LG to begin plasma, LCD TV assembly

In a bid to cut losses in the highly competitive flat panel display televisions segment, market leader LG Electronics India plans to set up an assembly unit for plasma and LCD televisions in India.

Consumer electronics companies across the board are bleeding as competition is driving constant undercutting of prices, company executives said.

"At the moment, supply is larger than demand. Hence, players in the flat panel display market are losing money. We will set up an assembly unit for plasma and LCD televisions at our plant with an investment of $100 million spread over 5 years," said Moon B Shin, deputy managing director, LGEIL.

At present, completely built television imports attract 20 per cent duty and executives admitted that LG was losing about 5-6 per cent on every set sold in this category.

Replying to queries whether LG would eventually begin complete production of flat panel display televisions in India, Shin said the market size should touch at least 1 million units to justify the investment for a production unit.

He added that in the likelihood of this happening over the next 3-4 years, the company might consider a production facility in its proposed third plant here.

The plant is expected to come up in the southern region.

Currently, the Indian market of flat panel televisions is roughly around 1.3 lakh. But demand is expected to jump to more than 5 lakh units in 2007.

The assembly unit is expected to come up in the first half of 2007 at the company's existing plant at Ranjangaon near Pune with an initial capacity of 100,000 units per annum.

The local content would initially be around 20 per cent, which would then be ramped up with time to further cut costs.

Prices in the flat panel display segment have fallen by about 35 per cent this year and the industry expects this to continue for a while longer. Fellow South Korean consumer electronics producer Samsung India also began assembling plasma and LCD televisions in June 2006.

"Prices have dropped by 20 per cent in just the past 3-4 months and going forward prices should not drop by more than 15-20 per cent in the next 3 months but after that the market should show signs of maturing," said Prashant K Das, product group head (Flat Panel Display), adding that right now it was impossible to predict with any accuracy how long the price cuts would last.

LG has also drawn up ambitious plans to grow eight fold in the flat panel display segment to Rs 1,140 crore by 2007 from Rs 150 crore in 2006.

The company sold Rs 52 crore worth of plasma and LCD televisions in 2005.

While the cathode ray television market is growing by 9 per cent every year, the plasma television market is projected to grow at 400 per cent CAGR and the LCD television segment by 463 per cent CAGR by 2009.