LG's Gandhidham plant to start by June

LG Electronics India Pvt Ltd will begin production at its newly constructed manufacturing facility at Gandhidham in Kutch district by June 2004.

Set up with an investment of Rs 30 crore, the unit at Gandhidham will produce colour televisions and washing machines in the initial phase, after which the facility will be expanded to manufacture air conditioners and microwave ovens as well.

Kwang-Ro Kim, managing director of LG Electronics India said the structure has been completed and machines and other equipment have been ordered. Trial production and the subsequent full-fledged production will begin within the next two months.

"The Kutch manufacturing facility will have a capacity of two lakh colour televisions and 50,000 washing machines," Kim said.

He said the facility will support the mother plant at Greater Noida, which accounts for about 70 per cent of the company's production of the entire range of products.

"By 2006, LG will begin manufacturing air conditioners and microwave ovens at Kutch too," Kwang-Ro Kim said. Kim said half of the products manufactured at the Gandhidham plant will be sold in Gujarat, thus reducing transportation and other costs considerably. The remaining half will be sold in states near Gujarat.

Both the central and the state governments have announced a tax holiday on capital investments for units set up in the earthquake-ravaged Kutch district. LG Electronics will save Rs 20 crore on central excise and Rs 30 crore on sales tax until 2009 as the tax holiday is valid for five years from commissioning of a unit.

The company officials said subsequently, printed circuit boards, mouldings and packing materials for colour televisions will also be manufactured at the Gandhidham facility.

"However, we will continue to source 30 per cent of materials, mainly spares and other accessories, from third-party manufacturers," Kim said.

The company targets a revenue of Rs 7,000 crore by the end of the current year. LG has so far invested Rs 750 crore in the country and plans to invest Rs 500 crore more over the next three years.

"We are planning to set up manufacturing facilities at Nasik, Baddi in Himachal Pradesh, Dehradun, Mohali, Bhopal and a few other places in the next few years," Kim said.

Kim said Gujarat has emerged as one of the most important markets for the company. It has two branches, many sub offices and over 400 dealerships in the state. The company plans to expand further.

"We are in the process of increasing our network considerably in the state," he said.

With the manufacturing facility ready to go on stream from June, the company's growth will receive a further boost in Gujarat, he said.