LG to invest $30m to bolster a-c business

Consumer durables major LG Electronics India today announced that it would invest $30 million dollar over the next five years to beef up its airconditioner (AC) business.

The investments would go towards adding two more AC manufacturing lines and increased research and devopment activities.

"By end of the current year, the new manufacturing plant in Pune will start producing airconditioners with one manufacturing line targeting the new export markets,"said MS Vasu, head (AC R&D), LG India.

Half of the proposed $30 million investment would be for the new manufacturing lines and the rest for R&D applications.

According to LG, the new initiatives would help the company take its marketshare to more than 50 per cent by 2007. The latest ORG-GfK figures said that with a marketshare of nearly 46 per cent LG was the largest player in the one million units a year AC market. Its nearest rivals Samsung and Voltas had a marketshare of 13.9 per cent and 9.9 per cent respectively.

"The company is looking to achieve sales of Rs 2,000 crore by 2007. Last year, LG had a turnover of 750 crore from its AC business," said Ajai Bajaj, product group head (ACs).

The company said that it plans to shift its export oriented AC production to the PUne plant given its the tax benefits and proximity to the ports. India serves as the export for several of LG's markets in Africa and MIddle East.

The company today also launched two new ACs under its Whisen range which offers high-end products.

The company expects the Whisen range to give it better margins in a market characterised by cut-throat price competition.

"This range would contribute 20 per cent of our overall AC sales. It is also the fastest growing product range increasing at nearly 38 per cent every year when the market growth is 20-25 per cent," added Bajaj.