Dixon Technologies is the “first Indian mobile manufacturing company” with the capability of “building the 5G phone as per any global requirements,” says Atul Lall, the company’s managing director. Lall in the fourth quarter earnings call on May 27, 2021, said that the company is in talks with a “player from the global markets” for exporting its 5G phone to the United States. The managing director at Dixon Technologies said that the company is “targeting to start exporting the 5G phone to US for this particular brand” around August or September. Further, Lall said that the 5G phones set to be exported will be for the telecom operators in the United States.
Global Mobile Phone Market Still Strong: Dixon Technologies MD
It has to be noted that Padget Electronics in early October 2020, received approval from the Indian government under Production Linked Incentive (PLI) scheme for manufacturing of mobile phones. The wholly owned subsidiary of Dixon Technologies in late December 2020, inked an agreement with Motorola for manufacturing of smartphones. Further, Padget Electronics in late January 2021, entered into an agreement with HMD India for manufacturing of Nokia smartphones.
“I am keeping fingers closed and we are pursuing these relationships hoping that more and more benefits can accrue to us, because I find the global market is still strong and I still feel that our anchor customers are absolutely committed and the numbers are going to be fine,” Lall said in the fourth quarter earnings call.
The PLI scheme was notified by the Indian government on April 1, 2020, with the scheme offering 4% to 6% incentive on incremental sales of goods manufactured in India in select segments. In October 2020, the Indian government gave its approval to 16 companies including Padget Electronics, Samsung, Foxconn, Wistron, Lava and Micromax.
“We are making further investment to meet the threshold levels and we will be targeting to take the capacity up to 15 million per annum in the next couple of years against a present capacity of 3.5 to 4 million given a strong order book from Motorola and out of this 60% to 65% will be for the export markets,” Lall said.
Additionally, the managing director at Dixon Technologies said that the company manufactured 600,000 Set-Top Box (STB) in the past quarter and over two million in the 2021 financial year. Lall said that the company has a “very healthy” order book for its STBs with demand for almost 500,000 STBs per month. However, the managing director at Dixon Technologies said that the company should be able to manufacture around 350,000 STBs “due to shortage of components.”
“So, the business is on a strong footing, at present our major customers are Jio for Den and Hathway and also we are now supplying to Dish TV and also Sify cable, so the order book is extremely robust,” Lall said.
Dixon Technologies Set to Supply Routers, Modems to Telecom Operators
In early April 2021, Dixon Technologies inked an memorandum of understanding (MOU) with Bharti Enterprises to create a joint venture (JV) company for manufacturing telecom and networking equipment such as modems and routers. It was said that the JV company will apply for the Indian government’s PLI scheme for manufacturing of telecom and networking products. While the central government announced the scheme, Lall said that the company is “awaiting the guidelines.”
“Also let me share with you that irrespective of this PLI scheme, we are and have finalized an agreement with a principal for manufacturing modems and routers for supplying to the telecom operators and this kick off is going to take place within Q3 of this fiscal,” Lall said.
ICICI Direct said that the new client addition in the mobile space along with Dixon Technologies “entry into new product categories” will enable the company to record seven times growth in revenue. The financial product distributor in India in its report on Sunday also highlighted that Dixon Technologies will receive necessary government approvals for PLI schemes in the second half of the current financial year.
Similarly, Dolat Capital, a financial firm engaged in the trading markets on Thursday said in a report that Dixon Technologies “continues to remain the best play on PLI in India.”
“Strong customer addition, diversification and fungibility of manufacturing are its strength,” Dolat Capital said in its report.