Ever heard of Dixon Technologies (India) Ltd.? No? Let’s try again.
Have you encountered—if not owned—Samsung, Philips, Godrej, and Havells products? That’s right. 27-year-old Dixon, India’s largest electronics contract manufacturer, makes products for all these popular household brands.
While Dixon clearly never bothered with building its own brand, perhaps you remember the once-popular TV brand owned by its promoters—Weston. One of India’s first colour TVs in the 1980s—launched by Dixon’s founder and executive chairman Sunil Vachani’s father—Weston paved the way for Dixon’s entry in electronics.
But Dixon is now up for a new challenge, one fitting for the 2020s—storming the smartphone market. Early signs look good for the Rs 11,000 crore ($1.5 billion) market cap company. Its shares have soared 150% this year compared to a 2.4% fall in the benchmark Sensex index. The Noida-headquartered company also saw its consolidated revenue surge 50% in the year ended March 2020 to around Rs 4,400 crore ($590 million). And its net profit nearly doubled to Rs 120 crore ($16 million).
Not just that, one of its units, Padget Electronics, has scored big in the smartphone race. The ministry of electronics and IT has chosen Padget and 15 others for a production-linked incentive (PLI). The initiative is expected to put together phone and component manufacturing worth a whopping Rs 10,50,000 crore Rs 10,50,000 crore PIB PLI Scheme Read more ($140 billion) in five years, around 60% of which will be exported.
As part of the scheme, Dixon plans to take its annual smartphone manufacturing capacity to nearly a fifth of the total smartphones sold in India in 2019 2019 IDC India's Smartphone Market Grows by a Modest 8% YoY in 2019 Read more . For that, it’ll need to rapidly scale up to 27 million units from the current 11 million. That said, if it does manage to scale, it stands to make anything between Rs 640 crore ($86 million) and Rs 1,460 crore ($200 million) in largesse, cumulatively, till the year ending March 2025, according to the brokerage Dolat Capital. It’s because the scheme offers an incentive of 4-6% on incremental sales in the next five years.
Dixon is already on top of it. It’s in talks with three global smartphone brands, said the company’s managing director Atul Lall on a conference call with analysts on 30 October. It already makes feature phones and smartphones for prominent brands like Samsung, LG, Gionee, and Karbonn.
India’s recent local manufacturing push could help Dixon cross that finish line. In a bid to reduce dependence on imports imports Beyond the First Order Can India disincentivise imports while incentivising exports?