LG Electronics has a ‘worry’ in India, and it is called ‘LG” – Times of India

LG Electronics India is preparing for a Rs 15,000 crore IPO. LG’s IPO is likely to be India’s fifth-largest IPO after Life Insurance Corporation, Hyundai Motor, Paytm and Coal India. And among the concerns that LG has listed in its draft prospectus reportedly includes the company’s South Korean parent company LG.
According to a report in Economic Times, LG Electronics India has expressed concerns about potential future competition from its South Korean parent company. In its draft prospectus, the Indian subsidiary highlighted the lack of an exclusivity agreement, stating that while the parent currently doesn’t compete in India, it reserves the right to do so, which could create conflicts of interest and negatively impact LG India‘s business.

LG India’s ‘big competition concern’

This concern extends to Hi-M Solutek India, an indirect, wholly-owned subsidiary specializing in LG commercial air conditioner service and maintenance. Although currently focused on LG products, there’s no guarantee it won’t expand to serve competitors or directly compete with LG India in the future.
“While our promoter is currently not engaged in businesses that compete with ours in India, the promoter may in the future engage in businesses that compete with ours because we do not have any exclusivity arrangement with them,” the company said in the draft prospectus. “This may give rise to conflicts of interest, which may adversely affect our business, financial condition and results of operations.”
“Currently, Hi-M Solutek India only provides services for our products. However, we do not have an exclusive contractual arrangement with them and there is no assurance that Hi-M Solutek India will not expand their business in the future to compete with ours or to provide services for our competitors,” LG India said.
“We plan to roll this out across our distribution network, which we believe will enable us to offer differentiated services, enhance consumer satisfaction and drive sales to consumers,” the company said.
The draft prospectus also says that LG India plans to build a new factory in Andhra Pradesh — its third in the country. LG India is also scaling up component sourcing from its 280 local suppliers with the figure rising from 45% in 2022 to 58.3% in June this year.