Daybreak - After a blockbuster IPO, LG faces a tougher test — selling luxury without losing loyalty

Episode Date: October 27, 2025

LG Electronics India just pulled off a record-breaking IPO, drawing bids worth over 4 lakh crore rupees. Investors love its dominance in consumer electronics and its unrivaled retail network. For decades, LG has built trust through deep relationships with local retailers, flexible margins, and a people-first culture. But as the company shifts toward profit maximization and premium products, those same relationships could be tested. Can a business built on generosity stay efficient enough to compete with rivals like Samsung and Whirlpool? Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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It's not every day that a company makes history just by going public. But when LG Electronics India hit the stock market earlier in October, something unusual happened. It's IPO worth 11,600 crore rupees, pulled in bids worth over 4,000. Crores. That is 54 times oversubscribed. Institutional investors alone wanted 166 times more shares than they could. And when the stock listed, it did not crawl out of the gate. It leapt, opening nearly 50% higher than the issue price, which was around 1,700 rupees. That kind of frenzy is

not just luck. It is love. It is investor love. Because this isn't just another good. consumer brand story. It is about how a Korean giant turned its Indian arm into a cash machine built on something rare in the business. Trust. LG's parent built the brand, but the Indian subsidiary built the business. And now every rupee from that blockbuster IPO, all of it goes back to Seoul. After all, it was an offer for sale. LG Korea just sold 15% of its stake in one of its most successful global ventures. But behind that record-breaking listing lies a deeper question.

And maybe a warning. How long can a company that is built on generosity, flexibility and human connection continue to grow when the next chapter demands ruthless efficiency? So today we go over the story of LG India's empire of loyalty, the relationships that made it unstoppable, and why those same relationships could now test its future. Welcome to Daybreak, a business podcast from the Ken.

I'm your host, Nikda Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time. LG's story in India is really a lesson of how to stay in power. Over three decades, LG did not just sell refrigerators, TVs and ACs. it was selling dependability, especially to the people who sold its products, the retailers.

Retailers don't call LG a supplier. They call it a partner. Executives visit small shops, share meals, check on targets, and if those targets are not met, often let retailers keep their margins anyway. Nearly half of LG's trade partners have stayed with the company for over a decade now.

That is rare loyalty. but it's not cheap. To earn that trust, LG often takes on retailers' burdens like credit, unsold stock or margin support. And that generosity comes at a cost. The company converts only about 60% of its operating profits into free cash flow. Compare that to Samsung's 78% or World Pool's 95%. Still, somehow it has worked.

And that is partly because LG also takes, treats its own employees with the same long game philosophy. For example, attrition fell to less than 8% in the financial year 2025 down from 11% 2 years earlier. Samsung, in contrast, reportedly laid off 200 executives in 2024 alone. That stability matters. When LG Senior Management visits a city like Vijayvara, they don't just drop into Reliance Digital.

They visit the local shops. They talk to the owner. share a meal, ask about problems firsthand. And that hands-on approach also shows up in how LG runs its sales operations. Targets are ambitious but flexible. One retailer in Tamil Nadu told my colleague De Banjali Biswas, if I sold 100 ACs last year, LG expects me to sell 20% more. If I reach 118 instead of 120, they still let me have the bonus margin.

It is not just kindness, it is data. Because LG listens, it adapts and plans production accordingly. For example, when a rainy quarter hit AC sales across India, LG did not end up with unsold stock. Why? Because it had heard from its retailers early on. And the result was lower risk, tighter inventory and a deep moat of goodwill. But that same goodwill is also what keeps LG's cash tight.

up. It takes LG around 16 days to collect payments compared to Samsung's 12 and Blue Stars 9.5. Now, that cash could have gone into new investments, like it's planned 5,000 crore-ru-re-manufacturing plant in Andhra Pradesh. So, you see, LG's trust-first approach built the empire. But can it build the next one? More on this in the next segment. Stay tuned. You can't talk about LG without talking about how it sells. In a world where everybody is chasing online growth, LG is oddly traditional. Most companies stock different versions of their products online and offline. Same model, small tweaks, big price gap. Samsung, for example, sells TVs online that are about $5,000 to $6,000 cheaper because of reduced features. Retailers hate that. They say,

why would a customer walk into my store if it is cheaper online? Now, LG understood this. So, it decided to keep the difference smaller, about 1500 to 3,000 to 3,000 rupees between its online and offline models. As a result, footfalls in stores stayed steady. Retailers trusted LG more and that trust translated into predictable year-round sales. But predictability comes at a price. LG rarely participates in online discount wars.

It does not flood Amazon or FlipCard with deals during sales seasons. One FlipCard category manager even said that we have a tough time getting competitive deals from LG. Meanwhile, Samsung plays a different game. During sales, it might ask e-commerce platforms to stock 80,000 units of a popular model, even beyond their capacity, offering sweet margins to push that volume. That means Samsung spikes during festival seasons. LG stays steady the rest of the year. And this difference comes from structure.

Samsung runs separate teams for online and offline channels. LG keeps one unified sales teams, which is led by its chief sales officer Sanjay Chitkara. It is efficient, yes, but it also shows where LG's focus lies. on building relationships that last, not just chasing short-term volume. Still, there is a storm ahead. LG's new ambition is profit maximization. It wants to move beyond mid-range to premium, O-LED TVs, high-end ACs, smart appliances.

And to do that, it is expanding into modern trade stores like Chroma, Reliance Digital and Vijay Sales. In the financial year 2025 alone, it increased presence in these outlets by a third, adding 16 more stores in just one quarter. But in doing so, LG is leaving behind the entry-level segment, the one that made it a household name. Competitors like Voltas, Lloyd and Higher are grabbing that space fast. Even in TV's newer brands like Xiaomi and TCL are cutting into LG's share. The company admits this in its IPO filing. It is deliberately taking a hit on market share to go premium. And that is risky, especially when cheaper imports from China and Vietnam are flooding the market.

Yes, LG was the first to bring OLED screens to India, first to make inverter AC standard. But now Samsung leads in premium refrigerators and washer dryers. So the question is, can LG turn its old strengths, which are loyal. trust and relationships into leverage for this era of premiumization? Or will the very thing that made it so loved, its flexibility, its generosity, hold it back from becoming as profitable as its rivals? Maybe that is the paradox of success.

Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague Snitha Sharma and edited by Rajiv Sien.