Consumer electronics major LG expects exports to contribute more than 10% of its overall revenue within the next two financial years, as it looks to expand its presence in overseas markets, said Sanjay Chitkara, Director and Co-Chief Sales and Marketing.
Exports currently account for 6-7% of the company’s revenue, amounting to around $150 million. The company expects the contribution to cross the double-digit mark within the next two financial years.
“Our exports are growing very fast. Currently, exports contribute around 6% to 7% of our overall revenue, amounting to approximately US$150 million. Our objective is to take exports to a double-digit contribution very soon,” said Chitkara.
“It is difficult to give an exact timeline, but based on the way we are growing, we expect to cross double-digit contribution within the next two financial years,” he added.
The company currently exports its Essential series to around 22 countries and plans to export its newly launched range of semi-automatic washing machines to 10 countries, primarily in Africa and Asia.
On rising component costs, which could push up prices of LG appliances, Chitkara said price increases were inevitable across industries, including automobiles and consumer durables. However, he said LG would take a category-specific approach rather than implement an across-the-board price increase.
“We are closely observing input costs and currency movements. Any decision will also depend on the affordability of our products, our profitability situation and the competitive environment. These three factors are very important. We will take decisions on a segment- or category-specific basis rather than making an overall price increase across the board,” he added.
The company, which is completing 29 years of operations in India this month, currently operates two manufacturing plants — one in Greater Noida, Uttar Pradesh, established in 1997, and another in Pune, Maharashtra, set up in 2004. Construction of its third plant at Sri City in Andhra Pradesh began in May last year.
LG said its localisation level in India is around 55%, while work on its third manufacturing facility is progressing as planned. The first production line at the facility is expected to begin operations in December this year, initially for air conditioners, followed by AC compressor manufacturing from January.
The company plans to begin AC production first as the season starts early in southern states, particularly Kerala and Tamil Nadu. The new facility will primarily cater to the southern market, which contributes around 38% of LG’s business and is growing rapidly.
The facility is expected to help the company reduce logistics costs and improve time to market, besides supporting its future growth.
On festive season sales, LG said it had started strongly with Onam, recording double-digit growth. The company expects the festive season to remain favourable, partly because Diwali falls in November this year compared with October last year, giving consumers and manufacturers a longer festive window.
The executive said last year’s uncertainty over the implementation of GST had also affected consumer purchases. GST changes were announced on August 15 and implemented on September 22, creating uncertainty among consumers even in product categories that were not directly affected by the changes.