Dixon Tech has forayed into manufacturing of Set-Top Boxes & Medical Electronics; they are growth-oriented verticals: Atul Lall, MD

Atul Lall, Managing Director, Dixon Technologies (India) Pvt. Ltd, demand, fundraising plan, PLI Scheme and outlook on mobile segment contribution among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The demand has increased and has reached a five-year best level in August, which makes it look that things are moving towards betterment. Do you think that the momentum will continue in future as well?

A: The demand is very good. In August, we have registered the highest-ever sales in every vertical whether it is in television or washing machine or mobile phones or set-up boxes. The forecast is very encouraging and that’s why I believe that demand recovery is very good in the electronics sector and Dixon will be benefitted from it. We are increasing our capacity in every vertical. Thus, it is very positive news and sign for the industry as well as for us.

Q: Recently the board has approved fundraising up to Rs 200 crore. Out of this Rs 200 crore, how much will you raise via equity? Also, how do you plan to use these funds?

A: In the last board meet, we passed an enabling provision as we wanted it to get it approved at the AGM that is scheduled to be held at the end of September. This enabling provision will be there for one year. Anyway, whatever is our CapEx plan I think that we will be able to generate enough cash through internal accruals for the purpose. We also have credit lines. But we can get several opportunities and if required we will raise this fund. However, no plan has been finalized yet about will we will raise funds of Rs 200 crores or not and if we do it then when it will be done. There is adequate strength in the balance sheet, enough cash generation is available, there are internal accruals and credit lines to fund our expansion plans.

Q: You are a diversified electronics company. So can you name the segments where good growth can be seen along with good M&A opportunities?

A: We are expanding our capacity in every vertical and now we are a strong contender of the government’s production linked incentive (PLI) scheme as a domestic company. We have large contracts in our pipeline for manufacturing for both export and domestic markets. So, significant investment and expansion will be made for it. Otherwise, whatever verticals we have we are doing something there, like in the washing machine segment we are coming up with a new plant for fully automatic uploading in Tirupati. And, when it will be commissioned then our capacity will be equal to almost 33 per cent total capacity demand of India. Similarly in the television segment, we are increasing our capacity from 4.4 million to 5.5 million and the capacity will be above 30% in this segment as well. So, these sectors are based in the existing verticals. The new verticals where we have expanded includes digital set-up box where we manufacture cable and set-up boxes for big brands in India.

Recently, we have also ventured into a new vertical of medical electronic, where we are developing a COVID-19 virus testing device for Molbio and its manufacturing will start in a week. So, medical electronic and set-up box are two new verticals that we are pursuing and I feel that these two segments are potentially growth oriented verticals.

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Q: You have talked about PLI scheme and you are a strong contender for it. If we have a look at your overall revenue then mobiles contribute around 10% in your business. What are the growth opportunities here and will you like to be mobile-specific? Samsung and Xiaomi are two big clients for you are you in talks with other brands, if yes, what kind of revenue growth is expected in mobile manufacturing particularly?

A: As far as mobile is concerned then I think approval for the PLI will be a game-changing event for Dixon Technologies, we are sitting at a sitting at an inflexion point. I believe that mobile is going to be our biggest vertical in the next three years. We have existing customers and customer acquisition is an ongoing exercise and I can’t disclose it right now. Some big contracts are in the pipeline and it will be shared with you after they are signed.