LG to Establish Manufacturing Unit in Andhra Pradesh, Expresses Concerns Over Competition from Parent Company.

LG Electronics India plans to establish a new manufacturing plant in Andhra Pradesh to enhance its production capacity in response to growing demand. However, the company has expressed concerns about potential competition from its South Korean parent entity, LG Electronics, which provides support across various aspects of its business, including product design, technology, and branding.

The company has been increasing its sourcing of raw materials from local markets to meet consumer demands, reduce inventory, and lower costs, enabling more competitive pricing. Despite these efforts, LG Electronics India still relies on imports, especially for premium products, with key imports coming from China, South Korea, and Japan.

In its Draft Red Herring Prospectus (DRHP) filed with SEBI, LG Electronics India also highlighted its dependency on a few suppliers for raw materials, noting that any disruptions could affect its operations. The company has strong ties with LG Electronics, paying a royalty fee for the use of its brand and technology. Any adverse change in the relationship with its parent company could negatively impact the business, the company warned.

LG Electronics India has two manufacturing units in Greater Noida and Pune, with plans for a third facility in Andhra Pradesh. The new plant is expected to boost its capacity, supporting the company’s growing product and component manufacturing needs.

In a broader context, LG Electronics India filed for an initial public offering (IPO) to raise ₹15,000 crore, with the South Korean parent selling a 15% stake. The IPO is entirely an offer for sale (OFS), meaning no funds will be raised for the company itself.

HBL