The Hindu Business Line : LG Group banks on rural markets for revenue growth

In fact, the semi-urban and rural markets are expected to contribute nearly half of LG Electronics India’s revenues in India. The company also plans to enhance its manufacturing capacity by about 30 per cent by deploying innovative processes in its plants, which will translate into greater efficiency, said Mr V. Ramachandran, Director, Sales and Marketing, LG Electronics India.

The company, which has expanded its focus areas to the rural markets, now expects 40 per cent contribution from rural sales to its turnover this year, as the rural sector is growing at a pace faster than urban sector resulting in higher disposable incomes and, thus, mounting purchasing power.

Mr Ramachandran said that rural markets were untouched by slowdown and “will contribute major in durable sales”.

New focus

LG aims at increasing its revenues from the blooming rural markets. “For our premium products, we shall continue to focus on the urban markets,” he added.

The premium products category was growing at a pace faster than the market growth because “they are operating on a low base,” he said.

The company hopes to alter its portfolio and model mix for the rural market, and ensure that all segments are represented at the entry level. “We plan to have a good product mix at the entry level to make use of the rural opportunity,” said Mr Ramachandran.

According to him, the situation in India is not alarming. “We are still positive about our growth and are looking at a turnover of Rs 12,500 crore in 2009 following a 15 per cent growth rate,” said Mr Ramachandran.

In fact, “we are very upbeat about India this year and we are targeting a growth of 15 per cent for this year. In January, we have registered a growth of 17 per cent.”

Cash infusion

The company plans to invest about Rs 200 crore this year on expansion, new product development, and research and development activities. “There will also be an additional investment of Rs 400 crore for marketing and promotional activities,” he said.

The company plans to leverage on its “Brand Reliability” proposition, and “our focus would be on the distribution channels and products, which are the elements that would drive this campaign”, he said.

No lay offs

According to Mr Ramachandran, there have been no lay offs at the company. “There has been an impact on the overall consumer durable industry with reference to consumer sentiment. The challenge in the present situation is to boost the employee morale,” he said.

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