Dixon Technologies will have a CapEx of around Rs 125-150 crore in 2021: Atul B Lall, MD & VC

Atul B Lall, Managing Director and Vice Chairman (VC), Dixon Technologies (India) Limited, talks about expectations from the New Year 2021, CapEx and what shareholders should expect from the company during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: 2020 has been great for Dixon Technologies. Do you think that 2021 will be as promising as 2020 was what are your expectations and what kind of target you are setting for the company? 

A: Our order book forecasting of our customers in every category in which we operate - maybe it is LED television or lighting or mobile, in which we have been selected as a company under PLI scheme among five companies, or set-up boxes or washing machines - is very healthy. We are also acquiring new customers. We are setting up a new factory for mobile. In LED lighting, we are also expanding our capacity in the batten and tube lights. The new fully-automatic washing machines factory plant will start functioning in the Tirupati campus by the next year. So, I believe that there will be a very growth next year too. But this is a pandemic time and every company and management should always remain cautiously optimistic. So, we are cautiously optimistic and as on date situation suggests that there will be a very aggressive growth in 2021-22.

Q: What kind of CapEx is lined up and what is your view on overall margins of the company and from where the healthiest margin is expected and what kind of trajectory will be seen there?

A: We will have a CapEx of around Rs 125-150 crore next year. The company’s balance sheet is very strong and the debt to equity ratio stands at 0.15 only. I feel that we will be able to fund this CapEx through internal accruals or will need a small debt but the company’s balance sheet has a strength. As far as the margins are concerned, then we have two types of businesses:

1. OEM prescriptive basis business
2. ODM, where we offer our design and products

Margins are currently in the 5% range and I expect the margins will remain in the same range next year, as well. A little pressure may come because the prices of commodities are increasing and freight trades are increasing. So, I think, the margins will stay in the same range.

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Q: How will you reward your shareholders and what they should expect from you and what kind of indications you are getting at the helm of the company?

A: We have to do our business properly, we have to grow, generate cash and profit. And that profit should be reinvested because the growth opportunities are very big. Our target of return on capital (ROC) is above 30% and we are maintaining it. The kind of business plans that we have made, I am very confident that this return on capital employed will increase. So, when such a financial matrix develops or emerges in any company then the shareholders are automatically rewarded. So, the work on which we are focusing and the journey we have started should be increased and I believe that we will continue to do so.