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LG denies rumors, to focus on expanding reach, product line

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CIOL Bureau
New Update

Asim Raina & Balaka Baruah Aggarwal

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NEW DELHI: LG Electronics India Ltd. has denied market rumors about closing

its IT business in the country, attributing the rumors as mischief by its

competitors who are seeking to gain marketshare at its expense.

K R Kim, MD, LG India, said, "These are absolute rubbish and a pack of

lies, and is the handiwork of our competitors. We are very focused about the IT

business and have recently invested $10 million in setting up our assembly lines

for monitors at NOIDA."

In fact, the IT division of LG Electronics is buzzing with activity these

days. There is an agenda of expansion, both in terms of reach and product

portfolio. The company has appointed four new regional distributors in the last

three months -- Micromax for UP and Uttaranchal, Salora for north, Jupiter for

the east and Wellwin for the south. This is in addition to its four existing

national distributors -- Aditya Infotech, ACI Computers, Priya International and

Compuage Infocom.

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"The logic behind appointing regional distributors is to reach out to

people in the C and D class cities. National distributors typically focus on

high volume areas and in the process smaller cities with immense potential could

end up being neglected," pointed out N S Bindra, GM (sales and marketing) -

IT Products, LG India.

New appointments are therefore not expected to eat into the business of

existing distributors since it is aimed at targeting those markets which were

not being served properly. More appointments are on the anvil depending upon the

market dynamics.

By January, LG is also planning to flood the market with an array of new

products including DVD RAMs (which would be the only available brand in the

market), combo drives, and will be revamping its high-end monitor range. The 17,

19 and 21-inch monitors would be available in TFT and the 19-inch monitors would

be elevated to the Flatron model. LG is also ready to launch its notebooks

"as soon as the market conditions seem right". Officials estimate that

the main product category would continue to be monitors contributing as much as

65 per cent of its business.

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But the trump card which LG is hoping to cash in on is its OEM strategy. It

started local manufacturing in June this year and already has HCL as one of its

clients. It is in the process of talking to Wipro and Zenith also. The plant has

the potential to manufacture 3.5 lakh units annually with its current output

standing at around 25,000 units per month.

With these initiatives in place, LG hopes to ramp up its growth rate in

monitors from 40 per cent in calendar 2001 to 70 per cent in calendar 2002. The

most significant thrust to its growth will come from the OEM foray.

Defending the high growth estimate as being "very reasonable",

Bindra said, "Our strategy has been to focus on local manufacturing which

would help bring down costs. We have also worked on improving our supply chain

management and inventory which is all expected to add to our bottomline."

He estimates LG's current marketshare to be in the region of 16-17 per cent and

is targeting to sell around six lakh monitors next year.

With the company's assembly line in place now, the next focus would be the

roll out of its new product range.

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