Friday, June 19, 2009: LG Electronics India Pvt Ltd (LG), a wholly owned subsidiary of LG Electronics of South Korea, is one of the most formidable brands in the consumer electronics, home appliances, IT hardware and mobile communications space. Recently, LG launched LED projectors, digital signage and network monitors in Bengaluru. On the occasion, Moon B Shin, MD, LG, spoke to Jesus Milton Rousseau S of Electronics Bazaar about LG India’s research and development plans, the company’s component sourcing endeavours and its impressive manufacturing facilities.
EB: Where does LG source its components from? What are the components that you require from the Indian vendors?
LG India sources more than 50 per cent of its components from the Indian players. We have a strong vendor base in India, which we are further strengthening to meet our long term objectives.
LG needs an array of components for its different product lineups. For our appliance business, we require compressors, sheet metal and motors. For electronic products, we need slim colour picture tubes, semiconductors, wire wound and moulding components.
EB: How would you rate India as a sourcing destination?
There is still a lot to be achieved in India, in terms of improving supply chain efficiencies, like vendor quality, enterprise resource planning structure and just in time supply.
EB: How do you choose and appoint vendors?
LG has a well defined process for vendor selection, which includes assessing the vendor’s capability to meet LG’s requirements, in terms of quality, cost and delivery. Also, we have a dedicated team for vendor selection and anybody who is applying has to fill a form based on quality, cost and delivery parameters. In the later stage of selection, the purchase and quality team visits the company for further line of action.
EB: Tell us about the manufacturing plants you have in India. What do you manufacture in these facilities?
Currently, we have one manufacturing unit each in Greater Noida and Ranjangaon in Pune. The unit in Greater Noida is one of the most eco-friendly among all of LG’s other manufacturing plants across the world and has a manufacturing production capacity of 1.2 million monitors annually. In this plant, we produce washing machines, refrigerators, air conditioners, colour televisions and LCD monitors.
In the Pune facility, we make optical disk drives, colour televisions, LCD monitors, refrigerators, washing machines, air conditioners and GSM mobiles. This establishment is India’s first mobile phone manufacturing unit and also Asia’s largest optical disc drive manufacturing plant. It has an annual production capacity of 0.5 million monitors and 1 million washing machines.
EB: Do you plan to erect more manufacturing plants in India?
As we continue to invest in manufacturing, there is scope for expansion in our Pune unit within the next three years. By 2012, we may have to find another extension. We will contemplate setting up another unit around that time but it all depends on market conditions and demand.
EB: Do you think India has an advantage over China for manufacturing hardware?
India is the only country that can compete with China in that respect. India’s massive market potential, skilled manpower, availability of raw materials and location advantage give it a competitive edge over any country in the world.
EB: Does LG sell through company-owned showrooms or channel partners?
We have a regional distribution model since 2002. LG is one of the few companies to have posted sustained growth and success with the regional distribution model. The regional distributors buy directly from LG and re-distribute to resellers and system assemblers. However, in the home entertainment and home appliances category, besides the regional distribution model, we also cater to direct dealers and brand shops.
EB: What was LG’s turnover in the last fiscal and what is its target for the year 2009?
Last year, we achieved a turnover of Rs 100,730 million. This year, we hope to strike the Rs 130,000-million mark.
EB: How much have you invested in R&D in India and what future plans do you have regarding R&D in the country?
Over the last five years, we have invested close to Rs 2,000 million on R&D in India. From this year onwards, we intend to double that sum to Rs 4,000 million over the next three years. Till now, our Indian R&D was focusing on development of products for the Indian consumer market. It was also developing some products for the Middle Eastern and African markets. In future, we intend to establish a strong R&D base, which would contribute to our global operations as well. Our objective is to infuse our products with an Indian flavour and design and make them more India specific.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
