LG Electronics India bets on exports, B2B products for margin boost

Kolkata: LG Electronics India is banking on exports and business-to-business (B2B) products as the next growth engines, as its Korean parent seeks to turn India into a global manufacturing hub producing both mass-market and premium products for markets worldwide, senior executives said.

The country's largest home appliance maker expects focus on these two areas to help expand margins at a time when profitability is under pressure from rising raw material costs, rupee depreciation and geopolitical risks.

"Our vision is to make India a global manufacturing hub. The best way to protect against geopolitical risk is to add geographical diversification so that we are not dependent on any specific region," LG Electronics India chief accounting officer Atul Khanna said.

The company's leadership was interacting with shareholders on Friday at its first annual general meeting since going public, held virtually.

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Exports contributed 6% to LG India's total sales last fiscal year. Khanna said the company has significantly expanded its export footprint in recent months, reaching 50 countries across Southeast Asia, the Middle East, Africa and some developed markets. The portfolio includes premium products such as side-by-side refrigerators and large-capacity front-load washing machines.

LG Electronics India co-chief of marketing and sales Sanjay Chitkara said the company plans to export its recently launched Essential series of mass-market products to 22 countries by the end of this calendar year.

The company is also putting greater emphasis on its B2B business, where it is looking to gain market share in system air conditioners, commercial displays, IT products and enterprise solutions. "This is a growth engine and has relatively better margins," Chitkara said.

LG has a value leadership market position across several consumer durables categories, including air conditioners, refrigerators and washing machines.

The company's ₹5,000 crore manufacturing plant at Sri City in Andhra Pradesh is also expected to begin the first phase of production by the end of this year. The facility will initially cater to southern markets before progressively focusing on exports. It will manufacture air conditioners and compressors, refrigerators and washing machines. The project is funded completely through internal accruals, said Khanna.