18 months on, Dixon gets govt nod for JV with China’s Vivo
New Delhi: Eighteen months after it was first announced, Dixon Technologies’ joint venture with China’s Vivo Mobiles has finally received government approval, clearing a key hurdle for a partnership expected to drive the company’s next phase of smartphone manufacturing growth.
In an exchange filing late on Thursday, the Noida-based electronics manufacturer said Vivo Mobiles India (VMI) had received government approval “for the merger of JV Co and subscription of shares of JV Co by VMI” through a letter from the department for promotion of industry and internal trade (DPIIT) on July 8.
On December 15, 2024, Dixon first announced a joint venture agreement with Vivo to assemble Vivo’s smartphones in India.
The venture, in which Dixon will hold a 51% stake, will also enable Dixon to operate as an original equipment manufacturer; This means that in the long term, Dixon could create its own smartphone brand or produce smartphones for other customers in its factories in India.
However, the joint venture did not take off as the Chinese firm needed approval under norms that require the firm from any country that shares a land border with India to seek permission from the government before investing in the venture.
The regulation was implemented when India’s relations with China soured due to the Galwan Valley conflict in 2020. With relations thawing in the last six months, New Delhi eased some restrictions on March 31, paving the way for investments by China-based organizations.
According to Dixon, the pending deal coincided with declining smartphone sales in India. On January 31, Dixon reported 29% year-on-year growth There was a decline in quarterly operating income due to the lack of clarity regarding the Vivo joint venture agreement and the decline in domestic smartphone sales.
On May 12, Saurabh Gupta, Dixon’s full-time director and group chief financial officer, said: Mint In an interview, it was stated that the company was in “advanced discussions” with the government to approve the joint venture, which “could increase Dixon’s smartphone production volume by 60%”.
Gupta also said that the company expects revenue growth of 15-17% in FY27, but the approval and establishment of the joint venture with Vivo “could accelerate revenue growth by up to 45% YoY.”
Analysts at brokerage firms were also positive about Dixon after months of decline in share prices.
On July 5, a note to investors by analysts Deepak Krishnan and Naman Jain of Kotak Institutional Equities stated: “Dixon is expected to deliver a strong 43% quarter-on-quarter revenue growth on the back of strong traction in the mobile and consumer electronics segments, while the margin impact from the absence of Mobile PLI benefits is likely to be largely offset by a favorable product mix.”
Even though the announcement was made late on Thursday, Dixon’s share prices rose 4.4%. However, the share price is still 25% below December 2024 levels when the joint venture was announced.
