LG India Launches Appliance Rental Business, Plans IPO Amid Strategic Expansions To support growing demand, LG India is set to construct a third manufacturing facility in Andhra Pradesh, with an investment of INR 5,000 crore.
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In a move to diversify revenue streams, LG Electronics India has ventured into appliance rentals, a step that could redefine its market presence. The company detailed its new strategy in a draft red herring prospectus (DRHP) filed ahead of its much-anticipated Initial Public Offering (IPO). LG India aims to leverage subscription-based appliance rentals to enhance customer satisfaction, broaden its distribution network, and drive sales.
The rental program, targeting premium consumers, was soft-launched last month at select exclusive LG stores. The company intends to scale this initiative across all sales channels, betting on its position as India's largest home appliance manufacturer, with leadership in refrigerators, washing machines, and microwave ovens.
"We plan to roll this out across our distribution network, enabling differentiated services that enhance consumer satisfaction," the company stated in its filing.
While LG India eyes growth, potential competition from its South Korean parent company, LG Electronics Inc., looms on the horizon. The DRHP revealed that LG Electronics Inc. could launch businesses in India that may compete directly with LG India due to the absence of exclusivity agreements.
The document also highlighted the operations of Hi-M Solutek India Pvt Ltd, a wholly owned subsidiary of LG Electronics Inc., which currently provides specialized services for LG's commercial air conditioners. Although Hi-M Solutek focuses on LG products, the DRHP raised concerns about possible future expansions into competing areas.
To support growing demand, LG India is set to construct a third manufacturing facility in Andhra Pradesh, with an investment of INR 5,000 crore. This complements its existing facilities in Greater Noida and Pune. The company is also ramping up localization of components. The share of raw materials sourced from domestic suppliers increased from 45 per cent in 2022 to 58.3 per cent as of mid-2024. This shift reduces inventory costs, enabling competitive pricing and quicker response to consumer demand.
The IPO aims to raise approximately INR 15,000 crore by selling 15 per cent of the promoter's equity, positioning it among India's top five largest public offerings. As LG India balances strategic innovations with expansion and competition concerns, the company's rental program and manufacturing investments underscore its commitment to strengthening its market leadership.
