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LG to infuse $50 m into Indian arm

Our Bureau

NEW DELHI, Jan. 18

LG Electronics of Korea is pumping around $50 millions into its wholly-owned subsidiary, LG Electronics India Pvt. Ltd. (LGEIL), as part of its expansion programme.

The new investment is part of the company's commitment to the Government approved by the FIPB and will not require any further Governmental clearances. Around $20 millions is earmarked for a proposed refrigerator manufacturing unit, which will come up at LGEIL's existing facility at Greater Noida near Delhi, company officials said at a press conference here.

Construction of the plant will be underway shortly and it will commence production by early 2001. The plant will have an initial installed capacity of 2,00,000 refrigerators. LG has also proposed to increase production capacities across all categories.

The company also said that it expects to register Rs. 1,500 crores in sales revenue during this year compared to Rs. 1,056 cores registered in 1999. Profits would be to the tune of five per cent of the revenues, the officials added.

However, internal targets are as high as Rs. 2,000 crores, which includes a Rs. 200 crores revenue expected from sale of monitors. The monitors business is being brought under LGEIL from LG's liaison office which will continue to handle import and market ing of peripherals till they too are taken over by LGEIL, Mr. K.S. Kim, Managing Director of LGEIL, said.

This year, LG plans an equal contribution from the consumer electronics and the home appliances segment. In the CTV segment, the company anticipates the high-technology Flatron TVs to be the highlight of the year with an expected contribution of 20 per cent to CTV turnover. The company hopes to grab a 12 per cent share of the CTV market during the year.

The LGEIL's Vice-President (Sales and Marketing), Mr. Ajay Kapila, said his company expects to attain 28 per cent marketshare in the air-conditioner segment and is playing to lay focus on the corporate segment. It currently leads the AC market in the ret ail segment.

LG anticipates 15 per cent marketshare in the overall category of no-frost refrigerators, 40 per cent in 300-litre including no-frost refrigerators, seven per cent in direct cool refrigerators, 30 per cent in fully-automatic washing machines and 25 per c ent in semi-automatic washing machines segment, 30 per cent share in the microwave segment and 35 per cent in the DVD segment, officials added.

Web site launched: LGEIL launched its Web site (www.lgindia.com) where one can buy an LG product on-line through on-line credit transaction using credit cards. The company is the first consumer electronics in India to have on-line business-to-consumer (B 2C) facility.

The site would be positioned to define business in the internet economy. Moreover, the company is already in talks with various consumer durable financing companies to provide attractive options for internet purchase, such as online credit approvals, etc .

Talks with FIs for loan

LGEIL is in talks with various financial institutions for a Rs. 50-crore debt. The money will be used for its expansion programme, according to Mr. H.J. Park, Director (Finance) of LGEIL. The company has already borrowed Rs. 80 crores from ICICI, of whic h it has paid back Rs. 20 crores.

The debt component in the company will, therefore, increase to Rs. 100 crores, Mr. Park said. He added that by the end of the year, the debt equity ratio will be around 0.8:1. At present, the debt-equity ratio stands at 0.51:1.