Greater Noida: The Indian unit of South Korea’s LG Electronics expects to double its revenue to $9 billion by 2015, a top executive said, as rising incomes and growing urban households expand the consumer durables market in Asia’s third largest economy.
LG Electronics India Pvt Ltd, which sells consumer appliances, IT hardware and mobile devices, also plans to grow its revenue by 25% in 2011 and 2012 each, chief operating officer Yasho V. Verma told Reuters in an interview, surpassing industry-wide growth estimates.
“Last year this industry grew by about 12 to 13%, this year we are expecting it will grow by about 14% and next year around that figure,” Verma said, speaking at an LG factory on the outskirts of New Delhi.
LG India reported sales of Rs16,000 crore ($3.6 billion) in 2010, and expects to touch revenue of Rs20,000 crore ($4.5 billion) in 2011.
In addition to the manufacturing plant at Greater Noida, LG operates a second plant in western India, manufacturing GSM phones, colour televisions, air conditioners, washing machines, refrigerators and optical disc drives.
The company set up its wholly-owned Indian unit in 1997, and has grown to be among the leading brands in the country’s fast growing consumer durables market, estimated to have annual sales of Rs65,000 crore ($14.7 billion).
LG will invest around Rs800 crore in 2011 on upgrading and ramping up capacity. The company would also decide “very soon” on whether to build additional plants, Verma said.
He also said he expected exports to grow to about 12 to 13% of total revenue in the next two to three years, up from 7 to 8% now.
The firm currently exports to countries in the Middle East, Africa, southeast Asia and Europe from India.
LG counts Samsung Electronics , Dutch consumer electronics major Philips and appliances maker Whirlpool Corp among its competitors in India.
Inflation, Cost Worries
The government has struggled with high inflation driven by rising oil, food and commodity prices, amid rising concerns that this would impact demand and economic growth.
India’s wholesale price index rose an annual 8.3% in February on higher fuel and manufactured product prices. But Verma said he did not see any impact on sales.
“As per present macro-economic parameters, the effect on the consumer durables will not be much,” he said.
While the Indian market has steadily expanded, consumer durable makers have been battling mounting raw material costs in recent months due to rising metal and oil prices globally.
Several consumer electronics firms have recently raised prices --especially for air conditioners and refrigerators -- by about 3 to 5%, citing high input costs.
LG India expects to raise prices if costs go up further, but Verma said the timing or extent had not been finalised.
“If raw material costs will go up, we’ll have to pass it on. There’s no other way we can absorb it,” Verma said.
“The trends are showing that they are going to go up, but at what rate and at what percentage it’s difficult to predict now.”