Asim Raina & Balaka Baruah Aggarwal
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.
"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.
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.