LG Electronics India Ltd IPO: Governance Watch
- Team InGovern
- Oct 11
- 1 min read
The LG Electronics India Ltd IPO, launched in October 2025, is an entirely Offer for Sale, raising approximately ₹11,607 crore with no fresh capital inflow to the company.
The proceeds accrue entirely to the promoter, LG Electronics Inc. (Korea), which will retain 85% ownership post-listing, leaving a limited 15% public float. Anchor investors subscribed to shares worth ₹3,475 crore, covering about 30% of the issue.
Despite stable profitability and a debt-free balance sheet, the company has disclosed contingent liabilities of ₹4,717 crore, equivalent to 73% of its net worth, largely from disputed tax and royalty claims, creating material financial uncertainty.
LG India operates under a perpetual brand and technology license with its parent, paying royalties of 2.3–2.4% of sales. The agreement allows royalty escalation up to 5% of turnover without shareholder approval, posing a risk of reduced transparency and margin pressure.
The company’s dependence on the LG brand and promoter technology makes it operationally vulnerable—any modification or termination of the license could severely disrupt business continuity.
Post-listing, promoter dominance and related-party transactions remain key governance concerns, with limited checks on decisions that could affect minority shareholders.
While LG India offers exposure to a leading consumer durable franchise with steady growth, investors must weigh the governance dependencies, high contingent liabilities, and promoter control risks before investing.
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