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LG Electronics to power up in rural India

07-May-2004
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LG Electronics to power up in rural India

LG Electronics India Pvt Ltd's growth in the years ahead would be fuelled by greater penetration in semi-urban and rural markets across the country, according to Mr Kwang-Ro Kim, Managing Director of the company.

Speaking to newspersons on a visit to the company's manufacturing facility at Greater Noida, Mr Kim said the company was focused on the vast Indian rural market. About 90 per cent of the company's total sales income in 2004 would be accounted for by high-volume, low-value products. With a view to tapping the scope in semi-urban and rural markets, LG Electronics has not only launched economy-range products but is also investing about Rs 7 crore in infrastructure. The company is also expanding its footprint by setting up 72 regional area offices, 61 central area offices and 43 branches.

Mr Kim said greater penetration in rural markets would help the company achieve its targeted turnover of Rs 7,000 crore and Rs 12,000 crore in 2004 and 2007, respectively. In 2003, the Indian subsidiary of the South Korean consumer electronics, home appliances and telecom products major recorded a turnover of Rs 4,500 crore. The revenue growth would be fuelled by garnering higher market share in existing product categories and also by introducing and gaining market share in new product categories such as GSM handsets and vaccum cleaners.

According to Mr Anil Arora, Head of Marketing of LG Electronics India, in the current calendar year, a corpus of Rs 200 crore has been earmarked for advertisements and brand building. Eighty-five per cent of the communications resources would be spent on promoting products of mass consumption this year while the balance 15 per cent would be spent on promoting premium products. In 2004, 90 per cent of the company's sales income would be accounted for by mass products while premium products would account for the rest.

Mr Arora said that, in 2007, 65 per cent of the communications resources would be spent on products of mass consumption while the balance would be spent on premium products. In that year, 75 per cent of the company's sales income would be accounted for by mass products while premium products would account for the balance 25 per cent.

Products priced below Rs 16,000 fall in the low-end category while those priced between Rs 16,000 and Rs 35,000 fall in the middle-range category. Products that are priced above Rs 35,000 are stated to be in the premium category.

Mr Arora said that, in its bid to increase penetration in rural markets, LG Electronics would unleash "round-the-clock, below-the-line secondary marketing initiatives in regional languages" in the hinterland across the country.

According to him, the company, which has invested Rs 500 crore at its manufacturing facility at Greater Noida, is setting up another manufacturing facility at Pune in Maharashtra. Estimated to entail an investment of an additional Rs 500 crore, the Pune plant is slated to be commissioned later this year. Products manufactured there would cater to markets in Western India.

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