The Hindu Business Line : LG plans `no-frills' ACs

Mr Salil Kapoor, National Head, LG Electronics (Room ACs Division), at the launch of the high-end Whisen range of air-conditioners in the Capital on Wednesday. — Kamal Narang

New Delhi , March 10

THE next three-five years may see a budget range of air-conditioners (ACs) emerging from the stable of LG Electronics India Pvt Ltd (LGEIL).

In a bid to tap the varied categories of consumers, the company is seriously looking at rolling out a sub-Rs 10,000 range of ACs that would be affordable to the common man.

Speaking at the launch of its premium range of ACs on Wednesday, Mr Salil Kapoor, National Head (Room Air-conditioner Division), LGEIL, said, "The company would like to unfold the sub-Rs 10,000 range in 1- and 1.5-tonne capacity. These would be ACs with no frills."

Talking about the high-end Whisen range, Mr Kapoor said, "It has been developed from the realisation that the market is not homogeneous and that every consumer has a different need that has to be catered to."

The Whisen range will be available in 1-, 1.5-, 2- and 3-tonne capacities at prices ranging between Rs 23,000 and Rs 66,000.

On whether the category would see any price hike, Mr Kapoor said, "The new launches have factored in the price hike. For the future, if the inputs cost see an increase the company would review the prices." This increase could be between 4 and 5 per cent. "Part of the price hike will be taken up by the high-end products, thus taking the pressure off the lower-end products," he said.

According to Mr Kapoor, the Whisen range is expected to contribute 10 per cent to the overall AC sales; by the end of the season, the company expects to see it contributing close to 22-25 per cent. "Our future projection for this category is close to 35 per cent of the overall AC sales," he said.

Revealing the marketing strategy for this range, Mr Kapoor said, "Advertisements would be rolled out on niche television channels such as CNBC. The communication would be image-led, and the total ad spend is around Rs 5 crore."

This year, the company proposes to sell 40,000 units of this range. With Whisen, it is targeting premium or high-end consumers while the LG health zone range targets the middle segment.

In fact, the company proposes to introduce Whisen as a sub-brand, something that it has not done till now in any other category. "In the long run, we would like to sell Whisen as an independent brand from the LG stable," he said.

The company's AC division recorded sales of 2.8 lakh units in 2003 compared with 2 lakh units sold during the previous year, thus recording a growth of 50 per cent. In value terms, its turnover stands at Rs 500 crore for the year, translating into a market share of 30 per cent (as per the Francis Kanoi report of April 2003).

In the split AC category, the company has witnessed a 123 per cent unit growth, selling 70,000 units in 2003 compared with 31,000 units during the previous year.

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