LG Vs LG? In the draft of its planned IPO of Rs 150 billion, LG expresses concerns about future competition from its South Korean parent and subsidiary, Hi-M Solutek India.
LG Electronics India sees its South Korean parent as its direct rival! The Indian subsidiary of the South Korean tech giant LG Electronics is preparing for an initial public offering (IPO) valued at Rs 150 billion, which, according to the Times of India, is set to be one of India’s largest, potentially becoming the fifth biggest IPO after Life Insurance Corporation, Hyundai Motor, Paytm, and Coal India.
However, the company’s draft prospectus reveals concerns regarding potential competition from its South Korean parent, LG Electronics, and its subsidiary, Hi-M Solutek India.
LG India’s prospectus highlighted the absence of an exclusivity agreement with its parent company. While LG Electronics does not currently operate in the Indian market in competition with LG India, the document indicates that this could change in the future. The lack of a binding agreement could lead to conflicts of interest, adversely affecting LG India’s business operations and financial results.
Additionally, the prospectus raised concerns over Hi-M Solutek India, a subsidiary that currently provides services exclusively for LG products. However, there is no guarantee that this subsidiary will not expand its operations to serve competitors or directly compete with LG India.
Despite these challenges, LG India is focused on growth, planning the construction of a new factory in Andhra Pradesh—its third in the country—and increasing its reliance on local suppliers. As of June 2024, sourcing from local suppliers has grown to 58.3%, up from 45% in 2022.
