The domestic electronics manufacturer has planned 1500-1800 crores INR investment, seeks to venture into new sectors.
Dixon Technologies, a producer of e-components, recently disclosed its investment plan in a statement by the Managing Director and Vice Chairman. Over the upcoming three years, the company plans to invest Rs 1500-1800 crore, equivalent to almost 20 million USD, in its business.
The investment primarily focuses on expanding the organisation’s production capacity and component manufacturing infrastructure.
The Noida-based company intends to raise funds from internal sources, relying on cash flow. It aims to invest more than Rs 570 crore (almost $700M) this fiscal year and is willing to consider external funding for substantial acquisitions, as per the MD and VC Atul. B. Lall.
Lall stated that one-third of the capital expenditure would be for the backward integration of components. Around 60-65% of this year’s capital spending will focus on increasing mobile phone production capacity. Approximately Rs 180-200 crore will be invested in display modules, with the rest allocated to various other products.
Furthermore, Dixon is venturing into the electric vehicle sector, as disclosed by the MD. The venture will be into the non-consumer electronic manufacturing services sector. The company is currently searching for land to build a factory to manufacture electronic modules for electric vehicles.
The MD emphasised their willingness to invest, citing a strong debt-free balance sheet. The total primary equity raised was Rs 60 crore during the IPO. Despite having sufficient cash, Lall mentioned being ready to raise more equity for significant transactions.
He highlighted that this move towards backward integration into components will improve margins, enhance capabilities, and solidify relationships with current clients.
Dixon recently signed a term sheet with HKC Corporation to form a joint venture for manufacturing components and assembling end products in India, including smartphones, TVs, and auto displays. The company reported a substantial revenue and net profit increase for 2023-24.
According to the MD, this sustained 30-40% revenue growth over the next three years. However, he mentioned that Dixon also faces the challenge of building the right talent pool for its expansion into component and high-end manufacturing.
Dixon has manufacturing capabilities for 45 million smartphones and 40 million feature phones, covering half of the market. It specialises in TV and refrigerator production and is diversifying into laptops, tablets, and IT hardware.
