LG Electronics India Ltd IPO

We are dependent on LG Electronics, our Promoter, in various aspects of our business, and we pay royalty to them under the License Agreement (defined below). Any adverse change in our relationship with LG Electronics and the companies in the LG Group could have an adverse impact on our business, reputation, financial condition and results of operations.

The royalty payments made by us to our Promoter under the License Agreement or otherwise may attract regulatory scrutiny or action. As of the date of this Red Herring Prospectus, we have a contingent liability of Rs.3,153.00 million in respect of royalty payments to our Promoter. There is no assurance that such observations will not be raised by the tax authorities in respect of future periods, which could then have an adverse impact on our results of operations.

It is possible that the Promoter may engage in the same line of activity or business as that of our Company in India which could result in conflicts of interest with us. In particular, Hi-M Solutek India Private Limited, an indirectly wholly owned subsidiary of Promoter provides services only to our Company. However, our Company does not have an exclusive contractual arrangement with Hi-M Solutek. Further, our Directors, Key Managerial Personnel and Senior Management may have interests in our Company in addition to their remuneration and reimbursement of expenses.

Increases in the prices of raw materials required for our operations could adversely affect our business and results of operations.

Our top-five suppliers and top-10 suppliers contributed 22.08% and 32.25% of our total purchases of raw materials, including components, in the three months ended June 30, 2025, respectively. Further, we source certain raw materials from suppliers in select countries outside India. Any interruption in the availability of raw materials due to geopolitical uncertainties, shortages or supplier misconduct, among other reasons, could adversely impact our business operations.

The Framework Agreement is valid unless terminated by either our Company or our Promoter, LG Electronics, in accordance with the terms of the Framework Agreement, by providing a 30 day prior written notice to the other party. If LG Electronics terminates this agreement with us, it would impact the Group Transactions and Existing Arrangements (defined below), which in turn will materially and adversely impact our business, reputation, prospects, financial condition and results of operations.

Our Company is subject to various outstanding tax claims amounting to Rs.47,170.55 million which is approximately 73.16% of our Company's net worth of Rs.64,478.48 million as on June 30, 2025. We cannot assure you that these claims will be decided in our favor and that no further liability will arise out of these claims or would not have a material adverse effect on the business, financial condition and results of operation of our Company.

We have certain contingent liabilities, which if materialize, may adversely affect our financial condition.

We derived 78.37% of our revenue from continuing operations for the three months ended June 30, 2025 from our Home Appliances and Air Solution division. Further, the revenue from sales of refrigerators, washing machines, air conditioners and televisions contributed 34.59%, 18.48%, 20.40% and 16.71%, respectively, of our revenue from continuing operations in the three months ended June 30, 2025, respectively. Any factor that negatively affects the sale of these products could adversely affect our business, financial condition and results of operations.

Our market share across select product categories has decreased. If our market share continues to decrease, it could have an adverse impact on our business, results of operations, and financial condition.