LG Electronics India has announced plans to establish a new manufacturing facility in Andhra Pradesh as part of its strategy to expand production capacity. The facility will complement the company’s existing manufacturing units in Greater Noida and Pune, which have a combined capacity of approximately 1.4 crore products annually.
The company aims to enhance its localization efforts by increasing the sourcing of raw materials from the domestic market, as noted in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI). However, LG Electronics India continues to rely on imports, particularly for components in its premium product range, with key supplies sourced from countries like China, South Korea, and Japan.
In the first quarter of FY25, the company’s top five and top ten suppliers accounted for 21.45% and 31.44% of its raw material procurement, respectively. LG acknowledged that any disruption in its supply chain could affect its operations significantly.
The company also reported paying ₹323.2 crore in royalties to its South Korean parent company in FY24. Additionally, LG Electronics India relies on affiliated entities for export orders, which underscores its dependency on its parent firm for innovation, design, and technology support.
The new Andhra Pradesh facility is being developed to meet rising consumer demand, supported by financial incentives from the state government. LG Electronics India has also filed for an initial public offering (IPO), with its South Korean promoter planning to sell a 15% stake, expected to raise approximately ₹15,000 crore. The IPO will be an offer for sale (OFS), with proceeds going to the parent company and no new capital raised for the Indian subsidiary.
If the IPO proceeds as planned, LG Electronics India will become the second South Korean company to be listed on Indian stock exchanges after Hyundai Motors India.