Dixon plans to manufacture display modules, finalises technology partner for JV

Dixon Technologies (India)

Indian contract manufacturer Dixon Technologies is planning to make display modules and has finalised the technology partner to form a joint venture for the same, a top executive said.

“The next phase is the deepening of manufacturing. So, we are looking to manufacture display modules and we have already finalised the technology partner. The details will be shared shortly,” Atul B Lall, the Vice Chairman and Managing Director of Dixon Technologies said during the Q4 earnings call on May 15.

The company is targeting to create a capacity of almost 25 million in the Delhi NCR region in the first phase. The capex for this is going to be almost $30 million without land and building and it's going to be a relatively higher margin business. “So, we are putting the resources in place,” Lall said.

The company is also looking to get into precision components and mechanicals, which is currently under deep study. “These are going to be the next level significant steps forward to consolidate our mobile business,” the managing director said.

Dixon said it is now making smartphones and feature phones for “top six brands” except one large global brand.

Lall revealed that the company will be adding another large global brand in the next three to four months.

“There are several brands dominating in the Indian mobile field, so we are ramping up. The ramp-up takes some time, but we feel confident that quarter-on-quarter this volume will keep on increasing,” he said. “We are expecting a significant ramp-up in the coming months ahead of the festive season,” he added.

Manufacturing for a global brand through Compal is expected to commence by September 2024, he said, adding that through its ODM partnership with Longcheer, it has started manufacturing for Realme.

For Realme, Longcheer is making four and a half lakhs volume in the current month with a substantial uptick expected in monthly volumes going forward.

Dixon Technologies recently said it will acquire a majority 50.10 percent share in Ismartu India, a subsidiary of Transsion Technology Limited. “For the Ismartu deal, approval of the Competition Commission of India is awaited and both parties are working on the deliverables for the continuation of the transaction,” he said.

In the last fiscal, Dixon said it had created a capacity of 45 million smartphones and 40 million feature phones, against 15 million smartphones and 38 million feature phones during the last fiscal.

“We have been making incremental investments in this business to meet the increased order book for our customers."

The company makes mobile handsets for Motorola, Xiaomi, Realme, and Ismartu brands -- Techno, iTel, Infinix-- and Compal. These coupled with the new brand the company expects to acquire will make it hit around 2.2 million to 2.3 million units per month, Lall said.

Dixon also expects a strong growth in the volumes of Motorola smartphones, including a growth in export orders. It is also ramping up the Xiaomi smartphone business and expects to clock around three lakh units a month May onwards.

“Such a large order bin showcases that practically we now have all the top six brands, except for one large global brand, as our partners. This has been a major positive for us in the last fiscal on which we have to consolidate in the coming quarters,” Lall said.

Dixon Technologies on May 15 reported a consolidated net profit of Rs 97.3 crore for the March quarter of FY24, registering a growth of 20.6 percent, from Rs 80.62 crore last year.

Consolidated revenue from operations stood at Rs 4657.97 crore, from Rs 3065.45 crore in the year-ago quarter, registering a growth of 51.97 percent, the company said in a regulatory filing.

Mobile and EMS business revenue for the quarter was Rs 3,091 crore which is a growth of 119 percent year-on-year.