Company's Exports Could Rise Sharply From ₹1,800 Cr Last Year To ₹8,000 Cr In FY26: Dixon Tech

Summary

In this interview, Atul Lal, Managing Director of Dixent Tech, discusses the company’s optimistic growth outlook, with export revenues set to rise significantly, particularly in the US and Africa. He highlights their efforts in expanding into European markets and managing supply chain disruptions, especially rising freight costs. Lal also touches on their efforts to reduce reliance on imports, particularly from China, by pursuing backward integration in manufacturing components like displays and camera modules. He provides insights into the company's future partnerships, including with Vivo, and their expected growth trajectory in FY26.

Takeaways

• 😀 Dixent Tech's exports have significantly grown, with a jump from ₹1,800 crores to an expected ₹8,000 crores, primarily focused on the US and African markets.
• 😀 The company is exploring opportunities in the European market, though it remains uncertain until global tariffs and trade agreements are clearer.
• 😀 Imports for different product categories vary, with washing machines and refrigerators having 30-35% imported content, and smartphones around 75%.
• 😀 Freight rates have significantly increased, with costs rising from $800 to $2,500, which is impacting import logistics but is expected to be a temporary issue.
• 😀 Despite the freight rate challenges, Dixent Tech is confident that margin expansion over the next couple of years won't be significantly affected.
• 😀 Dixent Tech has a strong order book, with large shares in the Indian market (35-40%) and aims for aggressive growth in the coming years.
• 😀 The company is pursuing backward integration, including investments in mobile components, camera modules, display modules, and lithium-ion batteries to boost margins.
• 😀 Dixent Tech is focused on reducing dependence on imports from China, particularly in mobile components, which currently make up around 75% of the imports.
• 😀 The company is in negotiations for a partnership related to camera modules and expects to announce something within the next few weeks.
• 😀 The company is working on a significant partnership with Vivo for mobile manufacturing in India, which is expected to provide a substantial increase in mobile revenue once finalized.
• 😀 Dixent Tech has no issues with copper imports under the ACAN FDA, as it does not import under this agreement. They have not received any notices regarding this matter.

Q & A

What growth opportunity does Dixent see in the export market, particularly in the US?

Dixent sees significant growth in the export market, particularly in the US, with an expected increase in exports from 1,800 crores last year to over 8,000 crores this year. They are also expanding their presence in Africa and other regions like Europe and North America.

What is the potential size of the EU export market for Dixent, and what challenges are they facing?

Dixent sees the EU export market as an opportunity, but they are currently unable to predict the exact size due to uncertainties in global tariffs. They aim for a 4x growth in export revenues, reaching 8-9,000 crores this fiscal year.

How does Dixent manage the supply chain challenges, especially concerning imports?

Dixent faces challenges with rising freight rates, which have increased from $800 to $2,500, impacting their cost structure. However, they don't anticipate these challenges to have a significant long-term impact on margins or the industry.

What impact do the rising freight rates have on Dixent's margins?

The rising freight rates are seen as a temporary challenge. Despite this, Dixent believes the fluctuations in freight rates, which had once soared to $25,000 per container, won't significantly impact their margins in the long run.

What is Dixent's position on growth for the current fiscal year (FY26)?

Dixent is confident in achieving aggressive growth for FY26, citing an excellent order book, a strong market share in India (over 35-40%), and a large customer base, which positions them well to outperform competition.

How dependent is Dixent on imports from China, and what is their strategy to reduce this dependence?

Currently, Dixent imports about 75-77% of components for their mobile business from China. They are pursuing backward integration and aiming to increase Indian value addition by investing significantly in non-semiconductor components, particularly through government schemes like the ECM.

What are the plans for backward integration at Dixent?

Dixent is actively pursuing backward integration in several areas, including display modules for mobile phones, laptops, and televisions, as well as camera modules and other components like lithium-ion batteries.

Where does Dixent stand in terms of their partnership for camera modules?

Dixent is in negotiations for a camera module project, and they expect to announce a significant development in the next 3-4 weeks. This would further contribute to their margin expansion strategy.

What is Dixent's strategy regarding the Vivo partnership, and what progress has been made?

Dixent has signed a binding term sheet for a Vivo manufacturing facility and filed their application for Pres Note 3 approval with the Indian government. The partnership is expected to significantly boost Dixent's mobile revenue, with developments expected in the coming months.

Has Dixent faced any customs-related challenges regarding imports under the ACAN FDA?

No, Dixent has not faced any issues or notices related to the copper imports under the ACAN FDA. They confirmed that their operations have not been affected by any such notices.