LG Electronics India Ltd (LGEIL) would offload 25 per cent of its equity to the public next year when it plans to get listed on the Bombay Stock Exchange.
Ajay Kapila, vice-president, sales and marketing, said that by December 2000, LGEIL should complete three years of profitable operations in India, and would be eligible for an initial public offering (IPO). "We hope to post good profits this year as well, and would go public next year," he said. According to Kapila, it would take four to six months to get the Securities and Exchange Board of India (Sebi) approval and by mid-2001, the company can come out with an IPO. LGEIL posted a profit-after-tax of Rs 40 crore in calendar 1999.
The company's paid-up capital, as of today, is around Rs 40 crore. So the company is likely to come out with a Rs 10 crore issue. LGEIL has also initiated a study on the issue, Kapila said.
Meanwhile, LGEIL yesterday announced that it would hive off its interactive Business-to-Consumers (B2C) web portal www.lgezbuy.com into a separate entity with an objective of getting it listed on the Bombay Stock Exchange by 2003.
A study has been commissioned by the company to find out the scope and business strategy for the proposed company which is expected to focus on evaluating business models and flow of operations.
To generate revenue on its own, LGEIL said that lgezbuy.com plans to turn into a full-fledged e-commerce mall wherein products other than that of LG can be purchased. Banner advertisements, commission from the parent company are other modes of revenue generation that the company is looking to. "Eventually, we are looking at becoming a Business-to-Business (B2B) portal," Kapila said.
Launched in March this year, the website has generated Rs 1-crore of sales from 100,000 hits till date and is estimated to generate Rs 10 crore by the year-end. The website features LG's exclusive product range, host of useful information, best buying propositions and special relationship programs with its customers.
"This year we have budgeted to spend $1.5 million in promoting lgezbuy.com, of which, 30 per cent (or approximately Rs 2 crore) would be used this month for promotions and advertisements such as LG's online Birthday Bash _ party@lgezbuy.com _ to coincide with LG's completion of three years in India." Ajay Kapila, vice-president, sales & marketing, LGEIL said.
Kapila claims as of today, the company is able to supply orders placed at lgezbuy.com within 24 hours. The company has engaged 75 of its dealers in this task and plans to involve 200 dealers in the Internet venture for supply of goods by the year-end.
LG is also offering finance options to consumers at lgezbuy.com through an arrangement with Countrywide GE. According to Kapila, loan approvals are being given on-line. The company has also tied up with Citibank for the purchase LG product. As of today, 30 per cent of LG's sales via this website is for digital products such as an MP3 player, Flatron TV, Plasma ACs, Digital TV and PC notebook which are not available at most LG dealership. These products are being imported from South Korea.
The company has also entered into a tie up with e-commerce service providers _ including Rediff.com and Hungama.com _ to give accelerated thrust to its e-operations.
In the second phase beginning June 2000, LG plans to set up 75 web kiosks at Internet dealer outlets across eight cities in India _ Delhi, Mumbai, Calcutta, Bangalore, Hyderabad, Chennai, Pune and Ahmedabad.
The company would also set up an additional 25 multimedia-enabled web kiosks at high traffic points such as airports, petrol pumps and departmental stores.