The South Korean technology giant LG Electronics plans product customisation and cheaper goods for the Indian rural market as it seeks to expand reach and double its revenues over five years.
At present, India contributes around 6% to LG’s global revenues and the company expects this to touch 12% by 2015.
“We need to make further inroads into the Indian market for our growth and expansion within the rural and semi-urban areas will be crucial,” Soon Kwon, managing director, LG Electronics India told Hindustan Times.
He said that the company would double its production capacity by 2013. “During this calendar year we will invest around Rs 800 crore to augment our manufacturing capacity.” Another R700 crore, in 2011, would be spent on the marketing initiatives.
Kwon, who took charge of LG India in January this year, knows that the company cannot take its position in the Indian market for granted and needs to be innovative. “We are already the number one in several categories such as refrigerators, washing machines and air conditioners but to maintain our leadership position is a relatively difficult task than to catch up with our competitors,” said Kwon, who bets on product customisation—he calls it product insight—to retain LG’s leadership position.
“We are very diligently working to develop insightful (customised) products that appeal to the Indian consumers. For instance, our recently launched refrigerator that keeps food cool for longer periods despite erratic power supply makes sense for consumers where load shedding happens for longer durations.”
At present, LG derives around 85% revenues from the urban pockets of India while remaining 15% revenues comes from rural India. “In coming years we see our revenues from rural India go up significantly,” explained Kwon.
Over the last five years LG India’s annual revenues have grown at around 25 to 30%. “We expect 2011 sales to grow at around 30% and increase the share of rural market in our revenues,” Kwon said.
LG India’s revenues during 2010 stood at R16,000 crore and it expects to garner around R20,000 crore revenues during 2011 with LCD televisions and mobile handsets providing the major revenue thrust.