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Despite a strong up-turn during the festive season, the biggest consumer durables company in India has fallen short of its revised turnover target for this year.
LG, which had to bring down its ambitious target of Rs 9,000 crore (Rs 90 billion) to Rs 8,000 crore (Rs 80 billion) only three months ago due to "natural calamities", was able to clock around Rs 7,500 crore (Rs 75 billion) this year. This comes despite a reported over-shoot of 31 per cent over its own target during the festival season.
"Though we exceeded our targets during the September to November festival season, the gains were not enough to completely mitigate the results of the tsunami, the floods and the confusion over the implementation of VAT," said Girish Bapat, vice president (marketing).
The company, which had set a growth target of 35 per cent at the beginning of the year and later revised it to 23, has had to be content with just 15 per cent growth this year.
"We expect to reach the Rs 9,000 crore mark only by the next year-end," said another official at the wholly owned subsidiary of the $ 33-billion Korean company.
As expected, most of the company's consumer electronics division turned out to be the biggest non-performer this year, with its overall contribution going down from 43 per cent last year to 41 in 2005.
LG has around 28 per cent share in the ill-performing Indian colour TV market, which product also contributes most of its revenues from the consumer electronics segment.
The biggest gain in revenues came from the home-appliances segment, where the company has between 30 to 40 per cent shares in various product categories.
Revenues increased by around 18 per cent here compared to the over-all 15 per cent, despite being the market-leader in all the segments. In 2005, around 43 per cent of the company revenues came from this unit against 42 per cent last year.
The IT-products division also increased its share, from 11 per cent last year to 12 per cent in this one, while the share of the GSM unit was reported as static at around 3 per cent. The company also makes capital investments totalling Rs 166 crore (Rs 1.66 billion) in 2005, officials said.
Led by strong colour-TV sales, LG's festival-season turnover this year saw a jump of 75 per cent this year compared to the last. Against an actual turnover of Rs 1200 crores (Rs 12 billion) during the two-and-a-half month festival season during last year, the company did a total of Rs 2100 crores (Rs 21 billion) worth of business during 2005. This year's figures have beaten the company's own target of Rs 1,600 crores (Rs 16 billion) by around 31 per cent.
The company sold a record 475,000 TVs during the month of October alone, up by around 44 per cent from last year's 330,000 units.
Colour TV sales, without including high-end panel televisions, accounted for Rs 392 crores (Rs 3.92 billion) during the month alone.
The company attributed the higher rate of revenue increase in the TV segment, compared to volume figures, to a shift by consumers to higher-end models.
"For the first time, flat TVs overtook the conventional TVs this year. We sold 273,000 units of flat TVs against 2.02 units of normal TV's during the October this year," said Girish Rao, vice president (sales), LGEIL.