Television

We are confident of achieving a turnover of Rs 4.5 billion in the digital audio video segment by year end : Moon B Shin- LG managing director

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Electronics major LG Electronics India Ltd (LGIL) recently announced their foray and focus on digital audio video products in Bangalore. LG showcased their latest offerings in the USA - the Super Multi Blue– a product they claim as the world's first dual high definition player.

LGIL managing director and LG Group president South West Asia Moon B Shin took on the reins of Indian operations in January 2007. A core member of the LG team, Shin is traveling over 100 countries including the Middle East, Africa and India.

In an exclusive interview with Indiantelevision.com's Tarachand Wanvari Shin highlights LG's plans for India, with a special emphasis on the digital audio video segment.

Excerpts:

LGIL has a turnover of Rs 82.5 billion. Considering that the audio-video segment is expected to account for just Rs 4.5 billion, how are you planning to push your presence in this category?

I know that comparatively this is a small amount, but these are the products that we expect good growth from. In the video category, we are placed number one with 26 per cent market share, Phillips is next with 22 per cent share. In audio we are far behind, we are around 13 per cent I think there number one is Sony and number two is Phillips because our presence at the moment is very small and we set the targets and these are the areas that we have to pickup. We have to beat Sony and Phillips. We have really worked very hard, product planning and selling, marketing for the last couple of years. We have come with really very new range of products.

Phillips and Sony are strong in the cassette and audio tapes analog space. You don't seem to have launched any products in that category?

Today we launched MP3, MP4, the portable DVD player, the car audio system – from the lower end segment to the high-end, we have a really full range. That analog tape market is the rural market and is coming down. Our focus is on digital.

How do your other products stack up against competition?

Overall in India the presence is quite sound. In consumer electronics and home appliances we are around 28-29 per cent. For GSM this year we are going to sell around five million sets and we are going to reach minimum revenues of US$ 200million from this stream. AV is around US$ 100million. We expect a total revenue of Rs 95 billion or around US$ 2.2 billion, so the 300 million translates to a little less than 15 per cent of our overall revenues.

How important is India as a market for LG?

India accounts for around 6 per cent share of the global revenues. India is tremendously important for LG. By 2010, our target is to increase the India share to 10 per cent of LG's global revenues. Our top management, they really pay attention to this market. The market conditions are very good and the government is very smart, they maintain an open policy, India is a market driven economy. All these things are very positive for us. The corporate attention on this market is really huge. Maybe even more than China.

LG has a large amount of visibility as far as mass communications are concerned. What are marketing and advertisement spends?

Every year for above the line and below the line, we spend around US$ 50 million in India. Last year we invested around US$ 46-48 million, this year we plan US$ 50 million. This figure may change because every month we are growing by 20 - 25 per cent. We are on right track.

So which segment is driving the growth?

The flat panel display, GSM, computer monitors, and now AV these are driving our growth. And they are also our future growth engines. Maybe PC's too.

What is your market share in PC's?

Laptops and desktops is around 6 million, and this will grow fast, so at the moment it is very minimal, around 3 per cent. But, we are coming up with good designs and technology so the PC potential is very good. The market size of laptops is area that we have to focus on.

'Flat panel display, GSM, computer monitors, and now AV are driving our growth'

Do you have lower end laptops also?

Yes we do, but we are not going to play in the low-end segment. We are going to really play in the top of the line products.

What are your forecasts for the next year - your growth targets?

Every year we have to grow by a minimum of 20 per cent. By all means we have to grow by this percentage. By mobilizing the attention from headquarters, from market surveys and through consultants like McKenzie, maybe work together with them if we feel that we cannot meet the targets.

What is the proportion of the products that you sell here that are made in India?

Almost 90 per cent. About 10 per cent we import as finished products or complete business units (CBU). The balance 90 per cent we manufacture and export too. Some are CKD, some completely manufactured in India. The local content varies product wise. But it's between 50-70 per cent.

Any plans to expand further here in India?

Not for the next several years no. In Pune we have a large space at Ranjangaon. I would not say that we have idle capacity, we have other buildings-two as a matter of fact, one is full of operations and the second building is 20 per cent operational. So there is space. We have to invest only in the manufacturing facility. The building and everything else is ready. We have to invest only in the machinery, that we will go on within Pune.

How long have you been in India and what is your experience here?

I have been here two years. Over this time, I have travelled a lot, to almost every corner of the country, I have pretty much covered the A and B class towns. I was a real frequent flyer, I wanted to see what is taking place in every corner of India and I could observe and find that the potential in India is really good. I think India is the only country that can fight against China. India will definitely be in the forefront as far as economic growth, or the GDP growth is concerned, it will be neck to neck with China in the next 30 years or so. China is growing very fast, but India is also growing as fast. The potential is there and I am going to communicate with the headquarters about this marketplace and how it is important. My outlook for India is very positive.

Could you speak about the infrastructure in India?

I was born in a very tiny town in Korea and I have grown up there. Maybe at times the infrastructure was even worse than it is today in India. So I am really accustomed to the poor infrastructure in the rural areas. For me there's no problem at all.

What is your opinion about the skill levels, the knowledge quotient of Indians?

They are good, they are very fast learners. We used to send people to Korea and train them over there and then bring them here. We sent them to our other subsidiaries to benchmark. Their adaptation is excellent. Skill levels are good. I really appreciate them.

Any R&D work being done in India for the LG group globally?

Not much. In India we have only around seven people working on design. They have not yet contribute to the designing for LG globally. We have our own design centers all over the world, in Europe, China, in the United States. We have design centers located in every corner of the world to come up with local design and also to supply global designs.

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