The Hindu Business Line : LG Electronics plans to boost exports

LG Electronics Inc (LGE) is looking to scale up its digital appliance sale in India to $1.5 billion by 2007,with nearly one-third of it coming from exports.

Talking to the visiting Indian media here, Mr Moon B. Shin, Vice-President, Digital Appliance Overseas Sales and Marketing, LG Electronics, said Indian sales currently accounting for only 3-4 per cent of the company's total revenue, would touch 10 per cent by 2007.

"The LGE digital appliances' sales are set to go up from $8.7 billion in 2004 to $15 billion by 2007. India is expected to play a bigger role in the coming days, as the Pune facility will take care of re-exports to countries in Africa and the Middle East," Mr Shin said.

Once the Pune facility becomes fully operational, India will become the second country other than China to have more than one LGE manufacturing base outside South Korea. While the Noida unit was set up in 1998 at Rs 500 crore, the Pune facility is being set up at around Rs 150 crore.

The Korean home and digital appliances company, that has 13 manufacturing bases worldwide, including three in China and one each in Brazil and Mexico, has been looking to overcome flat growth in the US and Europe by concentrating on the emerging markets. While China continues to be a hot destination for LG, despite stiff competition from local brands, the next two years will also see more focus on high-end markets such as the US.

"The attempt would be to try for a top-down penetration in the US markets, as the company has already gained a name for itself in products such as room air conditioners. With manufacturing bases in Mexico and Brazil, this market is important, as we concentrate on profitability than sheer revenue.

In India and other emerging markets, it will be a bottom-up approach, as high-end products still have some way to go," Mr Shin said.

Meanwhile, the mobile handset division of LGE here is working round the clock to bring four new models to the Indian markets.

This includes two each for Reliance Infocomm and Tata Indicom.

Ranking may dip after division

THE local media on Wednesday carried reports about how the LG Group faced the prospect of moving down one rank among the top three chaebols (South Korean conglomerates).

The reports said that LG Group would move down from the second to third position, once the impending division into LG Holdings and GS Holdings takes place. LG officials said the split was taking place as part of the group's `corporate governance strategy.'

The next year will see separate listings by the two new companies, they said. In 2003, when the digital appliance sale was to the tune of $7.4 billion, that of LG Electronics had stood at $25.7 billion and the entire group's turnover was $71.3 billion.

The other LG group businesses include chemicals, petrochemicals, engineering and construction, shipping, oil and gas.