Governance advisory firm InGovern Research Services has flagged risks in LG Electronics India’s IPO. Contingent liabilities, royalty structure, and related-party transactions could affect investor returns.
The company disclosed contingent liabilities worth Rs 4,717 crore, nearly 73 percent of its net worth, mainly from disputed tax claims under litigation. Any negative outcome could reduce future earnings or require large provisions.
LG Electronics India pays a fixed royalty of 2.3 percent of net sales for most products and 2.4 percent for LCD TVs and monitors. The promoter can increase fees up to 5 percent without shareholder approval, potentially affecting profit margins. A Rs 315 crore contingent liability is linked to royalty payments to the promoter. Post-listing, the South Korean parent will retain an 85 percent stake, limiting minority shareholder influence on key decisions.
Despite these concerns, LG Electronics India has reported strong financials. For FY25, revenue stood at Rs 24,367 crore with net profit at Rs 2,203 crore. EBITDA margins were 12.8 percent. The company is debt-free, with revenue growing 10.9 percent annually over recent years, showing healthy profitability and operational strength.
