LG Electronics India is planning to set up a new manufacturing facility in Andhra Pradesh to boost its production capacity in the country. Despite efforts to localize its supply chain by increasing the sourcing of raw materials from the local market, LG continues to rely on imports, particularly from countries like China, South Korea, and Japan, especially in the premium segment.
LG Electronics India, in its Draft Red Herring Prospectus (DRHP) filed with SEBI, highlighted its strategy of increasing raw material sourcing from local markets to meet consumer demands while lowering inventory and associated costs. This move enables competitive product pricing.
However, the company acknowledged its continued reliance on imported components, especially in the premium segment, with key imports sourced from China, South Korea, and Japan to enhance product quality and technology. Despite efforts toward localization, dependence on top suppliers poses risks, as its top-five and top-10 suppliers accounted for 21.45% and 31.44% of raw material purchases in Q1 FY25, respectively. Any disruption in this supply chain could significantly impact operations.
The company benefits from its parent, LG Electronics, for innovation, design, technology, and brand support, but noted potential risks from any changes in this relationship. LG Electronics India pays royalties to its parent, amounting to ₹323.2 crore in FY24, and relies on LG-affiliated entities for export orders.
While its two manufacturing units in Greater Noida and Pune have a combined capacity of nearly 1.4 crore products, it is establishing a third facility in Andhra Pradesh to meet growing demand, supported by financial incentives from the state. The company recently filed for an IPO, wherein its South Korean promoter will sell a 15% stake, aiming to raise approximately ₹15,000 crore through an offer for sale (OFS). The proceeds will go to LG Electronics, with no new capital raised for the Indian subsidiary. If successful, LG will follow Hyundai Motors India as the second South Korean firm to enter the Indian stock market.
LG Electronics India, a subsidiary of the South Korean conglomerate the company, is one of India’s leading consumer electronics and home appliances companies. Since its entry into the Indian market in 1997, it has become a household name, offering a diverse range of products including televisions, refrigerators, washing machines, air conditioners, and mobile devices.
Known for its commitment to quality, innovation, and customer satisfaction, the company has continually introduces technology-driven products tailored to the preferences and needs of Indian consumers, such as energy-efficient appliances and air purifiers designed for the country’s climate.
LG has established an extensive distribution and service network across India, ensuring accessibility and reliable after-sales support. With a focus on sustainability, the company has integrated eco-friendly practices and energy-saving technologies into its operations and products. LG Electronics India remains dedicated to enhancing the lifestyles of its customers through advanced technology and exceptional service.
