LG India is stepping into the appliance rental business as part of its strategy to diversify and expand. The initiative is aimed at premium consumers and was introduced through a soft launch at select LG-exclusive stores. The company plans to extend this service across its entire sales network, offering a subscription-based model to attract and retain customers.
Being India’s largest home appliance manufacturer, LG India leads the market in products like refrigerators, washing machines, and microwave ovens. With this rental program, the company seeks to enhance customer satisfaction while adding a new revenue stream to its portfolio.
Plans for a Public Offering
In preparation for its Initial Public Offering (IPO), LG India has filed a draft red herring prospectus (DRHP). The IPO, expected to raise around Rs 15,000 crore, will involve the sale of 15% of the promoter’s equity. This makes it one of the largest IPOs in India, aiming to strengthen the company’s financial position and support its future plans.
Despite its ambitious goals, LG India faces potential competition from its South Korean parent company, LG Electronics Inc. The DRHP indicates that the absence of exclusivity agreements could lead to LG Electronics Inc. launching competing businesses in India.
The document also mentioned Hi-M Solutek India Pvt Ltd, a subsidiary of LG Electronics Inc., which currently provides services for LG’s commercial air conditioners. However, the prospectus raised concerns about the possibility of Hi-M Solutek entering new markets that may compete with LG India’s offerings.
Manufacturing and Localization
To meet rising consumer demand, LG India is investing Rs 5,000 crore in building a third manufacturing facility in Andhra Pradesh. This facility will complement the existing plants in Greater Noida and Pune.
The company is also focusing on increasing the use of locally sourced components. The share of raw materials sourced domestically rose from 45% in 2022 to 58.3% by mid-2024. This shift not only reduces costs but also ensures faster delivery of products and competitive pricing, giving LG India an edge in the market.
Market Leadership
The appliance rental program and manufacturing expansion highlight LG India’s commitment to maintaining its market leadership. By diversifying its offerings and focusing on customer satisfaction, the company aims to stay ahead in the competitive home appliance market.
As LG India balances innovation with growth, its plans for an IPO and strategic investments show a clear path toward strengthening its position as a market leader.
