Dixon Technologies To Boost Capacity After India Restricts TV Imports

Dixon Technologies Ltd., a contract manufacturer of appliances to electronics, plans to increase LED television capacity after India restricted import of finished TVs to boost local manufacturing.The company will expand its capacity for LED TVs to 5.5 million units from the existing 3.6 million units, Atul Lall, managing director at Dixon Technologies, told BloombergQuint. The company earlier planned to increase production to 4.4 million units but raised the target after the government’s notification.Within next three to four weeks, the capacity will increase to 4.4 million units just before the festive season and the remaining expansion will take place in four to six months, Lall said. Order book for the LED segment remains more than the proposed capacity, he said.Dixon will spend Rs 120 crore in 2020-21 on capex, including for expansion of TV capacity, Saurabh Gupta, chief financial officer, had said in a conference call earlier.India moved TV imports to ‘restricted’ category from ‘free’ to push local manufacturing. Imports, however, contribute less than a tenth of the television market that IBEC, a government-backed think tank, pegs at about Rs 80,000 crore. Inbound shipments, according to Commerce Ministry data, stood at nearly Rs 5,000 crore in 2019-20.India, however, has been pushing local manufacturing of televisions since 2017 by increasing duties. Dixon Technologies has been a significant beneficiary of this shift, growing its volumes faster than the underlying market as well as the overall outsourcing industry, according to a report by Investec Securities.The brokerage expects commencement of production for Samsung in fiscal 2021 and import substitution by Xiaomi to aid its volumes, and backward integration to save costs.Dixon assembles panels and printed circuit boards for LED TVs and recently added Toshiba, Nokia and Hisense to its list of clients, according to an exchange filing. The company intends to increase value-addition by adding plastics and sheet metal components. Open cell panels or screens, which contribute two-thirds of the cost of a television, are completely imported.Outsourcing has increased in the LCD segment and could act as a sharp medium-term growth trigger for Dixon, said Ravi Swaminathan, analyst at Spark Capital Research, in a note.Dixon’s television volumes have grown at an annualised rate of 36% in the last five years, surpassing the 31% growth of the outsourcing industry, according to its red herring prospectus. It competes with Foxconn, Skyworth, Videotex and Noble.The total market size by volume stood at 14 million units in 2019-20, with a quarter of it coming from outsourced manufacturing , according to Investec Securities..Shares of the contract manufacturer have more than doubled so far this year. The stock has run ahead of analyst expectations and the average of 12-month targets estimates complied by Bloomberg suggest a downside of 7.1%. Of 18 analysts tracking the company, 14 suggest a 'Buy', three recommend 'Hold' and one 'Sell'..Watch the full conversation with Dixon Technologies' Atul Lall here..What Curbs On TV Imports Mean For The Industry

Dixon Technologies To Boost Capacity After India Restricts TV Imports

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