B2B) and by launching affordable SKUs (e.g. a new purifier at ₹6,499 was introduced to target value-segment consumers
Services+ premiumisation: The real differentiator, however, is the service ecosystem: management believes that superior after-sales service will convert more of those first-time buyers into lifetime customers, creating a virtuous cycle of referrals and repeat sales. This will lead to superior cash flow generation,(it is already great by the way), negative working capital, really good return ratios and high consistency in recurring revenue. Moreover, the company’s focus on premiumisation (e.g. IoT-enabled purifiers, high-end vacuum cleaners) combined with robust service support allows it to tap the higher end of the market for better margins.
Organizational changes – such as revamping the sales force (now called “Eurochamps”), investing in R&D for product quality, and upgrading IT systems – also support execution of this strategy. With the backing of Advent (which brings capital and global expertise) and a refreshed management team, Eureka Forbes appears well-positioned to navigate the next phase of growth driven by its service-led model.

Risk factors

Dependence on Direct Sales Legacy: Eureka Forbes historically relied on its direct sales force (door-to-door selling) for a large portion of product sales and AMC renewals. While this has been a strength (providing a personal touch and relationship building), it is also a risk if not adapted. High dependence on direct sales can lead to high fixed costs and scalability issues, and any decline in the productivity or morale of the salesforce could hurt growth. The company is mitigating this by developing other channels (20,000+ retail outlets, e-commerce presence, etc.), but a significant portion of revenue is still generated via the direct model. The risk is that in the era of digital shopping, Eureka Forbes must continue to modernize its sales approach or risk losing out to competitors with stronger retail or online distribution.
Grey Market Threat: As discussed, the grey market of unauthorized service providers remains a persistent risk. If Eureka Forbes fails to effectively convert customers to official service plans, many could continue to get cheaper service and parts from local technicians. This not only erodes the company’s service revenue potential but could also impact its reputation if customers blame the product for issues caused by counterfeit parts. While initiatives like QR-coded filters and awareness campaigns are underway, the entrenched nature of the unorganized sector (especially in smaller towns where brand presence might be weaker) means this battle will be ongoing. The risk is that the grey market might undercut Eureka Forbes on price to retain customers, forcing the company to either lower its AMC prices further (impacting margins) or potentially lose some budget-conscious consumers – a delicate balance.
Margin Pressures: Several factors could pressure Eureka Forbes’ margins. On the product side, steep increases in commodity prices (for plastic, steel, electronics) could raise manufacturing costs and squeeze product EBITDA, especially if competitive pressures limit the ability to pass on costs fully. On the service side, if the company aggressively prices AMCs low to drive penetration (e.g. the ₹599 plans), the average realization per customer may drop, which could dampen margin unless offset by volume and upselling of spares. There is also the cost of maintaining a large service workforce – wage inflation or higher fuel/transport costs could increase service operating expenses. So far, Eureka Forbes has managed to offset many costs through efficiency (service costs as a % of revenue actually fell in FY24, aided by digital service bookings and route optimization), but sustaining this improvement is key.

Valuations and technicals

On technicals side, the stock looks to be consolidating for a while. There look to be defined supports and resistances. It is a bit weird how is that happening, since the management has been walking the talk. Let us see how it goes in the future.

On the consumer durables side, the companies like water purifiers rtrade at some premium due to how high their gross margins and fundamentals are. Hence, on a PEG front, it might look optically expensive. However, the fundamentals of the business might just justify it. We can aim for about a 15% revenue increase or so for the next year, followed by margin expansion from their ongoing strategies.