Dixon Technologies is targeting Rs 4,500-Rs 5,000 crore in revenue from the laptop and notebook contract manufacturing business in the next two to three years, having onboarded four of India’s top laptop brands.
“In our business plan submitted to the government, we have committed to the government a revenue of Rs 48,000 crore over the tenure of the PLI scheme for IT Hardware. In the initial phase, it [the business] is going to stabilize at around Rs 4,500 crore to Rs 5,000 crore by year three annually,” Atul Lall, Managing Director of Dixon said during a post-earnings call on October 24.
He said the company has finalized the business with HP and Asus, and definitive agreements are in the final discussion stage.
“And, along with Acer and Lenovo, we have four global brands on board out of the top five brands in India. Manufacturing and production of Acer have already started. Lenovo production is expected to start this quarter from our Noida facility. Our 3 lakh square feet Chennai facility will be ready by the end of December 2024. The production for HP and ASUS is targeted to commence by Q4-'25,” Lall said.
Lall emphasized that Indian contract manufacturers must develop both capability and cost competitiveness in the IT hardware sector. This is essential to demonstrate to brands that they can meet requirements for cost, quality, and new product introductions. Additionally, he stated that for this category to thrive, ongoing support from the government policy framework is crucial for IT hardware manufacturing.
"...we can see the signs from the government that they're committed to support it. So, initially, I feel that it is going to be slightly slow. But once it reaches a certain level of maturity, it will be a huge, steep curve up. And once that happens, I'm sure, just like it happens in any industry, that many other players are going to come in...the deepening of manufacturing is going to be much faster compared to any other electronic product, like mobile," he added.
Lall said that he is seeing signs from the government that it will give global laptop manufacturers a deep nudge to start making their products in India.
India is expected to impose restrictions on imports of laptops, tablets, and personal computers after January, according to a recent report by Reuters. If implemented, this plan could significantly alter the dynamics of the IT hardware market in India, which is highly dependent on imports. A similar import restriction was withdrawn last year due to backlash from companies and lobbying efforts from the United States. Since then, India has been monitoring imports under a system that will expire this year and has instructed companies to seek new approvals for imports in the coming year.
The company has also taken an additional 1.5-square-foot facility in Noida on lease to cater to the increased demand of its “principal customer,” which is expected to start in the current quarter with a monthly capacity of another 400,000 smartphones.
Dixon already has four operational facilities that make smartphones for top Android brands like Samsung, Xiaomi, Oppo, Motorola and Transsion-Ismartu brands like Techno, iTel, and Infinix.
“...we have a healthy order book for a Transsion Group of brands, and another brand, Nothing. For Motorola, we've been consistently closing a volume of 1 million per month, and the order book looks healthy in coming months, including some decent export orders for the North American market,” Lall said.
"I see a lot of buoyancy and a lot of positivity in their [partners'] order book. So the business and the order book looks good. I feel that Q4 particularly is going to be very good," he said.
The top executive revealed volumes for Xiaomi and Oppo witnessed significant sequential growth in the second quarter.
He added that production for a large global brand through Compal will commence by the end of November 2024. “We are also in active discussions with another large global brand.”
The company manufactured 9.4 million smartphone units in the second quarter, including 1.3 million units of Samsung smartphones.
“There's a significant growth. If you saw smartphones last year, the number was 1.43 million, which has gone up to 8.13 million [excluding Samsung], which is a growth of 468%,” Lall said.
Saurabh Gupta, Chief Financial Officer, said that in the first six months of this fiscal year, the company has already produced 12.2 million units, excluding Samsung.
Dixon has also finalized the location for manufacturing displays in partnership with China’s HKC and is expecting to start manufacturing by the end of Q1 or the beginning of Q2 of the next financial year.
“We are also looking to further deepen the level of manufacturing and looking to get into precision components, mechanical, and camera modules, and the same is under deep study, and we are working on the possible partnerships,” he said.
The telecom business is also on a growth trajectory, with segment revenue reaching Rs 660 crore. The company is now looking to grow its revenues from telecom and networking products by three times in this fiscal year.
“We have added one more facility in Noida to meet the increasing requirements for our anchor customers. We have also ramped up our production for 5G, fixed wireless access, and outdoor and indoor units for the domestic market, and we are planning to double the capacity with the same to meet the customer requirement along access points, GPON ONTs, and internet set-top boxes. We are in the process of introducing IPTV boxes for domestic market in production segments in this fiscal year,” he added.
Dixon Technologies on Thursday reported a 263 percent rise in its consolidated net profit to Rs 412 crore in the September 2024 quarter. The company said in an exchange filing that it had reported a net profit of Rs 113 crore during the July-September period of the preceding 2023-24 fiscal.
The revenue from operations increased to Rs 11,534.08 crore in the current fiscal of the September quarter. The same was reported at Rs 4943.18 crore in the same quarter a year ago, a rise of 133.3 percent.
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