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It
was a tough year for LG India as the company's revenue took a beating by
around 17 percent. With CDMA additions not in sync with GSM, the company was
badly affected on the revenue front. Total sales for LG India in FY 2004—05
stood at Rs 2,314 crore, in comparison to the towering revenue of Rs 2,797 crore
in FY 2003—04.Â
Majority of LG's revenue still comes from Reliance Infocomm but in FY 2004—05,
the company made inroads into the Tata account too.
Pretty strong in CDMA, LG India is way above Nokia with market share of
around 59 percent. But things took a beating in the overall handset category.
With CDMA market not doing well in terms of number of additions, LG slipped to
second position in the overall category with a market share of 11.8 percent,
slightly higher than its next competitor Samsung.
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The company is inching forward in the GSM space and netted a revenue of Rs
200 crore in the past financial year. Focused in the color and camera phones
category, the company is focusing its product right from low end to high end and
is pretty aggressive. In terms of launches, the company launched almost one to
two models every month in the last six months. Its best-selling model in GSM
category was G1600.
On the FWT front, the company has a market share of around 79 percent and has
done pretty well both with the incumbent as well as the private operators.
LG has a unique distribution model, different from what its competitors are
practising. The company practices direct distribution model as it has a direct
presence through 300 authorized service centers. Plans are also to increase them
to 450 by June 2005. The company is very active on customer care and has
introduced 'One Hour Service,' which is helpful in resolving customer
complaints in an hour's time.
In order to cash in on the 3G bandwagon, the company has launched four models
in the country and is eagerly waiting for carriers to start 3G operations.
The company is eyeing a total revenue of $10 billion in 2010, which will
constitute around 10 percent of its total worldwide turnover. To this pie,
mobile phones will contribute the maximum with $3.5 billion, around 35 percent
of the overall revenue.
The company started its manufacturing facility at Ranjangaon near Pune in
2005 and started pilot production for two models of GSM phones and plans are
being firmed up to close the year with total sales of two million handsets. On
the handsets front, the company is planning to manufacture 20 million handsets
by 2010 of which 50 percent will go towards exports.
A strong believer in customization, LG is putting a lot of stress on R&D
and is looking at complete software and hardware integrations from its India
center.
"We would showcase the power of LG in 3G"
How do you see the Indian mobile market growing?
The Indian government is looking at a target of 250 million lines in a few
years and a large chunk of this will come from mobile subscriptions. Wireless
subscriptions have already exceeded wireline. So, I am optimistic that mobile
sector will further grow. We foresee a demand for more smartphones here.
Presently, India has very low tele-density but the potential is huge, both in
terms of sales and manufacturing. The availability of skilled manpower also
makes it one of the best countries for manufacturing of mobile phones.
What is LG's telecom strategy in India on the handset front?
We have set up a mobile phone manufacturing plant here and this will give us
an edge over others in terms of quality, production, and market share. We are
investing close to two to three percent of our turnover towards R&D. And we
hope to establish India as an R&D hub for consumer electronics, home
appliances, and GSM phones.
Having done well in the CDMA space, what are your plans in the GSM
category?
LG has always been a frontrunner as far as technology is concerned. When we
started GSM operations, the company was already present in the CDMA space and
the customers had already gone through their share of exposure to brands in
mobile phone category. I feel our presence both in GSM and CDMA showcases our
strength in mobility.
Presently, all LG GSM handsets have color screens and GPRS feature,
regardless of price. We've also launched several camera phones and they are
all popular with customers.
LG's forté is color and camera phones. How do you plan to be number one
in this segment?
LG sold 500,000 GSM units last year. With the domestic market for GSM phones
growing, we plan to grab a large slice of the market by manufacturing locally
instead of importing. It gives the advantage of reducing time to market for new
models and addressing consumer needs ahead of competition.
How many handsets are you manufacturing at Ranjangaon?
Ranjangaon has started pilot production for two GSM models. Plans are to close
the year with two million handsets. We are planning 20 million mobile phones by
2010, of which half will be exported.
What is LG India doing in software development? How big is the mobile
phone R&D team?
The Ranjangaon plant houses LG's R&D centre for GSM. It will have a
200-member team to develop software for handsets. Later the R&D team would
also start work on hardware integration.
Why hasn't LG launched high-end GSM phones in India?
Currently, we are not into high-end phones as we are waiting for the 3G
implementation. The future is smartphones and we are also focusing on them.
What is LG's global market share in 3G handsets? What is your strategy
for India?
LG had 54 percent in Europe, West Asia, and Africa in 3Q 2004. In India we are
waiting for the government to clear spectrum issues. After that we have got huge
plans for 3G and we would showcase the power of LG in 3G.